# Cost Management Plan

## Overview

An owner-side cost management plan for capital projects that need more control structure than a kickoff-level budget summary — approved budget, commitments, actuals, forecasts, contingency, invoices, accruals, and executive reporting in one consistent framework tied to how finance actually needs the numbers to reconcile.

## At a Glance

| Field | Summary |
| --- | --- |
| Resource type | Owner-side cost-control plan |
| Primary use | Budget baseline, commitments, actuals, forecast-to-complete, contingency governance, executive cost reporting |
| Best fit | Projects with meaningful change-order activity, multiple contracts, or finance/accrual coordination needs |
| Not intended for | Detailed cost estimating (this governs cost control after a budget is approved, not estimate development) |
| Recommended owner | Project manager or cost manager, with finance partner review |

## Intended Audience

Project managers, construction managers, real estate executives, capital planning and governance leaders, finance partners, procurement partners, cost managers, and project controls teams.

## When to Use This Resource

Use this plan when a project needs a dedicated cost management approach for approved budget, commitments, actual costs, forecast-to-complete, forecast-at-completion, contingency, change orders, invoices, accruals, and executive cost reporting — typically once a project exceeds the complexity a simple budget line in the kickoff plan can support.

## 1. Approved Budget Baseline

| Cost category | Approved budget | Funding source | Notes |
| --- | --- | --- | --- |
| Design/soft costs | | | |
| Construction/hard costs | | | |
| FF&E | | | |
| Technology/AV | | | |
| Contingency | | | |
| Owner's costs | | | |

## 2. Cost Codes and Reporting Structure

- Cost code structure used (align to the organization's chart of accounts or capital cost coding standard where one exists).
- Reporting frequency and format finance requires (monthly accrual cycle, quarter-end cutoffs).

## 3. Commitments and Actuals Tracking

| Contract/PO | Committed value | Invoiced-to-date | Actual cost-to-date | Retention held |
| --- | --- | --- | --- | --- |
| | | | | |

## 4. Forecast-to-Complete and Forecast-at-Completion

- Method used (earned value, percent-complete, bottoms-up remaining-scope estimate).
- Forecast-at-completion versus approved budget, with variance explanation.
- Update cadence — recommend monthly, aligned with the steering committee report cycle.

## 5. Contingency Rules and Approval Thresholds

| Contingency type | Amount | Approval threshold | Approver |
| --- | --- | --- | --- |
| Design contingency | | | |
| Construction contingency | | | |
| Owner's contingency | | | |

- Rule for what draws from contingency versus what requires a separate funding request.

## 6. Change Order Cost Process

- Change order log: number, description, cost impact, schedule impact, approval status, funding source (contingency vs. new funding).
- Approval authority by change order dollar threshold.

## 7. Invoice Review and Accrual Coordination

- Invoice review and approval workflow (who reviews, what's checked against the contract/PO before approval).
- Accrual process and cutoff coordination with finance for period-end close.

## 8. Cost Risk Escalation

- Trigger for escalating a cost risk beyond routine reporting (e.g., forecast-at-completion exceeds budget by a defined percentage).
- Escalation path and required response time.

## 9. Executive Cost Reporting

- Summary format for steering committee/executive reporting (feeds the Steering Committee Report Template's budget section).
- Key metrics: budget, committed, spent, forecast, variance, contingency remaining.

## 10. Closeout Cost Reconciliation

- Final cost reconciliation against approved budget and all funding approvals.
- Release of remaining contingency and retention.
- Lessons learned input on estimate accuracy versus actuals, for future project budgeting.

## Using This Template

Set up Sections 1 and 2 before the project starts spending — a cost code structure retrofitted after commitments are already underway creates reconciliation work that is hard to fully recover from.