ABSTRACT
Cost management begins with budgets, and budgeting begins with cost estimating. Once the budgets have been evaluated, the process of cost management should be proactive and is the process of managing work and purchasing so that no budget is exceeded. Cost management is closely associated with cash flow management. The trio deal specifically with project cost issues by describing procedures that, although they are often confused with cost management, are strictly only methods for reporting and assessing money that has already been spent. Most of the conventional cost reporting and control procedures, aim to achieve that objective. The project cost management function then extends to predicting and reporting costs to the client, working with the client to help schedule and control expenditure and marshal the necessary funds. This chapter describes some of the measures needed to establish a project budgeting and cost recording system, as a preliminary step towards implementing effective cost management.
