{"id":2849,"date":"2018-05-24T09:05:14","date_gmt":"2018-05-24T07:05:14","guid":{"rendered":"https:\/\/clockify.me\/blog\/?p=2849"},"modified":"2026-05-28T02:00:00","modified_gmt":"2026-05-28T00:00:00","slug":"project-cost-management","status":"publish","type":"post","link":"https:\/\/clockify.me\/blog\/business\/project-cost-management\/","title":{"rendered":"Project Cost Management: The Basics, Steps &amp; Main Goals (2026)"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">82% of project pros address issues before they even occur. They know that poor budgeting kills projects, leading to overspending and cutting corners.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>But<\/strong> <strong>smart project cost management keeps<\/strong> <strong>revenue<\/strong> <strong>high<\/strong> <strong>and<\/strong> <strong>clients<\/strong> <strong>happy<\/strong>. To help you master it, we\u2019ve cooked up a complete guide with:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Clear explanations,<\/li>\n\n\n\n<li>Actionable steps, and<\/li>\n\n\n\n<li>Best practices (plus expert insights).<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1110\" height=\"555\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-Cost-Management-cover-1110x555.webp\" alt=\"Project Cost Management - cover\" class=\"wp-image-38531\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-Cost-Management-cover-1110x555.webp 1110w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-Cost-Management-cover-600x300.webp 600w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-Cost-Management-cover-768x384.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-Cost-Management-cover-18x9.webp 18w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-Cost-Management-cover.webp 1200w\" sizes=\"auto, (max-width: 1110px) 100vw, 1110px\" \/><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul class=\"wp-block-list key-takeaways\">\n<li>Project cost management is the ongoing process of predicting, budgeting, and managing project costs.<\/li>\n\n\n\n<li>Strong project cost management leads to better resource planning, higher returns, and stricter cost monitoring.<\/li>\n\n\n\n<li>The main steps to project cost management are planning resources, estimating their costs, defining the budget, and controlling expenses.<\/li>\n\n\n\n<li>Managers use different cost estimation methods, such as reviewing past projects, analyzing measurable data, and consulting experts.<\/li>\n\n\n\n<li>Tailored apps like Clockify by CAKE.com help managers limit project spending through real-time and cost tracking.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"what-is-project-cost-management\" class=\"wp-block-heading\">What is project cost management?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Project<\/strong> <strong>cost<\/strong> <strong>management<\/strong> <strong>is<\/strong> <strong>the<\/strong> <strong>process<\/strong> <strong>of<\/strong> <strong>estimating<\/strong>, <strong>funding<\/strong>, <strong>and<\/strong> <strong>controlling<\/strong> <strong>expenses<\/strong> <strong>throughout a project<\/strong>. Managers apply it to create a baseline against which they can plan resources and the bottom line. Project cost management also helps you visualize a project\u2019s financial status to avoid money leaks and <a href=\"https:\/\/clockify.me\/blog\/business\/cost-overrun\/\">cost overruns<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Beyond lower spending, the <a href=\"https:\/\/www.unit4.com\/blog\/increase-profitability-effective-project-cost-management\" target=\"_blank\" rel=\"noreferrer noopener\">benefits of project cost management<\/a> include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Better resource use \u2014 allocating the right amount of resources to different tasks during the project.<\/li>\n\n\n\n<li>Higher profitability \u2014 identifying cost risks and reductions with reliable data to increase revenue.&nbsp;<\/li>\n\n\n\n<li>Progress tracking \u2014 monitoring expenses to adapt quickly and uncover cost trends (critical for small businesses with strict budgets).<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Seasoned project manager, <a href=\"https:\/\/www.linkedin.com\/in\/pveselov\/\" target=\"_blank\" rel=\"noreferrer noopener\">Pavel Veselov<\/a>, explains how to tackle internal and customer changes to limit spending:<\/p>\n\n\n\n<div class=\"wp-block-group pro-blockquote\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"800\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Pavel-Veselov.webp\" alt=\"Pavel Veselov - Seasoned project manager\" class=\"wp-image-38569\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Pavel-Veselov.webp 800w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Pavel-Veselov-300x300.webp 300w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Pavel-Veselov-630x630.webp 630w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Pavel-Veselov-768x768.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Pavel-Veselov-12x12.webp 12w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><em>\u201cThe manager should have a procedure for handling changes. We call this change management. The most important changes should be estimated for additional cost and time and approved by the project sponsor or committee.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n<\/div><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">\n<div class=\"banner banner-dark clockify-gradient-default\">\n    <div class=\"banner-text lg:pr-[6rem]\">\n        <span class=\"h4 text-lg translation-block mb-0\">Trusted Cost Tracker<\/span>\n        <p class=\"translation-block mt-1 mb-3\">Stay ahead of all project costs by tracking time, billable or not. Try Clockify for FREE today \u2014 available for MacOS, Windows, and Linux!<\/p>\n\n        <div class=\"banner-buttons d-flex gap-4 align-items-center translation-block justify-content-center justify-content-sm-start\">\n            <a class=\"bg-white rounded px-3 py-1 text-gray-dark\" href=\"https:\/\/app.clockify.me\/en\/signup\" target=\"_blank\">Sign up<\/a>\n\n                            <a class=\"button-2\" href=\"https:\/\/clockify.me\/time-expense-tracking\" target=\"_blank\">Learn more<\/a>\n                    <\/div>\n    <\/div>\n\n    <div class=\"banner-image banner-image-middle \">\n        <picture>\n            <source srcset=\"https:\/\/clockify.me\/blog\/wp-content\/themes\/cake-blog\/theme\/images\/banners\/clockify\/default@2x.png 2x\" alt=\"Illustration\"  media=\"(min-width: 1022px)\" \/>\n            <img decoding=\"async\" src=\"https:\/\/clockify.me\/blog\/wp-content\/themes\/cake-blog\/theme\/images\/banners\/clockify\/default.png\"  alt=\"Illustration\" \/>\n        <\/picture>\n    <\/div>\n<\/div>\n    &nbsp;<br><\/p>\n\n\n\n<h2 id=\"what-is-project-costing\" class=\"wp-block-heading\">What is project costing?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Project<\/strong> <strong>costing<\/strong> <strong>is<\/strong> <strong>a<\/strong> <strong>small,<\/strong> <strong>specific<\/strong> <strong>process<\/strong> <strong>of<\/strong> <strong>forecasting<\/strong> <strong>and<\/strong> <strong>controlling<\/strong> <strong>spending<\/strong> <strong>for<\/strong> <strong>subtasks<\/strong> \u2014 NOT to be confused with project cost management, which is a big, ongoing procedure that covers the whole project.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When costing a project, you need to take several steps. If you\u2019re implementing a security system for a client, you\u2019ll:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Size<\/strong> <strong>up<\/strong> their network setup,<\/li>\n\n\n\n<li><strong>Split<\/strong> your work into phases (plan resources, install new software, and train the client to use the system),<\/li>\n\n\n\n<li><strong>Look<\/strong> <strong>at<\/strong> immediate costs (license fees, total work hours, and training costs), and<\/li>\n\n\n\n<li><strong>Define<\/strong> your project budget and emergency funds (for pesky incompatibility issues).<\/li>\n<\/ol>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"wp-block-paragraph\">\ud83d\udca1 <strong>CLOCKIFY<\/strong> <strong>PRO<\/strong> <strong>TIP<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Want to calculate staff salaries and your operating overhead? Use this handy calculator:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/clockify.me\/hourly-rate-calculator\">Hourly Rate Calculator<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h2 id=\"where-does-project-cost-estimation-fit-in\" class=\"wp-block-heading\">Where does project cost estimation fit in?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Cost<\/strong> <strong>estimation<\/strong> <strong>in<\/strong> <strong>project<\/strong> <strong>management<\/strong> <strong>is<\/strong> <strong>the<\/strong> <strong>process<\/strong> <strong>of<\/strong> <strong>predicting<\/strong> <strong>the<\/strong> <strong>cost<\/strong>, <strong>quantity<\/strong>, <strong>and<\/strong> <strong>price<\/strong> <strong>of<\/strong> <strong>all<\/strong> <strong>the<\/strong> <strong>resources<\/strong> <strong>you<\/strong> <strong>need<\/strong> <strong>to deliver the project<\/strong>. It\u2019s the starting point for both the project life cycle and project cost management.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Project cost estimation combines <a href=\"https:\/\/clockify.me\/blog\/managing-tasks\/short-term-planning-and-long-term-planning\/\">long- and short-term planning<\/a>. First, you look at the overall project costs. Then, as you outline specific tasks, you identify detailed expenses to get them done.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In estimating costs, aim for:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Precision<\/strong> \u2014 try not to over- or underestimate the cost of a project. Make an educated guess based on your goal, resources, and time frame.<\/li>\n\n\n\n<li><strong>Accuracy<\/strong> \u2014 <a href=\"https:\/\/clockify.me\/payroll-management\">track time to get accurate work hours<\/a> and simplify planning for future projects.<\/li>\n\n\n\n<li><strong>Clarity<\/strong> \u2014 understand work requirements and limitations to avoid unpleasant surprises, like <a href=\"https:\/\/plaky.com\/learn\/project-management\/scope-creep-in-project-management\/\" target=\"_blank\" rel=\"noreferrer noopener\">scope creep<\/a>.<\/li>\n<\/ul>\n\n\n\n<p class=\"custom-btn wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\">Track projects with Clockify<\/a><\/p>\n\n\n\n<h2 id=\"key-project-cost-management-terms\" class=\"wp-block-heading\">Key project cost management terms<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">So far, 2 terms keep popping up: project costs and project budget. Let\u2019s clarify them.<\/p>\n\n\n\n<h3 id=\"what-is-a-project-budget\" class=\"wp-block-heading\">What is a project budget?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Project<\/strong> <strong>budget<\/strong> <strong>is<\/strong> <strong>the<\/strong> <strong>total<\/strong> <strong>funds<\/strong> <strong>planned<\/strong> <strong>and<\/strong> <strong>allocated<\/strong> <strong>for<\/strong> <strong>a<\/strong> <strong>project within<\/strong> <strong>a<\/strong> <strong>limited<\/strong> <strong>time<\/strong> <strong>frame<\/strong>. It starts with an initial cost estimate and then depends on how well you track spending.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To better control costs, try these 4 main <a href=\"https:\/\/corporatefinanceinstitute.com\/resources\/fpa\/types-of-budgets-budgeting-methods\/\" target=\"_blank\" rel=\"noreferrer noopener\">budget management types<\/a>:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Incremental \u2014 take your last project\u2019s budget and add or subtract a percentage to create a new one.<\/li>\n\n\n\n<li>Activity-based \u2014 consider the number of activities around a project and decide how to price them to reach your target revenue.<\/li>\n\n\n\n<li>Value proposition \u2014 determine the value each project task brings to your business and allocate funds based on that.<\/li>\n\n\n\n<li>Zero-based \u2014 build your project budget from scratch and justify every activity before setting money aside for it.<\/li>\n<\/ol>\n\n\n\n<h3 id=\"what-are-the-5-types-of-project-costs\" class=\"wp-block-heading\">What are the 5 types of project costs?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Project<\/strong> <strong>costs<\/strong> <strong>are<\/strong> <strong>the<\/strong> <strong>total<\/strong> <strong>expenses<\/strong> <strong>required<\/strong> <strong>to<\/strong> <strong>cover<\/strong> <strong>a<\/strong> <strong>project\u2019s<\/strong> <strong>life<\/strong> <strong>cycle<\/strong> and they\u2019re split into:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Direct project costs that are directly related to a project\u2019s completion, like providing custom market reports.<\/li>\n\n\n\n<li>Indirect project costs that aren\u2019t immediately tied to projects (and can be fixed or variable). However, they\u2019re necessary investments that keep the business running, like electricity bills.<\/li>\n\n\n\n<li>Sunk costs that you\u2019ve already paid for and can\u2019t recover. They can be direct or indirect costs, depending on whether they were attached to a specific project.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Knowing your total direct and indirect costs affects how you price services.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s a cost comparison table with specific examples.<\/p>\n\n\n\n<figure class=\"wp-block-table responsive\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Types of project costs<\/strong><\/th><th><\/th><th><\/th><th><\/th><th><\/th><\/tr><\/thead><tbody><tr><td><strong>Direct<\/strong> <strong>costs<\/strong> (costs of directly providing a service)<\/td><td><strong>Indirect<\/strong> <strong>costs<\/strong> (costs that indirectly support project work)<\/td><td><strong>Fixed costs<\/strong> (costs that don\u2019t change during a project)&nbsp;<\/td><td><strong>Variable<\/strong> <strong>costs<\/strong> (costs that fluctuate during the project)<\/td><td><strong>Sunk<\/strong> <strong>costs<\/strong> (non-refundable costs that have been spent on a project)<\/td><\/tr><tr><td>Outsourced contractor fees<\/td><td>Regular employee salary<\/td><td>Server rent for the company\u2019s website<\/td><td>Material prices (set by suppliers)<\/td><td>Declined project proposals&nbsp;<\/td><\/tr><tr><td>Computer equipment<\/td><td>Company-wide software licenses<\/td><td>Leasing office space<\/td><td>Revisions based on client feedback<\/td><td>Paid software for a specific project<\/td><\/tr><tr><td>Project\/Case research<\/td><td>Staff training (workshops and certifications)<\/td><td>Insurance premiums<\/td><td>Traveling for client meetings<\/td><td>Research for a failed product<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"custom-btn wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\" type=\"link\" id=\"https:\/\/app.clockify.me\/en\/signup\">Track project costs in Clockify<\/a><\/p>\n\n\n\n<h3 id=\"what-are-contingency-reserves-and-risk-costs\" class=\"wp-block-heading\">What are contingency reserves and risk costs?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">According to a <a href=\"https:\/\/www.mdpi.com\/2079-8954\/12\/3\/93\" target=\"_blank\" rel=\"noreferrer noopener\">study on project risk management<\/a>, <strong>contingency<\/strong> <strong>reserves<\/strong> <strong>are<\/strong> <strong>extra<\/strong> <strong>cash<\/strong> <strong>you<\/strong> <strong>set aside to cover<\/strong> <strong>risk<\/strong> <strong>costs <\/strong>(or<strong> <\/strong>unexpected<strong> <\/strong>setbacks). Think major revisions or <a href=\"https:\/\/clockify.me\/blog\/business\/no-call-no-show\/\">employee no-shows<\/a>. So, having a contingency budget keeps risk costs from breaking your bank.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A contingency budget covers 5\u201315% of the project\u2019s estimated funds. Say your project is valued at $400 \u2014 a contingency budget covering 5% of that would equal $20. Test it out with this formula:<\/p>\n\n\n\n<p class=\"has-background wp-block-paragraph\" style=\"background-color:#e1f5fe\">Estimated project budget * (Contingency percentage \/ 100) = Contingency budget<\/p>\n\n\n\n<h2 id=\"how-to-manage-project-budgets\" class=\"wp-block-heading\">How to manage project budgets<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">To stay on top of your budget (and cut costs where possible), you should:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Train<\/strong> employees in efficiency \u2014 promote <a href=\"https:\/\/clockify.me\/time-tracking-best-practices\">smart time tracking practices<\/a> to improve your team\u2019s performance and reduce project risks.<\/li>\n\n\n\n<li><strong>Use<\/strong> new technology \u2014 introduce project cost-tracking tools like Clockify by CAKE.com to check spending in real time.<\/li>\n\n\n\n<li><strong>Outsource<\/strong> tasks \u2014 hire freelancers or contractors to handle part of the work and lower costs.<\/li>\n\n\n\n<li><strong>Cut<\/strong> overhead \u2014 review your expenses to spot cost-cutting opportunities, e.g., move to a smaller office or implement remote work.<\/li>\n<\/ol>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"946\" height=\"630\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-project-related-fees-for-easier-invoicing-946x630.webp\" alt=\"Track project-related fees for easier invoicing\" class=\"wp-image-38533\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-project-related-fees-for-easier-invoicing-946x630.webp 946w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-project-related-fees-for-easier-invoicing-451x300.webp 451w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-project-related-fees-for-easier-invoicing-768x511.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-project-related-fees-for-easier-invoicing-18x12.webp 18w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-project-related-fees-for-easier-invoicing.webp 1200w\" sizes=\"auto, (max-width: 946px) 100vw, 946px\" \/><figcaption class=\"wp-element-caption\">Track project-related fees for easier invoicing<\/figcaption><\/figure>\n<\/div>\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Expenses | Clockify Features\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/i0--Ro6g4rc?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h2 id=\"how-to-calculate-project-management-costs\" class=\"wp-block-heading\">How to calculate project management costs<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Project management fees are a percentage of the total project costs and depend on the project scope, duration, and resources.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Say you set a PM fee at 7% for your $500 project. To get the PM costs, you\u2019d multiply your total project expenses by 7%, which gives you $35. Try out the formula:<\/p>\n\n\n\n<p class=\"has-background wp-block-paragraph\" style=\"background-color:#e1f5fe\">Total project costs * (Project management fee \/ 100) = Project management costs<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s how Wayne State University calculated <a href=\"https:\/\/facilities.wayne.edu\/design\/projectmgmtfee\" target=\"_blank\" rel=\"noreferrer noopener\">project management (PM) fees<\/a> for construction projects of all sizes:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Total<\/strong> <strong>Project<\/strong> <strong>Cost<\/strong> <strong>(minus<\/strong> <strong>PM<\/strong> <strong>Fee)<\/strong><\/th><th><strong>Project<\/strong> <strong>Management<\/strong> <strong>Fee<\/strong><\/th><\/tr><\/thead><tbody><tr><td>$50,000\u2013100,000<\/td><td>5.00%<\/td><\/tr><tr><td>$100,001\u2013250,000<\/td><td>4.50%<\/td><\/tr><tr><td>$250,001\u20131,000,000<\/td><td>4.00%<\/td><\/tr><tr><td>$1,000,001\u20135,000,000<\/td><td>3.50%<\/td><\/tr><tr><td>$5,000,001\u201310,000,000<\/td><td>2.50%<\/td><\/tr><tr><td>$10,000,001\u201320,000,000<\/td><td>2.00%<\/td><\/tr><tr><td>$20,000,001 and higher<\/td><td>1.50%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">As the table above shows, larger projects have lower PM fees. That\u2019s because you can spread project costs across a longer timeline.<\/p>\n\n\n\n<h2 id=\"what-are-the-4-steps-in-project-cost-management\" class=\"wp-block-heading\">What are the 4 steps in project cost management?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">To properly manage project costs, follow these 4 simple steps:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Plan<\/strong> your resources,<\/li>\n\n\n\n<li><strong>Estimate<\/strong> the costs,<\/li>\n\n\n\n<li><strong>Determine<\/strong> the cost budget, and<\/li>\n\n\n\n<li><strong>Control<\/strong> your costs.<\/li>\n<\/ol>\n\n\n\n<h3 id=\"1-plan-your-resources\" class=\"wp-block-heading\">#1: Plan your resources<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Resource<\/strong> <strong>planning<\/strong> <strong>is the process of<\/strong> <strong>reviewing<\/strong> <strong>the<\/strong> <strong>project<\/strong> <strong>scope<\/strong> <strong>and<\/strong> <strong>identifying<\/strong> <strong>the<\/strong> <strong>necessary<\/strong> <strong>resources<\/strong> <strong>for<\/strong> <strong>project<\/strong> <strong>delivery<\/strong>. In particular, you should consider the type, amount, and quality of resources, which can include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>People (employees, contractors, or freelancers),<\/li>\n\n\n\n<li>Team credentials and experience,<\/li>\n\n\n\n<li>Equipment (laptops and servers),&nbsp;<\/li>\n\n\n\n<li>Supplies (printing materials and SaaS tools) and<\/li>\n\n\n\n<li>Time allocated to each project task.<\/li>\n<\/ul>\n\n\n\n<p class=\"custom-btn wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\">Track labor costs with Clockify<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Then, create an <a href=\"https:\/\/clockify.me\/learn\/resources\/effective-resource-planning\/\">effective resource plan<\/a> that covers how many people you need, their skills, the equipment, and the exact project timeline.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To kick off planning, most project managers use the <a href=\"https:\/\/www.forbes.com\/advisor\/business\/what-is-work-breakdown-structure-may-26\/\" target=\"_blank\" rel=\"noreferrer noopener\">Work Breakdown Structure (WBS)<\/a>. Forbes describes it as the process of breaking down large projects into smaller, manageable tasks. Visually, the WBS is a hierarchy with 3\u20135 levels, starting with the main goal and ending with tasks that lead to project completion.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"689\" height=\"630\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Clockify-Visual_Work-Breakdown-Structure_BP-Project-Cost-Management-689x630.webp\" alt=\"Clockify Visual_Work Breakdown Structure_BP - Project Cost Management\" class=\"wp-image-38534\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Clockify-Visual_Work-Breakdown-Structure_BP-Project-Cost-Management-689x630.webp 689w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Clockify-Visual_Work-Breakdown-Structure_BP-Project-Cost-Management-328x300.webp 328w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Clockify-Visual_Work-Breakdown-Structure_BP-Project-Cost-Management-768x703.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Clockify-Visual_Work-Breakdown-Structure_BP-Project-Cost-Management-13x12.webp 13w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Clockify-Visual_Work-Breakdown-Structure_BP-Project-Cost-Management.webp 1200w\" sizes=\"auto, (max-width: 689px) 100vw, 689px\" \/><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">After launching your project, use <a href=\"https:\/\/clockify.me\/resource-planning-management-software\">resource-tracking software<\/a> like Clockify to get instant insights into time and costs.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"903\" height=\"630\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Check-project-progress-against-your-resource-plan-in-Clockify-903x630.webp\" alt=\"Check project progress against your resource plan in Clockify\" class=\"wp-image-38535\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Check-project-progress-against-your-resource-plan-in-Clockify-903x630.webp 903w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Check-project-progress-against-your-resource-plan-in-Clockify-430x300.webp 430w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Check-project-progress-against-your-resource-plan-in-Clockify-768x536.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Check-project-progress-against-your-resource-plan-in-Clockify-18x12.webp 18w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Check-project-progress-against-your-resource-plan-in-Clockify.webp 1200w\" sizes=\"auto, (max-width: 903px) 100vw, 903px\" \/><figcaption class=\"wp-element-caption\">Check project progress against your resource plan in Clockify<\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">SEO Manager, <a href=\"https:\/\/www.linkedin.com\/in\/derekiwasiuk\/\" target=\"_blank\" rel=\"noreferrer noopener\">Derek Iwasiuk<\/a>, plans projects proactively. He always assumes work takes longer than estimated:<\/p>\n\n\n\n<div class=\"wp-block-group pro-blockquote\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"800\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Derek-Iwasiuk.webp\" alt=\"Derek Iwasiuk - SEO Manager\" class=\"wp-image-38572\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Derek-Iwasiuk.webp 800w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Derek-Iwasiuk-300x300.webp 300w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Derek-Iwasiuk-630x630.webp 630w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Derek-Iwasiuk-768x768.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Derek-Iwasiuk-12x12.webp 12w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><em>\u201cI allocate my time for friction before anything else. If a task is estimated at 100 hours, then I\u2019m confident that it will be 120-130 hours after approval and revision come into play.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n<\/div><\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Once you have a complete resource inventory, you can move on to the second step in project cost management.<\/p>\n\n\n\n<h3 id=\"2-estimate-the-cost-of-resources\" class=\"wp-block-heading\">#2: Estimate the cost of resources<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Estimate<\/strong> <strong>the<\/strong> <strong>cost<\/strong> <strong>of<\/strong> <strong>project<\/strong> <strong>resources<\/strong> <strong>by reviewing the<\/strong> <strong>project<\/strong> <strong>scope<\/strong> <strong>and<\/strong> <strong>timeline to get the costs of labor, materials, and equipment<\/strong>. To ensure your project cost estimate is accurate, review past projects \u2014 compare their planned time and actual earnings. Get this data in <a href=\"https:\/\/clockify.me\/project-time-tracker\">time trackers<\/a> like Clockify.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"823\" height=\"630\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-time-and-revenue-for-project-tasks-in-Clockify-823x630.webp\" alt=\"Track time and revenue for project tasks in Clockify\" class=\"wp-image-38536\" style=\"aspect-ratio:1.3063568044842382;width:658px;height:auto\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-time-and-revenue-for-project-tasks-in-Clockify-823x630.webp 823w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-time-and-revenue-for-project-tasks-in-Clockify-392x300.webp 392w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-time-and-revenue-for-project-tasks-in-Clockify-768x588.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-time-and-revenue-for-project-tasks-in-Clockify-16x12.webp 16w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Track-time-and-revenue-for-project-tasks-in-Clockify.webp 1200w\" sizes=\"auto, (max-width: 823px) 100vw, 823px\" \/><figcaption class=\"wp-element-caption\">Track time and revenue for project tasks in Clockify<\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">Besides software, check out some of the best <a href=\"https:\/\/project-management.com\/project-estimation-techniques\/\" target=\"_blank\" rel=\"noreferrer noopener\">project cost estimation methods<\/a> in project management below.<\/p>\n\n\n\n<figure class=\"wp-block-table responsive\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Project Cost Estimation Methods<\/strong><\/td><td><strong>Definition<\/strong><\/td><td><strong>When to Use<\/strong><\/td><\/tr><tr><td><strong>Analogous<\/strong><\/td><td>Looks at general data from past projects (similar in size, complexity, and outcome) to gauge expenses for the new one.<\/td><td>In the early stages of project planning, and when historical data is limited<\/td><\/tr><tr><td><strong>Parametric<\/strong><\/td><td>Predicts the cost of a project by using measurable past data (like the labor rate per hour or cost per mile).<\/td><td>When you have tangible metrics and clear, repeating data<\/td><\/tr><tr><td><strong>Bottom-Up<\/strong><\/td><td>Estimates costs and time for each project-related task, and then sums them up to get the totals.<\/td><td>When projects have clearly defined tasks that you can assign time and costs to<\/td><\/tr><tr><td><strong>3-Point<\/strong><\/td><td>Forecasts project length and expenses based on 3 average estimates: optimistic (O), most likely (M), and pessimistic (P).&nbsp;Applies the following formula:(O + 4M + P) \/ 6<\/td><td>Best for risky, unpredictable projects, like upgrading old software or creating a market strategy<\/td><\/tr><tr><td><strong>Expert Judgment<\/strong><\/td><td>Determines project costs based on the knowledge and experience of seasoned estimators.<\/td><td>Best for projects with high uncertainty and scarce info<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 id=\"3-determine-the-cost-budget\" class=\"wp-block-heading\">#3: Determine the cost budget<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>You<\/strong> <strong>get<\/strong> <strong>the<\/strong> <strong>cost<\/strong> <strong>budget<\/strong> <strong>by<\/strong> <strong>summing<\/strong> <strong>up<\/strong> <strong>the<\/strong> <strong>costs<\/strong> <strong>of<\/strong> <strong>all<\/strong> <strong>project<\/strong> <strong>tasks and<\/strong> <strong>adding<\/strong> <strong>contingency<\/strong> <strong>reserves (extra<\/strong> <strong>money<\/strong> <strong>for<\/strong> <strong>unknown<\/strong> <strong>risks)<\/strong>. This means aggregating all direct, indirect, fixed, and variable expenses. The cost budget helps you compare actual and planned costs for a project.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">CMO at a software agency, <a href=\"https:\/\/www.linkedin.com\/in\/alys-reynders-9682a33b\/\" target=\"_blank\" rel=\"noreferrer noopener\">Alys Reynders<\/a>, breaks down her budgeting strategy. She looks at both \u201c<em>top-down project goals and bottom-up operational estimates to measure deliverables against a mock timeline.\u201d <\/em>Meanwhile, Alys stays prepared for changes by \u201c<em>using contingency reserves and real-time scenario planning.\u201d&nbsp;<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With a cost budgeting strategy, project managers can confidently predict costs for upcoming project stages.<\/p>\n\n\n\n<p class=\"custom-btn wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\">Track expenses with Clockify<\/a><\/p>\n\n\n\n<h3 id=\"4-control-the-costs\" class=\"wp-block-heading\">#4: Control the costs<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Controlling<\/strong> <strong>costs<\/strong> <strong>means<\/strong> <strong>tracking<\/strong> <strong>and<\/strong> <strong>documenting<\/strong> <strong>them<\/strong> <strong>all<\/strong> <strong>through<\/strong> <strong>the<\/strong> <strong>project<\/strong>. This process lets you react accordingly when things change, such as material or service prices.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To <a href=\"https:\/\/clockify.me\/blog\/managing-tasks\/expense-tracking\/\">keep track of expenses<\/a>, you should:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Ensure<\/strong> the project stays within scope,<\/li>\n\n\n\n<li><strong>Communicate<\/strong> with stakeholders,<\/li>\n\n\n\n<li><strong>Follow<\/strong> the schedule and track your time, and<\/li>\n\n\n\n<li><strong>Use<\/strong> project management software, like Plaky by CAKE.com.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">On a deeper level, cost control is about tracking project progress against its cost baseline \u2014 the original, approved budget for spending during the project\u2019s timeline. To make sure you stick to the baseline, keep tabs on 2 metrics:&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Cost variance shows you if you\u2019re under or over budget, and<\/li>\n\n\n\n<li>Cost performance index tells you how efficient you actually are compared to the budget plan.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Managing director of an ad agency, <a href=\"https:\/\/www.linkedin.com\/in\/burkanbur\/\" target=\"_blank\" rel=\"noreferrer noopener\">Burkan Bur<\/a>, shows what happens when you don\u2019t control spending:<\/p>\n\n\n\n<div class=\"wp-block-group pro-blockquote\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"254\" height=\"254\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Burkan-Bur.webp\" alt=\"Burkan Bur - Managing director of an ad agency\" class=\"wp-image-38571\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Burkan-Bur.webp 254w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Burkan-Bur-12x12.webp 12w\" sizes=\"auto, (max-width: 254px) 100vw, 254px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><em>\u201cA $40,000 job can lose 15% of its margins if not checked. Therefore, it\u2019s safe to do weekly cost reviews against scope, time, and approved status.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n<\/div><\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"wp-block-paragraph\">\ud83d\udca1 <strong>CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Learn how to track your spending faster with clear, custom budget reports:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/clockify.me\/blog\/business\/clockify-budget-report\/\">How to Create Quarterly and Annual Budget Reports With Clockify<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h2 id=\"how-to-monitor-costs-in-real-time\" class=\"wp-block-heading\">How to monitor costs in real time<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">To nail project cost tracking in real time, explore different tactics. For example, try the <a href=\"https:\/\/apmg-international.com\/article\/what-earned-value-management-and-why-it-important\" target=\"_blank\" rel=\"noreferrer noopener\">Earned Value Management (EVM) method<\/a>. It uses 3 elements to show if your project is on schedule and budget:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Planned Value (PV) \u2014 cost of the work you plan to do by a certain date,<\/li>\n\n\n\n<li>Earned Value (EV) \u2014 cost of the work you\u2019ve done so far, and<\/li>\n\n\n\n<li>Actual Cost (AC) \u2014 how much money you\u2019ve actually spent.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">With EVM, you can see how well you\u2019re following the spending plan.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">First, <strong>calculate<\/strong> <strong>the<\/strong> <strong>cost<\/strong> <strong>variance<\/strong> with the following formula:<\/p>\n\n\n\n<p class=\"has-text-align-center has-background wp-block-paragraph\" style=\"background-color:#e1f5fe\">EV &#8211; AC = CV<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A positive CV means that you\u2019re under budget and vice versa.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Then, <strong>get<\/strong> <strong>the<\/strong> <strong>cost<\/strong> <strong>performance<\/strong> <strong>index<\/strong> using this formula:<\/p>\n\n\n\n<p class=\"has-text-align-center has-background wp-block-paragraph\" style=\"background-color:#e1f5fe\">CPI = (EV \/ AC) * 100<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You\u2019ll get a percentage showing how much value you\u2019ve created for the effort you\u2019ve put in.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But what if you wanted to get warned about cost overruns before they happen? Then, you\u2019d rely on a project cost accounting system. Clockify lets you predict when projects are about to blow your budget by showing:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Completed time<\/strong> \u2014 total time tracked by your team so far,<\/li>\n\n\n\n<li><strong>Forecasted time<\/strong> \u2014 expected delivery time based on already tracked hours,<\/li>\n\n\n\n<li><strong>Scheduled time<\/strong> \u2014 amount of time you gave team members to complete their tasks, and<\/li>\n\n\n\n<li><strong>Estimated time<\/strong> \u2014 your estimate of how long it would take to finish the project.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1036\" height=\"630\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-forecasting-in-Clockify-1036x630.webp\" alt=\"Project forecasting in Clockify\" class=\"wp-image-38537\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-forecasting-in-Clockify-1036x630.webp 1036w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-forecasting-in-Clockify-493x300.webp 493w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-forecasting-in-Clockify-768x467.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-forecasting-in-Clockify-18x12.webp 18w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Project-forecasting-in-Clockify.webp 1200w\" sizes=\"auto, (max-width: 1036px) 100vw, 1036px\" \/><figcaption class=\"wp-element-caption\">Project forecasting in Clockify<\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">When the forecasted time starts to climb past the scheduled time, that\u2019s your sign to make changes \u2014 and <a href=\"https:\/\/clockify.me\/project-budgeting\">prevent cost overruns<\/a>.<\/p>\n\n\n\n<p class=\"custom-btn wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\">Try Clockify FREE<\/a><\/p>\n\n\n\n<h2 id=\"track-team-time-and-project-budgets-with-clockify-by-cake-com\" class=\"wp-block-heading\">Track team time and project budgets \u2014 with Clockify by CAKE.com<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Clockify can do 2 things at once \u2014 track time and<em> <\/em>monitor budgets. Apart from streamlined project cost management, our <a href=\"https:\/\/clockify.me\/pricing\">affordable time tracker<\/a> offers 99.99% uptime and enterprise-grade security! In practice, this project cost accounting system lets you:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Set<\/strong> hourly rates for people to track revenue and <a href=\"https:\/\/clockify.me\/labor-based-pricing-cost-calculator\">labor costs<\/a>,<\/li>\n\n\n\n<li><strong>Schedule<\/strong> projects or tasks and assign them to teammates,<\/li>\n\n\n\n<li><strong>Define<\/strong> and <a href=\"https:\/\/clockify.me\/help\/projects\/tracking-project-progress\">track budget or time estimates<\/a> for projects,&nbsp;<\/li>\n\n\n\n<li><strong>Track<\/strong> time with idle detection to spot inactivity, and<\/li>\n\n\n\n<li><strong>Record<\/strong> project expenses by unit (20 miles) or sum ($15).<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1088\" height=\"630\" src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Plan-your-budget-for-extra-costs-like-mileage-1088x630.webp\" alt=\"Plan your budget for extra costs (like mileage)\" class=\"wp-image-38538\" srcset=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Plan-your-budget-for-extra-costs-like-mileage-1088x630.webp 1088w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Plan-your-budget-for-extra-costs-like-mileage-518x300.webp 518w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Plan-your-budget-for-extra-costs-like-mileage-768x445.webp 768w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Plan-your-budget-for-extra-costs-like-mileage-18x10.webp 18w, https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Plan-your-budget-for-extra-costs-like-mileage.webp 1200w\" sizes=\"auto, (max-width: 1088px) 100vw, 1088px\" \/><figcaption class=\"wp-element-caption\">Plan your budget for extra costs (like mileage)<\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">Additionally, <a href=\"https:\/\/clockify.me\/features\/projects\">Projects in Clockify<\/a> come with 2 forecasting modes:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Project status<\/strong> \u2014 see current tracked hours and profits against your estimates, and&nbsp;<\/li>\n\n\n\n<li><strong>Project forecasting<\/strong> \u2014 predict future project outcomes, like how much it\u2019ll take and cost.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Forecasting | Clockify Tutorial (2025)\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/_LTpCwWkeKI?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">To ensure your work matches your estimates, enable <a href=\"https:\/\/clockify.me\/help\/projects\/alerts\">project Alerts<\/a>. Clockify will send email notifications when your project hits a set percentage of the estimated time or cost. (Only workspace owners and admins can create Alerts.)<\/p>\n\n\n\n<figure class=\"wp-block-video\"><video height=\"282\" style=\"aspect-ratio: 800 \/ 282;\" width=\"800\" autoplay controls loop muted src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Tailor-project-alerts-in-Clockify.mp4\" playsinline><\/video><figcaption class=\"wp-element-caption\">Tailor project alerts in Clockify<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">If your team\u2019s work is repetitive, <a href=\"https:\/\/clockify.me\/help\/getting-started\/create-manage-projects-clients-for-your-team#steps-to-set-a-project-template\">set your project as a template<\/a> to get consistent, reliable results. This saves project-related tasks, billable rates, and estimates.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-video\"><video height=\"366\" style=\"aspect-ratio: 732 \/ 366;\" width=\"732\" autoplay controls loop muted src=\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2026\/05\/Set-project-templates-for-future-use.mp4\" playsinline><\/video><figcaption class=\"wp-element-caption\">Set project templates for future use<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Clockify also offers smooth integrations to cover all aspects of project management. As part of the <a href=\"https:\/\/cake.com\" target=\"_blank\" rel=\"noreferrer noopener\">CAKE.com<\/a> Bundle, Clockify pairs with:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/plaky.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Plaky<\/a> for visual project planning and status updates, and<\/li>\n\n\n\n<li><a href=\"https:\/\/pumble.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Pumble<\/a> for dynamic team chats and video calls.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\n<div class=\"banner banner-dark clockify-gradient-bundle\">\n    <div class=\"banner-text lg:pr-[6rem]\">\n        <span class=\"h4 text-lg translation-block mb-0\">Top Productivity Toolkit<\/span>\n        <p class=\"translation-block mt-1 mb-3\">Get hooked on exact time tracking, smooth project workflows, and easy team interaction. Try Clockify + Pumble + Plaky today!<\/p>\n\n        <div class=\"banner-buttons d-flex gap-4 align-items-center translation-block justify-content-center justify-content-sm-start\">\n            <a class=\"bg-white rounded px-3 py-1 text-gray-dark\" href=\"https:\/\/cake.com\/try\" target=\"_blank\">Sign up<\/a>\n\n                            <a class=\"button-2\" href=\"https:\/\/cake.com\/bundle\" target=\"_blank\">Learn more<\/a>\n                    <\/div>\n    <\/div>\n\n    <div class=\"banner-image banner-image-bottom \">\n        <picture>\n            <source srcset=\"https:\/\/clockify.me\/blog\/wp-content\/themes\/cake-blog\/theme\/images\/banners\/clockify\/bundle@2x.png 2x\" alt=\"Illustration\"  media=\"(min-width: 1022px)\" \/>\n            <img decoding=\"async\" src=\"https:\/\/clockify.me\/blog\/wp-content\/themes\/cake-blog\/theme\/images\/banners\/clockify\/bundle.png\"  alt=\"Illustration\" \/>\n        <\/picture>\n    <\/div>\n<\/div>\n    <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Looking for more goodies to power your project workflows? Visit the <a href=\"https:\/\/marketplace.cake.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">CAKE.com Marketplace<\/a> for handy add-ons across categories such as IT &amp; Project Management, Analytics &amp; Reporting, and more.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Meanwhile, our <strong>24\/7<\/strong> <strong>human<\/strong> <strong>support<\/strong> is ready to answer questions from both paid and free users. Plus, onboarded members get personalized guidance for free!<\/p>\n\n\n\n<h2 id=\"faqs-about-project-cost-management\" class=\"wp-block-heading\">FAQs about project cost management<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In this section, we demystify the most nagging questions about project cost management.&nbsp;<\/p>\n\n\n\n<h3 id=\"do-you-need-project-management-software\" class=\"wp-block-heading\">Do you need project management software?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">You need project management software if you struggle to track projects, stay organized, and meet deadlines. Research backs this up. In fact, KPMG\u2019s <a href=\"https:\/\/assets.kpmg.com\/content\/dam\/kpmg\/xx\/pdf\/2023\/06\/familiar-challenges-new-solutions.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Global Construction Survey<\/a> found that:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>37%<\/strong> of firms miss project budgets and deadlines while<\/li>\n\n\n\n<li><strong>83%<\/strong> of firms have adopted, or are adopting, project management software.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">It pays off by helping managers break down work and track goals with actual metrics. Clockify combines <a href=\"https:\/\/clockify.me\/plaky-time-tracking\">time tracking and project management<\/a> to keep you organized without guesswork.&nbsp;<\/p>\n\n\n\n<p class=\"custom-btn wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\">Sign up for Clockify FREE<\/a><\/p>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"wp-block-paragraph\">\ud83d\udca1 <strong>CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Torn between tools? Pick your favorite from this article, which lists top 3 project management apps:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/clockify.me\/blog\/productivity\/project-management-techniques\/\">Project Management Techniques and Tools: Definitions and Tips<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h3 id=\"what-are-the-4-types-of-cost-estimates\" class=\"wp-block-heading\">What are the 4 types of cost estimates?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The 4 types of cost estimates include:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Conceptual<\/strong> <strong>estimate<\/strong> \u2014 based on limited, preliminary project details,&nbsp;<\/li>\n\n\n\n<li><strong>Detailed estimate<\/strong> \u2014 uses the confirmed project scope to list required materials, labor, and equipment costs,<\/li>\n\n\n\n<li><strong>Quantity<\/strong> <strong>estimate<\/strong> \u2014 calculates the exact amount of supplies, workforce, and equipment, and<\/li>\n\n\n\n<li><strong>Bid<\/strong> <strong>estimate<\/strong> \u2014 outlines the final price for the client, including overhead and profit.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">As a project progresses, its cost estimate evolves from an initial rough approximation to a final precise figure.<\/p>\n\n\n\n<h3 id=\"what-are-the-7-types-of-costs\" class=\"wp-block-heading\">What are the 7 types of costs?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Here are the 7 fundamental costs worth tracking:&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Rent or mortgage,<\/li>\n\n\n\n<li>Utilities,<\/li>\n\n\n\n<li>Payroll expenses,<\/li>\n\n\n\n<li>Cost of goods sold (direct production costs),<\/li>\n\n\n\n<li>Marketing and advertising,<\/li>\n\n\n\n<li>Insurance premiums (like property insurance), and<\/li>\n\n\n\n<li>Legal and accounting costs (for drafting contracts and bookkeeping).<\/li>\n<\/ol>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"wp-block-paragraph\">\ud83d\udca1 <strong>CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Save money on accountant fees. Learn how to link Clockify with an invoice app:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/clockify.me\/blog\/apps-tools\/clockify-invoicing-integration\/\">How to Sync Clockify With Invoice Apps to Grow Revenue<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h3 id=\"what-are-the-5-basic-cost-concepts\" class=\"wp-block-heading\">What are the 5 basic cost concepts?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The 5 basic cost concepts in project cost management are:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Standard<\/strong> <strong>costs<\/strong> \u2014 target costs set to cover supplies, labor, and admin expenses.<\/li>\n\n\n\n<li><strong>Marginal<\/strong> <strong>costs<\/strong> \u2014 money you spend to intentionally expand the project by adding 1 more component, like a research report.<\/li>\n\n\n\n<li><strong>Opportunity<\/strong> <strong>costs<\/strong> \u2014 profits of a project you pass up when choosing a different one.<\/li>\n\n\n\n<li><strong>Differential<\/strong> <strong>costs<\/strong> \u2014 the difference in total cost between 2 decisions, such as picking between suppliers.<\/li>\n\n\n\n<li><strong>Controllable<\/strong> <strong>costs<\/strong> \u2014 expenses that managers can influence during the project, like buying more printing materials.<\/li>\n<\/ol>\n\n\n\n<p class=\"custom-btn wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\">Control costs with Clockify<\/a><\/p>\n\n\n\n<h3 id=\"whats-the-difference-between-the-cost-baseline-and-cost-budget\" class=\"wp-block-heading\">What\u2019s the difference between the cost baseline and cost budget?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The cost baseline is your approved spending plan, while the cost budget is your total planned capital + extra money for emergencies. In practice, the baseline maps out your project goals, which makes cost tracking easier. The budget defines your limits so that you don\u2019t overspend.<\/p>\n\n\n\n<h3 id=\"what-are-the-4-principles-of-project-cost-management\" class=\"wp-block-heading\">What are the 4 principles of project cost management?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">We\u2019ve outlined the 4 principles of project cost management from <a href=\"https:\/\/www.researchgate.net\/publication\/396930146_The_Principles_and_Practices_of_Project_Cost_and_Financial_Management\" target=\"_blank\" rel=\"noreferrer noopener\">research on managing project finances<\/a>:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Rely on<\/strong> accurate data to avoid underestimating project costs and overestimating the revenue.<\/li>\n\n\n\n<li><strong>Track<\/strong> project progress consistently with a specific method (like a time tracker) to <a href=\"https:\/\/clockify.me\/blog\/business\/client-relationships-improvement\/\">maintain transparent client reporting<\/a>.<\/li>\n\n\n\n<li><strong>Identify<\/strong> the expected project costs and benefits to ensure the project can sustain itself and turn a profit.<\/li>\n\n\n\n<li><strong>Use<\/strong> cost-tracking tools to monitor how changes to your estimates affect the bottom line and to adjust quickly.<\/li>\n<\/ol>\n\n\n\n<p class=\"custom-btn wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\">Get started with Clockify<\/a><\/p>\n\n\n\n<h2 id=\"references\" class=\"wp-block-heading\"><strong>References<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Project Management Institute (2025). Pulse of the Profession\u00ae 2025 [Review of Pulse of the Profession\u00ae 2025]. In Project Management Institute (pp. 1\u201341). https:\/\/www.pmi.org\/-\/media\/pmi\/documents\/public\/pdf\/learning\/thought-leadership\/pulse\/pulse_of_the_profession_2025-1.pdf<\/li>\n\n\n\n<li>Ottaviani, F. M., De Marco, A., Rafele, C., &amp; Castelblanco, G. (2024). Risk Perception-Based Project Contingency Management Framework. <em>Systems<\/em>, <em>12<\/em>(3), 93. https:\/\/doi.org\/10.3390\/systems12030093<\/li>\n\n\n\n<li>Okeke, G. N., Obiorah, C. A., Ugah, T. A., Ali, S. E., Ukandu, O., Nesiama, O., Okoro, P. O., Babatope, C. O., &amp; Akabueze, E. A. (2025). The Principles and Practices of Project Cost and Financial Management. <em>International Journal of Innovative Finance and Economics Research<\/em>, <em>13<\/em>(4), 115\u2013124. https:\/\/doi.org\/10.5281\/zenodo.17354053<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Dodge cost overruns with expert advice on navigating project costs. Ace project cost management with Clockify \u2014 an analytical time tracker.<\/p>\n","protected":false},"author":3,"featured_media":38629,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-2849","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"acf":[],"_links":{"self":[{"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/posts\/2849","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/comments?post=2849"}],"version-history":[{"count":108,"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/posts\/2849\/revisions"}],"predecessor-version":[{"id":38659,"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/posts\/2849\/revisions\/38659"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/media\/38629"}],"wp:attachment":[{"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/media?parent=2849"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/categories?post=2849"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clockify.me\/blog\/wp-json\/wp\/v2\/tags?post=2849"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}