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According to PMI standards, Cost Management is a sequential flow that moves from high-level strategy to detailed execution and monitoring.

Plan Cost Management (Keyword: Policies): This is the first step where you decide how you will manage the budget. It results in the Cost Management Plan, which dictates the level of precision (e.g., rounding to $10 or $100), units of measure, and organizational procedure links.

Estimate Costs (Keyword: Approximation): In this process, the project manager looks at individual work packages or activities to predict how much they will cost. Because it happens during planning, it is an " approximation " based on known information at that point in time (using tools like Analogous or Parametric estimating).

Determine Budget (Keyword: Baseline): This process involves summing the costs of individual activities or work packages. Crucially, this includes adding Contingency Reserves to create the Cost Baseline. Once approved, this is the version of the budget against which performance is measured.

Control Costs (Keyword: Variance): This is a Monitoring and Controlling process. The PM looks for the " Variance " (the difference between what was planned and what was actually spent). Tools like Earned Value Management (EVM) are used here to see if the project is over or under budget.

A common point of confusion is the difference between Estimate Costs and Determine Budget. Remember: you estimate individual pieces, but you determine the budget for the whole project by adding those pieces together along with reserves.