# Costs management and budgeting overview

> **Key takeaway:** Costs management: budgets + CMO (CPR 3.12–3.18). Assessment tied to approved budget unless good reason (3.18; Harrison). Proportionality always. FRC may apply instead on intermediate track — check current rules.

- **Jurisdiction:** England & Wales
- **Practice area:** Civil Procedure
- **Last reviewed:** 2026-08-04
- **Interactive page:** https://kttclegal.info/library/notes/CivilProcedure/costs-management-overview
- **Keywords:** costs management, costs budget, Precedent H, CPR 3.18, proportionality, fixed recoverable costs, Harrison, multi-track

## What is this about?

In multi-track litigation (and other cases where ordered), costs management requires parties to file budgets and seek court approval of future costs. Budgets discipline proportionality and shape later detailed assessment. Fixed recoverable costs regimes increasingly cover intermediate-track work — always identify which costs world applies.

## What is the core rule?

Where costs management applies (CPR 3.12–3.18 framework), parties file costs budgets (Precedent H) and budget discussion reports; the court makes a costs management order recording approved budgets. Subsequent costs are assessed by reference to the last approved budget unless good reason is shown (CPR 3.18). Proportionality remains central (CPR 44). Failure to file a budget when required can have severe consequences (often limited to court fees only for future costs, subject to relief). Fixed recoverable costs tables may displace hourly budgeting for many intermediate-track claims.

## What are the elements or test?

1. Does costs management apply to this track/case type?
2. Or does fixed recoverable costs apply instead?
3. Budgets filed in time and in proper form?
4. Assumptions and contingencies documented?
5. Variation of budget needed after significant development?
6. Settlement: Part 36 interaction with budgeted costs

## Which authorities matter?

- **Civil Procedure Rules, rr.3.12–3.18 and Practice Direction 3D (costs management)** — Primary budgeting regime — verify current numbering after CPR consolidations.
- **Civil Procedure Rules, Part 44 (general costs rules and proportionality)** — Overarching costs principles applying alongside budgets.
- **Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792** — Court of Appeal guidance on departing from approved budgets only for good reason.

## How does this apply in practice?

FRC reforms are phased and technical — check current CPR tables before advising on intermediate-track quantum. Pilot schemes and specialist courts may differ. This is not a bill drafting manual.

## What are common pitfalls?

- Missing budget deadlines
- Under-estimating experts/trial and needing late upward revision without good reason
- Applying multi-track budgeting habits to FRC cases
- Ignoring proportionality even within an approved phase total

## When would a practitioner use this?

CMC preparation, budget negotiation, and settlement accounting for recoverable costs.

## Quick reference

Costs management: budgets + CMO (CPR 3.12–3.18). Assessment tied to approved budget unless good reason (3.18; Harrison). Proportionality always. FRC may apply instead on intermediate track — check current rules.

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*Reference material from [KTTC Legal](https://kttclegal.info/), not legal advice. Work product supports instructing solicitors and barristers under their supervision. England & Wales.*