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Hi, this is my first post and need some help, this is my situation:

-I am currently under a 5 year Tier 2 Visa expiring on December 2019 and expecting to apply for ILR before then.
-My daughter was born in the UK in 2017 and has a dependant Visa (linked to my own).
-My wife is a PhD student and has a Tier 4 (General) Visa expiring on January 2020 as she is expected to finish her studies this year.

We have the intention to stay in the UK, my understanding though is that the ILR process can take up to 6 months (or even more) and wouldn't want my wife to have to leave the UK and apply from abroad.

My understanding is that both of them can stay as my dependants under my ILR, but not sure what's the process to follow and how much it will cost. Also:

-Do I need to apply for a Tier 2 dependant Visa for my wife before I apply for ILR?
-What would be the best course of action for my daughter as I believe she would be able to get a UK passport once I get ILR?

Thanks in advance for any information you can provide.

-My daughter was born in the UK in 2017 and has a dependant Visa (linked to my own).

You can register your daughter as British once you get ILR. She does not need ILR for this as UK born children have an entitlement to register as British.

-My wife is a PhD student and has a Tier 4 (General) Visa expiring on January 2020 as she is expected to finish her studies this year.

We have the intention to stay in the UK, my understanding though is that the ILR process can take up to 6 months (or even more) and wouldn't want my wife to have to leave the UK and apply from abroad.

No it doesn't take 6 months. It is very rare when it does. Most are getting approved within a few weeks now.

My understanding is that both of them can stay as my dependants under my ILR, but not sure what's the process to follow and how much it will cost.

Your wife can apply for FLR(M) spouse visa, meeting the English and financial requirements once you get ILR. Your daughter, see my comment above, she doesn't need ILR.

-Do I need to apply for a Tier 2 dependant Visa for my wife before I apply for ILR?

You can or you can wait till you get ILR and apply on FLR(M). Your choice. She will only get a tier 2 dependent visa for the duration of what your visa is valid.

-What would be the best course of action for my daughter as I believe she would be able to get a UK passport once I get ILR?

No, not a passport as she is not yet British. You have to register her as British first on form MN1 and once approved and you have the certificate, then only can you apply for a passport.