Machinery: Depending on your project, you may need to use various types of equipment and machinery. Are you prepared if you need to pour cement and your cement mixer stops working? Imagine the chaos that would ensue if you chose to undertake a project without budgeting for and managing your time and expenses. The first part of the project runs smoothly, but you run into supplier issues in the second half.
Then your project lead is injured on the job and you have to replace them with another lead, who has to be brought up to speed on the project, taking another week. Using project cost control would not have prevented any of the above circumstances from occurring.
Starting with accurate cost estimates, there are a variety of tips that can help you better manage your next project. These tips include the following:. To realistically account for possible budgetary adjustments, you have to factor variances into your initial project cost.
Remember, you have no control over your suppliers, and any change in pricing will directly affect the cost of your project. Accounting for variances in your project budget from the start makes it more likely that your project can be completed under or at budget and on time. When creating your initial budget, take past experiences into consideration. If your projects have gone over budget in the past, use that experience to better plan for your next one. Instead, factor in potential issues and material cost increases into your initial budget forecasting.
One thing you can expect is the unexpected. But what you can do is prepare for them by including them in your budget. Torrential rain, hurricanes, or tornadoes are all unplanned natural disasters, but you can budget for them. The same goes for unexpected delays due to illness and accidents. For example, using a project management software application can help you keep track of the various stages of each project, serving to notify you should time, labor, or other expenses approach your baseline.
Cost management software or procurement software such as PLANERGY can also help manage both material and supply procurement and threir associated costs. Using project management software, you can also set some key performance indicators KPIs for each phase of your project and monitor your progress accordingly. Doing this regularly allows you to make proactive adjustments as the project progresses rather than dealing with the repercussions after the project has been completed.
By regularly implementing these measures, project managers can quickly identify variances and take corrective action when needed. These targets could be on a monthly or weekly basis or even yearly if the project will go on for long. This is much easier to work with rather than having one complete budget for the entire period of the project. If any new work is required to be carried out, you would need to make estimations for this and see if it can be accommodated with the final amount in the budget.
If not, you may have to work on necessary arrangements for 'Change Requests', where the client will pay for the new work or the changes. Another effective technique would be effective time management.
Although this technique does apply to various management areas, it is very important with regard to project cost control. The reason for this is that the cost of your project could keep rising if you are unable to meet the project deadlines; the longer the project is dragged on for, the higher the costs incurred which effectively means that the budget will be exceeded. Project change control is yet another vital technique. Change control systems are essential to take into account any potential changes that could occur during the course of the project.
This is due to the fact that each change to the scope of the project will have an impact on the deadlines of the deliverables, so the changes may increase project cost by increasing the effort needed for the project. It is important to maintain a consistent level of staffing in all aspects of the project in order to reduce the potential for cost increases due to adjusting staffing levels ad hoc.
In addition, it can have ancillary effects on other aspects such as costs due to safety concerns and more. Vendors will attempt to pass on cost increases as they occur. However, proper vendor controls can limit these increases. While not a comprehensive list of cost control aspects, these five measures can help limit cost increases while at the same time reducing the impact on other aspects of the project.
Project Time Management. Project Management Software. Project Workforce Management. Quality Assurance and Quality Control. Rewards and Recognition. Requirements Collection.
Resource Levelling. Staffing Management Plan. Stakeholder Management. Statement of work SOW. Stress Management Techniques. Structured brainstorming. Succession planning. Supply Chain Management. Team Building Program. Team Motivation. The Balanced Score Card.
The Halo Effect. The Make or Buy Decision. The Rule of Seven. The Virtual Team. Total Productive Maintenance. Total Quality Management. Traditional Project Management. Work Breakdown Structure. As per PMBOK guide, following are the 4 processes for project cost management: Plan Cost Management — Developing overall guidelines for cost management for the project Estimate costs — Estimating the total amount of money that will be needed to successfully complete all the project work Determine budget — Developing a cost baseline by aggregating the costs of individual activities which needs to be spent at different points in the project schedule Control cost — Regularly monitoring the cost performance, measuring cost variances and deciding appropriate corrective action and also making forecast of any revised cost estimates.
Key considerations for effective project cost management and control Accurate cost estimation — It is extremely important to come up with accurate cost estimation. Cost impacts because any new change request, must appropriately be added to the cost baselines with required permissions Monitoring project timeline — In order to complete the project within cost, it may be important to ensure there are no delays in completing the project work.
Conclusion Project cost management and control is one of the most important functions of project management. Leave a Reply Your email address will not be published. Muwanguzi Edward Good information to enhance good communication. Ali Thanks.
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