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8 Tips for Managing Project Costs

11/5/2011

8 Comments

 
1.  Produce an estimate. Compile a realistic estimate with your team. Make sure it covers all the project’s phases and activities and that it contains sufficient contingency. Account for all people costs as well as materials, hardware and software

2. Achieve a baseline budget. Formally get the estimate signed off by the sponsor and steering committee and ensure that the actual funds get released and allocated to the project. You now have a baseline budget to work from.

3. Establish monthly budget. Determine what you expect the project’s monthly running costs to be based on your knowledge of the project’s resource plan and schedule. Document the monthly expected expenditure in a spreadsheet encompassing the entire project. 
 
4. Establish cost controls. Set up clear cost controls and sign-off responsibilities for the different types of expenditure. Consider who will be approving and signing off on timesheets, materials, hardware, software and vendor invoices. This part is crucial as this is where you control the actual costs that will be booked to your project.

5. Record actual costs. Check the actual amount of money accounted to your project at the end of each month. This figure will normally be provided to you by the finance department.  Record this amount in your spreadsheet so that you can directly compare it to your budget.

6. Calculate metrics. Calculate and update your cost metrics at the end of each reporting period. Measure how much money the project has spent of the total budget compared to how much money you had expected it to spend at this point in time. Include your cost metrics into your project reports and steering committee presentations.

7. Update forecasts. Adjust your forecasts on a monthly basis to cater for any changes that have taken place. Changes could stem from the actual running costs being higher (or lower) than forecast or estimates being
higher (or lower) than forecast.  

8. Communicate. Create transparency to senior management around the project’s costs by including your cost metrics and key numbers into your project reports and steering committee presentations. If for some reason your costs are not on track, treat it as an urgent issue which must be analysed, resolved and discussed with the steering committee.


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8 Comments
Management certificate link
24/4/2012 23:09:24

Nice tips for maintaining project cost.To estimate a project cost is a Pre-planning process.If we are fail to plan it in the right way than it can cause a great loss to our project as well as our company.

Reply
deepak kumar link
9/5/2019 08:18:53

thanks for sharing this tips

Reply
Jhon Smith link
12/5/2019 08:32:50

I was looking for information regarding this and finally got one. Thanks for sharing the information with us. The article was a great help to me.

Reply
Sawailal Jangid link
20/8/2019 09:20:33

Great content. Thank you so much for sharing it with us. The content structure is really great.

Reply
Harlon Heath
25/10/2019 21:38:30

Good information thanks for sharing.

Reply
John Wesley link
12/11/2019 14:12:04

Great Tips! Exactly what I was looking for. Thanks for sharing.

Reply
Alla Bukuyazava
22/7/2020 20:13:46

Very good tips, thank you.

Reply
Phil Huntington link
24/3/2021 09:03:34

Hello, I think the idea You share about managing project costs is really applicable and good. I really think that this thing is very important as well because in this way we can manage financial matters as well. Thanks for sharing this information.

Reply

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