Project Cost Control : Powerful and Mindful Spending
Companies have to identify their expenditures for a particular project, program or portfolio. Cost estimates can be done comparatively or parametrically, to be feasible and reliable. These the may be investigated to a produce greater extent of scope, schedule and resources.
A project cost control consists of the base estimate which includes the resources needed and the managing of work. It also overheads the other charges that may occur due to multiple activities of different departments. On the other hand, there are fixed costs that need to remain. Fixed costs may refer to the machineries or other equipment. There are also variable costs that may need to change just like salaries and other compensation types. Keeping the budget plan updated to adjustments will result to productivity and efficiency of the project.
There are Cost control techniques to be followed when planning for a Project cost control. First, it has to be planned. All the possible expenditures like payments and compensation have to be included in the plan and must be accurately computed to avoid conflicts. Keeping its track would enable the management to identify the improvements to be done and allocate a budget for it. Each phase of the project has to be provided a budget in respect to its time frame. Should there be needed adjustments, it can be accommodated easily. An effective time management must be kept at hand as well. This allows flexibility in attending to the necessary adjustments and unforeseen conflicts. A time line will serve as a guide to monitor the progress of the entire project. Should there be changes in the project, an effective change control has to be implemented in order to cope with the impacts that the changes would bring. Having enough control to the situation will help the management improve the system. Project performance or earned value must also be measured aligned with the objectives of the company, to apply the necessary changes.
Keeping a proper documentation for the entire costs and expenditures must be regularly updated to make sure that there will be no overspending and the resources are maximized. This will also provide information in the progression of the entire project and its financial aspect. Contingency plans can also be made out of the project cost control in case a need arises. Setting money aside will help the company to get rid of debts. The program manager must know how to allocate the budget so the feedback can be given to the stakeholders. It is also important to keep in mind that these costs must be aligned with the financial cycles of the company.
Within the diverse program that a project may have, whether be it innovative or routine project, project costs must incurred. Though the estimation will vary depending on the program, it will provide an overview of the whole program’s financial condition. A program support needs to be established and should adhere to by all projects and benefits realization at work. The management is then responsible for setting standards of cost estimates, accounting and reporting across all the components aspects so that a decision can be made.