Project Management: 7 Tips to Help You Manage Costs

Every successful project requires inspiration, hard work, planning and preparation, as well as an adequate budget. If you are a project manager, it’s crucial that you establish a budget well in advance so you can oversee the financial side of things, helping to ensure every cent is put to good use. If you don’t know how to manage the costs, you may run out of money, so here are seven tips to help you keep on track of your finances.

Produce an Estimate

Before a project can begin, it’s important that you establish an estimate that’s realistic. Your estimate should cover every phase and activity involved in your project, and should contain a sufficient contingency. There are various factors that need to be included, such as employment costs, materials, software, and hardware.

Achieve a Baseline Budget

Once you have produced a realistic estimate, you will need to get it signed off by a steering committee or sponsor. Also, as the project manager, you will need to make sure that the actual cashis released and put towards the project so that you have a baseline budget to adhere to.

Establish a Monthly Budget

You will need to figure out what you envisage the project’s total monthly running costs to be, which can be based on the knowledge and expertise you have of the project’s schedule and resource plan. Make sure that you outline the monthly expected expenditure on a spreadsheet as this will help you remain on track.

Establish Cost Controls

You will also need to set up clear and cohesive cost controls for the various types of expenditure, as well as consider who will be responsible for authorizing and signing off on time sheets, software, hardware, materials, and vendor invoices. Establishing cost controls is a crucial component as you need to be able to accurately establish where every dollar is being spent.

Record Actual Costs

Make sure that you keep a close eye on the exact amount of cash that is accounted towards your project at the end of every month. You will normally be able to obtain this information from the finance department, so recording this total in your spreadsheet can help when it comes to comparing it to your budget.

Communicate

Stakeholders need to be in the know from start to finish, so make sure that you communicate your numbers throughout the project. If, for some reason, you find that your costs are not correct, you need to treat this as an urgent issue which must be analyzed, discussed, and resolved with stakeholders.

Project Management Tools

If you aren’t using the right tools to keep track of your project costs, you may be more prone to making mistakes along the way. To help provide reassurance that your numbers are accurate, and keep the project moving forward successfully, there are various project management tools that you can compare and utilize.

Producing an estimate, achieving a baseline budget, establishing a monthly budget, and keeping control of total costs are just a few of the things every project manager must do when it comes to working on a project.