Project Management

6 Practical Ways to Actually Improve Your Cost Management

It’s never easy to think about money, especially when you are a project manager and your job is to work on money every day. Estimating project costs and trying to reduce the budget to the minimum are headache-inducing tasks. Indeed, cost management is never a straight shot. It’s more like a zigzag where we attempt to find ways to deal with the budget constraints and balance gives-and-takes. In order to improve cost management and better track your expenditure, Harry Hall suggests in a post for the Project Risk Coach several practices that can transform your work:

  1. Perform a work breakdown structure with your team.
  2. Ask for estimates from the people doing the work.
  3. Create a contingency reserve.
  4. Create a management reserve.
  5. Perform change control.
  6. Compare your actual expenses against your planned expenses regularly.

Be Wise with Money

A work breakdown structure (WBS), as the name itself suggests, helps break down and organize your team’s work into manageable sections. Adopting a WBS will reduce complicated activities to a collection of tasks and thus make it easier for you to assign specific costs to each task. The WBS allows project managers to distribute the project budget into defined packages linked to the tasks and ensure that the task costs don’t exceed the cost estimates. In estimating project costs and performing WBS, it is important to cooperate with your team and ask them to render the estimates.

What differentiates strategic project managers from others is also their preparation plan for potential risks and uncertainty. Sometimes, you have to spend unexpected money in life, such as on wedding gifts for your friends, or medical bills when your kids get sick. You need a budget for these sudden cases. Similarly, you never know what will happen once your project takes place—unfortunate incidents can happen that cost money to avoid crises. The best solution is to always have a contingency reserve or a management reserve to deal with these scenarios when they come.

Once your project is implemented, remember to adjust the budget following changes to your project activities and monitor your expenses carefully. Managing a project without keeping track of your expenditure is like giving your kids a credit card without instructing them how to use it. If you can follow these steps above to manage your project costs, you will not only ensure the quality and speed of your project, but the money should also not be a concern. And if the money is good, you’ll get off work feeling good at the end of the day.

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