Management

Delivering a successful project is defined by overall cost management and delivering the project on time. Project managers must have the ability to allocate work and resources efficiently to manage costs and keep the project running on the track. While handling complex projects, these project management skills are important because they showcase your ability to stay organized and communicate efficiently.

While working on cost control, project managers should pay attention to the following:

• Original Budget
• Approved Cost
• Forecasted vs. actual cost
• Committed costs

What are Project Management costs?

Project management cost includes estimating, budgeting, and controlling cost throughout the project life cycle. To keep the expenses under the approved budget. A project is considered to be successful, only when:

• Delivered on the requirements and scope
• When the execution quality is high
• When the project is completed within the time
• When a project is completed within budget

Hence project management cost is the pillar of project management regardless of any domain. Project management cost creates a baseline against which project managers can benchmark the project costs and realign the directions.

Why is Project Management Cost Important?

It is important to understand cost management. With Predefined budgets, it gets easier to assess whether you are running in the right direction or not. In large organizations, the scale of this problem is further divided due to the running of multiple projects, changes in initial stage assumption, and the addition of unexpected costs. That’s when management costs can help.

By implementing effective cost management, project managers can:

• Set clear expectations with management
• Track progress and respond with corrective actions
• Maintain expected margin and can increase ROI
• Generate useful data that can be used for future projects. 

Tips To Lower The Project Management Cost

While cost management is a continuous process and requires regular monitoring. Yet many factors affect the budget by hitting the upper side. To lower the project management cost, follow these easy tips.

Allocate efficient resources during the initial phase of the project

Identifying and assigning the right resource during the initial stage helps deliver the project within time and budget. It also avoids hiring under or over-skilled resources at various levels. Assigning the underskilled resource will lead to delay delivery and compromise the quality of work. Whereas if managers have higher over skilled resources that may cause the high cost will lead to budget overrun. Managers must ensure that key resources are onboarded before the project starts.

At the same time, managers need to allocate the best available best-fit resources instead of additional hiring. Distributing highly skilled resources across all the projects will reduce the project cost rather than assigning them to high-priority projects.

Cost-effective resources across boundaries

Organizations that allow the sharing of highly skilled resources between projects and functional units lower the project budgets. Visibility across boundaries enables you to identify and allocate cost-effective resources.

This helps in reducing the Project costs significantly without compromising the quality. Replacing the highly skilled resources with low-cost generic ones having similar skills helps control the budget. High-skilled resources can be allocated to train and mentor the junior resource, which also helps in saving additional training costs.

At times it becomes difficult to do succession planning for a critical multi-skilled resource. If the role of such an employee is distributed to multiple resources, the cost will go up significantly. So to keep the budget intact, distribute work with multiple people from a low-cost location.

Track forecasted vs. actual project cost

Resource Management software monitors project financial indicators such as cost, revenue, margin, overheads, etc. Monitoring the project financials will avoid budget overruns. Project managers can control the cost by comparing the actual spending against the estimated budget. If the difference is monitored, necessary actions can mitigate the project risk.

This also helps in monitoring the resources working on multiple projects, this gives room to project managers to adjust the resources and control the project costs.

Save last-minute hiring cost

Looking into pipeline projects in the opportunity or approval stage enables managers to plan to hire the resources ahead of time. This helps to deliver the project within budget and time to achieve higher client satisfaction. Resource capacity planning tools read the gap and identify the excess and shortage of resources ahead of time.

Resource managers can use appropriate resourcing software to fulfill the resource requirement. Managers can also effectively plan to increase the productivity and billable hours of the existing bench of resources.

Effective resource management software prevents last-minute scuffling for hiring competent resources and avoids last-minute hiring pain. Last-minute hiring compromises in quality and hiring mismatched skills that adversely affect the bottom line.

Boost productivity through job rotation

Low productivity dampens the project, spike project costs, and at last results in unexpected attrition. Allocating resources without planning, and without considering their skills and interests can lead to low productivity.

Resource managers can boost productivity by implementing the job rotation strategy. Introducing employees to the different project tasks provides them ample scope for skill building. This encourages employees to develop multiple secondary skills in addition to their primary skills. Managers can improve the chances of billability in case there is no resource available matching their primary competencies.

Track and measure progress

Data collection is crucial for project success. It’s important to set good goals, but it is less effective without the data to track and measure the progress of your project toward those goals so that it increases transparency in the project.

Having a time-tracking tool is more effective, as this helps to stay on track. With a time tracking tool, it gets easier to track the time consumed in completing the tasks. Projects running on time reduce additional costs.

Conclusion

The primary goal of Project Cost Management is to eliminate unnecessary costs without compromising the quality. It is a continuous process of monitoring. It gets easier to identify the discrepancies and helps you to take time to avoid budget burning.

Many times project managers plan the reserve budget for unforeseen circumstances. They create the project plan with the remaining budget to avoid last-minute hiccups. Managing resources effectively increases operational efficiency and significantly reduces project costs.

eResource Scheduler

eResource Scheduler is a leader in offering the most powerful and configurable solution to manage your resources effectively and efficiently. With over 12 years of experience, has created a global presence across 5 continents and 18 counties serving the industries like defense, education, advertisement, property and asset management, oil and gas construction, Information technology, consultancy, and many more, helping them achieve their business goals. eRS comes as a one-roof solution for Resource Allocation, Project Management, and Costs Management with easy integration.