In this blog article, we want to talk about project cost management software, a topic that pains Project Managers across every industry. Complex and damaging if chosen wrong, this is the cornerstone on which the success of every project depends.
What is Project Cost Management?
Project cost management is the process of estimating, planning, and strategically allocating project budgets to control project costs. This approach, when repeated across different projects, gathers valuable insights that allow forecasting future project expenses, in turn minimising the risk of burning over the budget.
Such data is achieved when after finishing the project the predicted costs are measured against the actual costs.
What Makes It Important?
Cost management is crucial for any company as this is the cornerstone of any project plan. You cannot begin mapping the project out without knowing what resources will be required.
Here’s an example: you want to build a new website for your company. To achieve this, you will need to hire a web designer, a developer and, maybe a UX specialist. Whether they’re salaried or work on an hourly rate, you will need to pay them. There are also other costs, such as web hosting, domain name, stock images and others. To estimate how much will this all cost, you will be turning to cost management - this way making sure you have the budget before you even begin.
Software for Project Cost Management
There are many things that are part of cost management. Budgeting, resource planning, progress and performance measurement, funds allocation, time-planning, forecasting, reporting and many more. The good news is that you don’t have to do it all by yourself. There is project cost management software to assist you.
No More Spreadsheets
There are multiple reasons why Excel spreadsheets are not suitable for project cost management. First of all, they need to be updated by manually keying data in, which leaves a lot of room for human error. Secondly, they are incapable of storing a lot of data without becoming very slow or downright crashing. Thirdly, they will always be stand-alone pieces of documentation that cannot be included in a streamlined workflow.
A designated piece of software addresses and solves these three key points. While you will still be required to add new data manually, the existing figures will change accordingly. Additionally, unlike Excel, project cost management software is capable to identify and address patterns. It doesn’t just store data, but also analyses and presents it in a digestible format within seconds for you to review. Thanks to integrations, it can also transfer said data to your other digital solutions, therefore building a seamless, automated workflow.
Visibility and Resource Allocation
One of the key advantages of using a specialised solution is that it’s been built with the major challenges of managing project costs in mind. This is why it provides you with a centralised view of the entire project, as well as allows you to inspect separate elements individually for more context and closure.
Having better visibility of the situation and being able to identify potential gaps, you will naturally gain better control over resource allocation. Being able to zoom into siloed areas grants you more data that then becomes the cornerstone of decisions that are more likely to drive favourable results.
Invoicing & Client Billing
Software built with the aim of giving you better control over the project budget is holistic in its functionality. Not only does it enable better tracking and utilisation of data, but also supports your efforts in other areas.
Some projects rely on an outsourced workforce and navigating through different pay rate conditions can get very complicated. This adds risk to mishandling invoices and client billing, which leads to damaged trust and potential financial losses. At Timesheet Portal Project edition, we addressed this issue by adding a Client Billing module, so you can focus on areas that require your involvement.
Key Criteria for Digital Solutions
There’s a lot of different software available on the market. While your choice will highly depend on the individual needs of your business and whether the solution addresses them, there are three core features that are a must.
Integrations and APIs
The purpose of digital solutions is to aid you in the creation of streamlined workflows that require as little manual input as possible. And integrations are the key to it. To put it shortly, integrations link different solutions you have together, this way expanding their functionality and data collected.
Speaking of project cost management software specifically, you need to ensure it integrates with tools like your accounting and project management platforms. By linking these solutions together, you will have a holistic overview of the project and be able to see how your decisions in one area may influence the results achieved in other.
Expenses Management
Keeping track and maintaining control over employee expenses is a crucial element of cost management. However, it is often prone to human error or suffers from a lack of a clear process in place. Both lead to potential big financial losses that can be difficult to track back to.
A decent piece of software will be created with this factor in mind and will therefore be inclusive of a module dedicated solely to expenses management. This will address both of the above-described issues and potentially prevent your business from losing lump sums of money.
Project Analytics
Finally, every project needs to be measured in order to deduct whether it’s been successful or not. Speaking of project cost management specifically, as stated in the beginning, you estimate its success by comparing the forecast with the actual spend. And the latter becomes known largely through a project analytics dashboard.
Having a thorough and in-depth analysis presented in a visual format will give you a lot of valuable insights in regards to what’s going right and what needs to be improved as the project runs its course. By the end of the project, the analytics will also contribute to calculating the ROI. A powerful analytics platform is overall a selling point for most digital solutions - and it’s a huge plus when you can also build custom reports within it.
Real-time, Automated and Collaborative Cost Management
At Timesheet Portal, we have designed our Project software to be a one-stop tool for project management. Therefore it has modules designed to address different elements of a project, including cost and expenses management. Rich on integrations, our solution grows with you, offering extensive options for automation and smoother workflows.
Being cloud-based, our platform allows multiple users to access it simultaneously and make changes in real-time. This contributes towards creating better alignment through visibility and transparency, therefore improving overall performance. A flexible reporting system also allows you to build custom reports, tracking unique metrics that matter to your business.
Key Takeaway
Project cost management is an essential part of any project and is highly responsible for overall success. However, it’s a complex process with many elements that are also very susceptible to human error. And these errors can be difficult to catch on early on, therefore resulting in huge damages.
The best of minimising the risk is to automate as much of a process as possible. Not only is this a risk management measure but also a great way to free up time normally wasted on repetitive manual tasks that add no value to your business overall. Additionally, adopting a digital automation tool will grant you a lot of new insights in a format that’s easy to analyse and will therefore lead to better decision-making moving forward.
Not sure how to choose a decent project cost management software? We can guide you.
