With this article, we aim to inform Consultancy Owners and Finance Managers of ways to improve project cost management exponentially. We will be sharing a total of five tips. Adopting them will lead to smoother projects, more accurate forecasts and the overall betterment of your business.
When it comes to project management, there are many areas to address mapping out a road to success. If we were to deep dive into them all, this would become a very, very long read. Therefore we want to focus on project cost management specifically.
Scrupulously managing expenses and budgets throughout the project’s entire lifecycle is a fundamental part of an effective, results-driven project strategy. It’s the starting point for decision-making, task prioritisation and ROI evaluation. In other words, every aspect of the project depends on how well you manage the budget. If this is an area you feel could do with some fine-tuning, here are some words of wisdom.
How Can We Improve Project Cost Management?
There are 5 key tips to becoming better at project cost management.
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Analyse past results
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Be certain of what your budget is
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Prepare to face unexpected costs
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Continuously monitor your budget
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Communicate with your team
1. Use Past Projects to Inform Future Strategies
We’re constantly told to learn from our mistakes to secure better future outcomes. Project cost management is another area where this mindset applies. Think back to those past projects where you ran over your budget by a hefty margin. Identify the reasons for this, then put processes in place to make sure the history doesn’t repeat itself.
The best way of doing so is by pulling out old data that was collected throughout the projects. By uploading it into cloud-based software, you can put it in comprehensive yet highly detailed, visual reports. This way it’s easy to see the precise areas of previous errors. It also informs future budgeting decisions, such as setting estimates.
2. Triple Check Your Budget
Keeping up with the theme of wise sayings, let’s emphasise the fact it’s better to be safe than sorry. It could be pretty disastrous to discover you made a major forecasting error on a project when you’re mid-delivery. So, always get a second – or even third – pair of eyes to go through the figures with a fine-tooth comb. It could save you a great deal of hassle in the long run.
Or, even better, avoid the error altogether. Making mistakes is very human. Therefore when the consequences of one are at high stake, it’s best to trust the machines. Some solutions, using the data collected either natively, through integrations or uploaded manually, will provide you with forecasts that are error-free. Additionally, by using centralised expense tracking business software, you will always have a clear view of expenditure and the remaining balance.
3. Expect Unexpected Costs
Man plans, God laughs. Yes, we’ve done this again. It’s quite rare for a long-term project to be completed glitch-free. Certain problems out of your control could end up altering project costs. Accounting for such contingencies in the planning stage will help you to better deal with these issues should they arise.
This problem is best tackled at the primary stages when allocating the budget. Instead of spreading the entirety of it across project-aimed tasks, put some of the budgets aside to address unforeseen circumstances. As they say; dig the well before you’re thirsty.
4. Update Budgets in Real-Time
Projects need to be monitored constantly; that’s a given. The same goes for project costs. You need to assess and adjust budgets in real-time on a monthly or even weekly basis. In fact, an assessment is needed every time a project change is made (seeing as any change is likely to impact spending).
This is time-consuming and counter-productive, although essential. However, this is also a challenge that’s easy to overcome using automation. If your budget information and data are put into a SaaS system that helps manage project expenses, the business intelligence will do most of the work for you. Your only duty is to open the dashboard and check if the information is correct.
5. Communication is Key
Finally, projects are run by teams for a reason. And when working with others, transparency is key to effective cost management. All team members involved in the project need to be aware of the budget status. This way, they’ll be more inspired to watch their personal project costs and make you aware of issues or discrepancies as soon as possible.
SaaS software is notorious for creating team alignment by enabling maximum visibility. Cloud-based systems for project cost management can be accessed and edited by multiple team members in real-time. They also track changes made as opposed to full overwriting, offer in-platform communication via comments and notes, and generally create seamless collaboration experiences.
Summary
The majority of these tricks can be pretty time-consuming in terms of implementation. On the other hand, that’s not the case if you pass it on to the software. The pattern we can see is that approaching these best practices from a digital perspective cuts time. It also increases accuracy and turns into an ongoing automated process instead of being a repetitive manual task.
Digital transformation in project management is now vital for delivering good results. Not only does it create smooth workflows but also pulls together more insightful data than a manual approach could ever deliver.
Curious to try the software that will improve your project cost management? Book a demo to explore what it has to offer.
