Project cost management

                                                               PROJECT COST MANAGEMENT
Cost is usually one of the first questions that come up in any project. Cost management is the process of estimating, allocating, and controlling the costs in a project. Project cost management is the process by which one plans and manages the project budget. It helps project managers estimate what the project will cost and set in place controls by which they can reduce the chance of the project going over budget.
 
The cost management process begins in the planning phase of the project, where the costs are approved by executives before being implemented. Then, when the project is executed, the expenses are carefully monitored and recorded to make sure that they’re aligned with the cost management plan.
 
Importance of Project cost management
1) It sets a baseline for project costs. That is, it governs the decisions and directions you take when managing costs on your project. This helps you keep the project on track without going over budget.
 
2)Without project cost management, the organization could lose money as costs exceed profits. Another issue is that you might incorrectly invoice your customers. All this leads to a sloppy budget and a dangerous inability to note when you’re overspending.
 
Tips for Managing Project Cost
 
The following are some tips to keep in mind as you’re working on managing your project costs.

• Plan for Inflation: Pricing is not set in stone, and any good budget is going to take this into account by allowing for a range of costs.

• • Account for Government policy or Potential Events: Expect the unexpected might sound silly, but you must have room in your budget for a license, increased taxes, subscription fees, personal issues or some other unknown that will delay the project and increase costs.

• Other Unexpected Costs: Not all unexpected costs are random. There can be legal issues, penalties associated with the project or unexpected labor costs, all of which you can’t budget for, but can prepare your budget.

• Track in Real-Time: Having software to monitor the budget as you execute the project is key for managing costs. However, if you’re looking at data that is not current, you won’t be able to act swiftly enough to resolve issues. Therefore, you want to have software with real-time data tracking.
• Respond Promptly: Regardless of how you discover a discrepancy in your project cost, you must act immediately. The longer you wait, the more money is wasted.
• Size Accordingly: Some people think smaller projects don’t need project cost management. But small or large, you’ll want to manage costsPro-Tip: In order to best manage project costs, you have to know your project inside and out. The best way to do that is at the start of the project by creating a thorough project charter.