Project budget and tips on effective cost management

Project budget – one of the toughest project constraints and the most vulnerable for a couple reasons:

1. If the timeliness or the scope of the project change – the cost is impacted automatically.
2. Cost of the project is generally harder to negotiate and address as it gets the most attention from business owners and other top management stakeholders across the board
3. Changes to the cost baseline have the most impact on all of the stakeholders, starting from the delivery teams and all the way up.

There are ways on how to structure your estimates for the project correctly as well as how to manage changes to the cost effectively.

Depending on the level of maturity of PM in your company as well as the seize of your organization you might not be heavily involved in the estimation process. However when it comes to cost updates PMs or the owners always have a seat at the table. So what do you do? Be proactive! How?

Here are our tips:

Proactive project cost management.
• Make sure you can easily identify in-scope and out-of-scope items.
That will help you articulate potential impact on the cost of the project ahead of time.

• Make sure you track your project timeline closely.
Monitor to ensure the project budget allows for any unexpected changes to the
timeline. If you see a risk – flag it early, build awareness early, work with the team to mitigate that risk before it becomes a budget issue…

• Keep your pulse on the news.
What? Yep! Not a common tip and not something you will find in your average PM literature. This advice can only come from someone who
“lived a life”.  Do your best to keep your pulse on the news relevant to your projects. For example, if you plan to lead an infrastructure project you will need to track how the logistics issues are unfolding due to COVID. This will have a tremendous impact on your project cost and will put you in a much better position to work through those issues proactively.