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2 Ways To Manage Project Costs and Budget

Projecte Management Triangle

Projecte Management Triangle

 

When planning and managing for project costs, several factors come into play and knowing how to successfully manage them will ultimately help achieve project success. The two most common factors that lead to project delay and increased in project costs include design errors and scope change. As important it is to understand how they affect project costs, it is just as important to know how to mitigate and avoid them.

 

Design Errors

Design errors are one of the major reasons why project costs overrun. Proper representation of client’s requirement is important to set a clear picture of what is required for the project. These project designs help map out what technical input is required to achieve project success. Hence, a design that is inaccurate, wrong or insufficient are common errors when presenting project deliverables. This would lead to wrongful application of techniques during the actual execution of the project. Another source of design errors is the lack of in-depth site investigation. This leads to additional work when the actual site conditionals arise during the construction phase. Therefore, the constant correction of the design errors would lead to a delay in timeline and increasing project costs.

 

Mitigation Measure

Maintaining a project team that is professional and highly skilled helps to ensure that the initial project design contains minimal errors. Integration of the design team with the project team allows the design process to be properly planned with minimal corrections. Proper site investigation should be done to ensure that all site conditions are noted in the design, and application of value management could be use to obtain the best cost effective design options.

 

Scope Change

“The scope should include interim milestones, with deliverable dates and a budget worksheet that represents all time involved. If the initial project writeup has enough detail, the better you and your client will interact through its production,” Adam Balkwill, Technical Director, Garfield Group.

 

Scope, defined as the detailed set of deliverables or features of a project, are derived from a project’s requirements. Causes of project scope change include inaccurate scope definition, change in project budget, change of project goals and objectives and inherent risks and uncertainties. Thus, any change in the project scope during execution means that the budget, timeline, schedule and quality will have to reviewed. This undoubtedly causes a delay in timeline and increased in resources against the initial baseline.

 

Mitigation Measure

Having a proper change management plan helps factor any changes in the project while involving the project stakeholders. Identification of the key success factor during the planning phase of the project helps manage expectations. Having clear communication with the client, seeking their approval for changes, setting KPIs and milestones, ensure all stakeholders are on the same page. Keeping the scope frozen for changes that are constantly evolving, ensure that the project KPIs are still met.

 

Managing Project Costs And Budget is a 3-day course held from 24 – 26 September 2018 (Kuala Lumpur), 29 – 31 October 2018 (Kuala Lumpur), 29 – 31 October 2018 (Bangkok) and 12 – 14 November 2018 (Kuala Lumpur) designed to provide delegates with an effective set of skills and knowledge that will allow them to manage the dynamic project cost function. Through these skills and new knowledge, the delegate will acquire the ability to implement the application of techniques that will contribute directly to more efficient project financial management processes. For more information, please visit us at http://www.opuskinetic.com/training or contact us at info@opuskinetic.com.

 

An important aspect of managing project costs is being equipped with the right skills. Check out: Skills Needed For Project Managers To Be International Ready

 

Opus Kinetic believes that people are why organisations are successful, and giving people the knowledge to perform well at their job is integral for success. We pride ourselves as the premier provider of knowledge, offering acclaimed in-house trainings, and many others professional training courses spanning from various industries. Our training courses are well researched and updated with the latest industry trends. For more information on our professional training programs, visit us at http://www.opuskinetic.com/training.