Keeping a project’s expenses in check is often easier said than done.
Tracking expenses is becoming increasingly complex, and without the right tools and processes, meeting a project budget becomes virtually impossible.
So, in this article, we will cover how to make budget management efficient.
CONTENT
Why is project expense monitoring important?
A project budget is key in making critical decisions such as:
- Which and how many resources to recruit;
- What level of quality can be achieved;
- What supplier quotes may be acceptable, etc.
Without a set budget, answering these questions is challenging, and once the project is in motion, it becomes impossible to assess whether one is headed in the right direction.
In large organizations, the scale of this concern is further increased due to the simultaneous management, del cambiamento delle ipotesi iniziali e della comparsa di costi imprevisti.
5 tips for keeping project expenses in check
1. Check and change your budget frequently
Keeping your budget up to date is easily the most important element in project cost management.
If the pandemic has taught us anything, a change can happen at any moment, and it is necessary to stay responsive and prepared to find a solution.
The only way to do this is to monitor, update, and possibly change your project budget frequently so that you stay on track.
2. Monitoring resource utilization
One of a project’s biggest cost areas is usually manpower, as well as machinery, tools, and technology.
As with constant budget control, successful project management is also linked to continuous resource monitoring.
Typically, project managers must regularly review the number of people working on the project and revise the strategy to stay within budget if costs are too high.
The same applies to any material resources, such as machinery. Reviewing a project’s resources will ensure they are used effectively.
It will also help to understand whether fewer or more resources are needed to complete your project.
A good cost management tool helps, for example, to differentiate between resource costs and ancillary costs, and also allows a comparison between estimated and actual cost.
3. Involve multiple stakeholders
Teamwork is crucial to project success. Even when it comes to cost control, each team member should actively consider the budget before making any purchases.
This will help promote a mindful and healthy spending culture, reduce unauthorized spending, and increase each individual’s accountability.
4. Focus on your project
Over the course of a project, unplanned work may seep into your schedule.
This “scope shift” can lead to a major change in project focus, ultimately leading to the failure of both the budget and the project itself.
To mitigate this risk, constantly reminding team members of the original project goal is critical.
5. Automating budget management with project management software
Project managers often track costs only after team members submit expense reports.
This reactive approach to project budget management can make all the difference between job success and failure.
Regarding cost management, working reactively can be harmful.
After all, a project manager needs to know the status of their project budget in real time to make informed decisions.
To do so, one solution would be to automate expense management and cost control as much as possible.
Project management software such as Twproject can significantly simplify this process.
Here is a short video showing how many processes you can optimise with the use of this tool:
Let’s take a look at some of the benefits of using this software in project cost management:
- Automation of complex quantitative analysis during estimation and measurement helps prevent manual errors;
- Data integration through planning, estimating, and cost control enables continuous monitoring and rapid, proactive responses;
- Decision-making is made easier as the software helps evaluate alternative solutions through scenario prediction and what-if analysis;
- Clear and user-friendly reports delivered as dashboards and other advanced and customizable user interfaces;
- Many project cost solutions allow third-party integrations so that data can be grouped and analyzed;
- Benchmarking and standardization are possible through the accessibility of project performance data.
Thus, to ensure efficient project expenditure control, you need a proactive management style and Twproject, the best project management software available.
