Project Cost Management
As any project manager (PM) should know, Cost Management is the time of action of monitoring and controlling costs within a project and it enables you to determine the total cost of staff on the project, monitor the total actual cost Vs forecast cost, calculate total cost of undertaking each project task, clarify current and possible over-runs and monitor the consumption rate of the project budget.
To unprotected to this effectively, you need a set of processes, roles and documents. Random management of cost management is a dangerous game to play, which is why you need to implement a structured cost management course of action using expense forms, an expense register, approval and project plan update procedures. All this can be divided into three staged activities:
- Document expense – a team member activity
- Approve expense – a project management activity
- Update project plan – a project admin activity
It’s worth noting that the PMI cost management course of action is slightly different but it addresses all the same elements of basic managing cost in a project ecosystem. The main difference is that the PMI course of action addresses resource planning, cost estimating and cost budgeting separately to cater for larger projects. the time of action I’ve shown has connected them as a single course of action.
So you need to create the following three documents:
- Cost Management course of action
- Expense Form
- Expense Register
The form and register are straight forward enough, so long as you’re clear about the kind of data you need to be capturing. The expense form should intended to record basic information such as amount, payee name, task ID, description, etc. This should be sufficient information for the project manager to have a clear view of what’s being spent and for what.
The expense register monitors and controls the current position of expenditure with the project and it helps the project manager clarify and resolve any spending issues so that the project can be delivered to budget.This will typically contain columns such as activity description, ID, expense ID, expense kind, approval date, approver, payment position, etc.
The real work is in the creation of the time of action and this should be carefully defined before it is proven and introduced. The diagram above might help you.
With all this done, you’re now ready to effectively manage cost and so help optimise your chances of delivering your project to budget.