Cost management is considered as the key factor behind the success of any project. Before beginning any project, the first question that arises is “the cost of project”. Engineers consider project cost management as the series of activities, which leads to estimate, allocate, and control the overall costs of the project. Project cost control management is very important to control the cash-flow of overall project in meeting the target. Cost is one of the three constraints, which impacts the quality of the project. Any deviation in projects costs impacts the other two constraints of project quality i.e., schedule and scope. Therefore, it is very important to keep project cost management on high priority in order to attain the required project goal.
Exceeding project costs is one of the common elements behind failure of every 4 out of 5 projects. So, project cost management plays a very important role in managing and controlling the flow of cost for various resources in different tasks of the project.
Following are the benefits of project cost management:
Implementing cost management in a project enables the project manager to directly control the flow of cost for resources in an appropriate manner. Cost management helps the project manager to limit the overall paychecks of different employees at different levels. This will allow the project manager to hold back more amount and use it for future resources. By using project cost management technique, a company can easily reduce its overall capital expenses.
Project cost management can directly help in determining the total sum required for each task within the project. This helps in managing the activities based on determined costs of the project and therefore, enables the project tasks to run smoothly. Other than this, project cost management also helps in comparing the estimated project costs with the actual cost of each task and identify the components, whose costs are required to be controlled.
Identify Procurement Effectiveness
Every project requires vendors to gather required resources for the project. Major portion of the overall project budget is utilized for procurement activity, so it is very important to effectively manage it. Project cost management helps in identifying various vendors and selecting the most profitable vendor for ordering required project resources.
In many cases, it has been identified that the overall project cost increases either due to implementation of unnecessary technologies within the project or due to lack of technical up gradation in the project. With the help of cost management, one can easily determine the necessity of technology and accordingly implement it for project completion. This helps the project manager to utilize the saved cost for other beneficial tasks.
Thrift basically explains the quality of saving money and utilizing it for other business purposes. Project cost control management enables the project manager to reduce the cost on each task and apply it on other useful tasks. Utilization of saved money due to project cost control directly helps the company to meet its fiscal year’s goal.