5 Different types of Cost Estimation Models

Cost management is the most critical portion of managing any project and any change in cost estimation directly impacts on the project schedule and scope. The accurate practice of project cost control is very important in any project in order to successfully attain the project goal. Advancement in technology has made a mind-set of stakeholders to complete the entire project within tight schedules and low project cost. There are a number of challenges that occur while practicing project cost control in any project.

Following are the top five challenges that comes across for effective cost controls:

Controlling Scope Variation

For any project, a budget is prepared beforehand and it is very common to have an inevitable variation in the scope, which leads to variation in the budget. In this scenario, it is very important for the project manager to control the changes in scope. It can be identified that only controlling the variation in scope would help the project manager to make the budget manageable. Therefore, controlling this variation in cost is due to scope variation, which is very difficult and is one of the major challenges faced for effective cost controls.

Accurate Cost Analysis

Every project requires appropriate analysis of costs for the resources within the project. Project professionals are frustrated due to the difficulty they face in managing and maintaining cost accounting for the project. It is very important for the project professionals to implement effective cost analytical tools in order to monitor the cash flow within the project. Hiring an appropriate accountant for cost analysis is the common challenge that project professionals come across while attaining the required target.

Integrating Schedule and Cost

Aligning the schedule and budget of the project is another difficult task that project professionals come across in cost control management. In every project, managers of Controlling and monitoring activities and managers for managing cost codes, fiscal periods, and transactions are typically different. Managers responsible for managing WBS (Work Breakdown Structure) and task activities are least aware about the cost analysts who monitors the flow of cash for each activity and so, it becomes very difficult for the cost analysts or accountants to control costs for each task. Therefore, it accounts as a major challenge for project managers to control cost.

Accurate Reporting

In every project, customers are involved in the project where customers might include stakeholders, the IT business unit, funding authorities, and many more. These customers demand regularly for accurate reports for each activity in order to check its proceedings. Sometimes, it becomes very difficult for a project manager to provide error free reports of all departments associated with the project to its customers.

Adapting Advanced Technology

There are numerous advancement in project cost management but only an appropriate usage of this technology can lead in attaining the project’s goal. Despite all major advancements in technology, project managers are afraid of adapting it correctly. This is also a common challenge to cost control management faced by many project professionals.

Cost management is the most critical portion of managing any project and any change in cost estimation directly impacts on the project schedule and scope. The accurate practice of project cost control is very important in any project in order to successfully attain the project goal. Advancement in technology has made a mind-set of stakeholders to complete the entire project within tight schedules and low project cost. There are a number of challenges that occur while practicing project cost control in any project.

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