Project Cost Controls

Having effective project cost controls is absolutely vital to ensure your project doesn't run out of money before it delivers. You might think that this should never happen if project cost estimation had been done correctly and the project budget managed effectively but you would be astonished to discover just how many projects run out of money.

So what really is the best way to implement project cost controls? Well you could rely on the PMo for this. After all they supposedly track all the costs booked to your project and from the plan are able to then forecast what your total budget costs should be. So in theory this should give you advance warning that you're current "burn rate" is going to take you over your project budget.

However this isn't as foolproof as you might think. Firstly the PMO is always a lagging indicator in much the same way as your credit card company is. So for example if your credit card is fraudulently used the first you will know is after the event when all you can do is stop the credit card and wait for the money to be reimbursed. With your project the consequences are far more serious. Instead of the money being reinbursed, you will instead have to go to Finance or the Programme Board and beg for more money.

The reality is that successful project manager's always have a project cost control system of their own which they utilise to ensure that they know in advance when their budget it going out of control.

So how do you do this? Well it's really simple and akin to the way most people check their normal utility and bank bills. Basically you check weekly what costs and resources have been booked to the project and cross reference these with your project plan. By doing this you should be instantly able to see:

1. Which resources are booking time to our project and whether these resources are named in your project plan. If not then you can query what the resource was working on. You would be amazed how many resources book to projects when they have done no work simple in order to attribute their working hours somewhere. This can often get out of control if not swiftly nipped in the bud.
2. Check how many hours resources are booking to a project. If it is more than 37 hours you should definitely query it. If it is more than 40 hours then you should reject the timesheet until the additional hours are accounted for. After all no resource should be booking what is essentially overtime without your prior approval.
3. Check what tasks have been worked upon and check whether this is within the timeframes detailed in your plan.

After doing this you can then go and check your Actuals Expenditure and Forecast Expenditure and check that you are still within the budget you have been allocated. If you're not then you can immediately take action to remedy this by either requesting cheaper permanent resources or insisting certain tasks are done faster

Project Cost Controls - Tip

The important things to remember is that where project cost controls are concerned you should keep it simple and actively check them. Then when the budget looks like it's getting out of control you will be in an excellent position to turn it around and ensure that on your project, money is one thing which it will not be short of.