Managing Project Costs Through Effective Budgeting and Cost Control

Posted: September 20th, 2023

The purpose of this assessment is for you to coherentlyexplainthe content of your project issue analysis in a 5-10 minute presentation.The presentation should explain the project issue, main project management principle(s), any consensus, disagreements, or gaps in the reported findings, and the significance of your recommendations.
As a guide, you’re expected to reference about 5-10 relevant, primary sources of information including peer reviewed, seeUnderstanding what information you need.Students that use generative AI tools or similar platforms must insert the link to the generative text or image they used to help them with their presentation.

Suggested structure for the presentation
Title
Student ID
Introduction
Body (main themes or principles on your project issue presented in a coherent structure)
Closing part
Link(s) to generative AI text and/or image(s)
References (about 5-10 relevant, primary sources of information)
References must be from articles of the belowJournals

As a guide, you’re expected to reference about 5-10 relevant, primary sources of information including peer reviewed.

References must only be from articles in the 4 journals as per attached.

The topic to be chosen for the presentation must be one of the below-

Managing teams and performance
Project leadership
Stakeholder management
Procurement management
Managing project costs
Project risk and uncertainty
Communication
Project resource management
Quality management
____________________
Managing Project Costs Through Effective Budgeting and Cost Control

Project costs are one of the most important factors that determine the success or failure of any project. Proper management of project costs involves careful planning, monitoring, and control of the allocated budget. This article discusses some of the key principles and best practices for effectively managing costs throughout the different phases of a project.
Planning for Project Costs
The first step in managing project costs is to develop an accurate cost estimate and budget during the project planning phase. This involves identifying all the cost elements that will be incurred, such as labor, materials, equipment, facilities, travel, and overheads (PMI, 2013). Costs should be broken down by work package or activity to get a clear picture of how money will be spent. Contingency amounts should also be included to account for uncertainties.
Once costs are estimated, a detailed project budget can be prepared. The budget acts as a baseline for tracking and controlling actual costs against the plan. It is important to get buy-in and approval of the budget from key stakeholders early on (APM, 2019). Any scope changes later in the project that affect costs should go through a formal change request and approval process.
Controlling Project Costs
During project execution, costs must be actively monitored and controlled. This involves collecting actual cost data, performing earned value analysis, and taking corrective actions as needed. Managers should track costs against the budget at least monthly, if not weekly on large projects (PMI, 2017). Any variances between the budget and actual spending should be identified, analyzed for causes, and addressed promptly.
Techniques like trend analysis can help forecast future performance and catch potential overruns early (Kerzner, 2017). Managers must work closely with team members to ensure tasks are completed efficiently and within estimated budgets. Value engineering reviews of designs or plans that are over budget can help reduce costs without compromising quality (APM, 2019). Re-baselining the budget may become necessary if significant scope or timeframe changes occur.
Change Management and Cost Control
Change requests are common on projects and need to be managed carefully to avoid cost overruns (PMI, 2013). A formal change control process involving impact assessments on time, costs, quality, and risks helps evaluate changes objectively. Only changes approved by stakeholders should be implemented to maintain budgetary discipline. Retaining a small contingency fund can help accommodate minor approved changes internally.
Other Techniques for Cost Control
Additional techniques that project managers can use to control costs include value improvement processes, make-or-buy analyses, alternative solution evaluation, and should-cost modeling (Kerzner, 2017). Leveraging technology like ERP systems and project management software can also help automate processes, standardize practices, and improve cost visibility. Outsourcing non-critical tasks to consultants when it provides better value can control internal project costs as well.
Conclusion
Proper planning, monitoring, and control are essential for managing project costs effectively. Adopting a disciplined approach involving stakeholder buy-in, change management processes, and cost control techniques can help deliver projects on or under budget. This improves customer satisfaction and ensures the viability and profitability of projects in the long run.
References
APM. (2019). APM body of knowledge (7th ed.). Princes Risborough: APM.
Kerzner, H. (2017). Project management: A systems approach to planning, scheduling, and controlling (11th ed.). Hoboken, NJ: John Wiley & Sons.
PMI. (2013). A guide to the project management body of knowledge (PMBOK guide) (5th ed.). Newtown Square, PA: Project Management Institute.
PMI. (2017). The standard for portfolio management (4th ed.). Newtown Square, PA: Project Management Institute.