What is cost control?
It is a constant process of measuring the variances in cost from what was initially planned and making appropriate changes to the scope or budget of certain aspects of the project. This process is done throughout the whole lifetime of a project. Remember one of the factors of “Was this project successful?” is whether or not it stayed within budget. One of the larger cost control mistakes made by management is focusing too hard on that very same factor. None of the budgeting means anything if the rest of the project is crumbling.
Think of cost control like how a pottery spinner makes a vase. Molding a vase is a constant process. As the vase spins around the artist uses their eyes to see any deviations in the shape that they desire. If they do catch a deviation, they need to take action to fix it.
What do efficient cost management practices actually look like?
- Set clear expectations with stakeholders
- Control scope creep due to transparencies established with the customer
- Track progress and respond with corrective action at a quick pace
- Maintain expected margin, increase ROI, and avoid losing money on the project
- Generate data to benchmark for future projects and track long-term cost trends
Cost management plans include tangible values for measuring project performance. These values are defined and set before the project begins. If the threshold of these values is breached. Then action is taken to modify the scope and budget of the project. You can use software and equations to determine this. After all, the project manager isn’t an accountant, and I’m sure that I would miss something here or there without software keeping track of it for me.
Advantages of using Cost Management Software
- Efficiency
- You will spend more time managing the costs and less gathering data.
- Ease of Visibility
- I am a visual learner and having all of my information in from of me helps me understand the scope
- Standardization
- You can manage all of the costs across multiple teams of people without any translation errors.
9 Comments
Brandon Kresge · March 22, 2021 at 7:30 pm
Great article! I love the mention of balance between budget and project status. The pottery example was also really good. I agree with your sentiment on the budgeting software. It seems like the most difficult part of a project for me, and I would definitely at least try a software if I had to try and manage the budget myself. The advantages are really helpful, as well. It makes it easy to work with and can just let people get to working on it instead of doing data collection.
Autumn Coulton · March 23, 2021 at 4:50 am
Very detailed! I liked that you mentioned project managers aren’t accountants, making the use of cost management software all the more important. Cost control is measured throughout the lifetime of the project, so the project manager will be able to observe how the project is going and make decisions based on the results. In the end, this is a good concept for the project manager to determine if the project was successful.
Sean Kinneer · March 23, 2021 at 11:34 am
I love your beginning analogy of the pottery spinner making a vase. It first reminds everyone of the movie, Ghost, if they have seen it. R.I.P. Pat. It also shows how a project manager and team need to be paying attention for any potential problems and correct them ASAP. I like how you specified what are good cost management practices. The project values are defined and planned out but still may change, as you said. I also like how you mentioned the human errors in miscalculating numbers and how having cost management software is a good safety net. Good post, Connor.
Trisha Badlu · March 23, 2021 at 1:23 pm
I really like how you used pottery spinning as an example. It makes it a lot clearer to understand how everything connects. Cost control is necessary, but project managers also have to make sure that they’re meeting other success factors otherwise staying within budget becomes meaningless. I also like how you mention that cost management plans include tangible values. This is very important because without those values, you can’t really know if you’re meeting expectations.
Manogna Pillutla · March 23, 2021 at 2:39 pm
Great post Connor! I like the concept of cost control being a continuous process. Makes more sense to me. It helps me understand how it can be in a practical environment. Pottery example was a really good connection. It makes it clear how important it is to take continuous fix actions if things go wrong to get a right final product. Usage of software is something I dint know. Can someone point to a set of software tools for Cost Management? Good points under effective cost management practices.
Vivian Azar · March 23, 2021 at 3:44 pm
Nice section on the advantages of using cost management software. Like Mano, I’m also curious as to what types of tools are widely used for that purpose. I did a quick search and things like Hubstaff and DeskTime came up, but I’d be curious to hear if anyone in here has any experience with one of these tools in general
Brandon Sutton · March 23, 2021 at 3:50 pm
Quite an insightful post, Connor! As many people said, your pottery wheel analogy demonstrated beautifully the constant monitoring required in cost control concerns. I found the list of practices great as well, and it was illuminating to see how many issues can be dodged simply by being open with customers by way of a direct and honest list of expectations. I find visual learning to be my wheelhouse as well, so it was good to see that cost management software is conducive to that.
Griffin Nye · March 23, 2021 at 7:22 pm
This is a very well-thought-out post, Connor. Your metaphor likening pottery to cost control was brilliant! This goes along with what I said on Chris’s post, re-evaluating the costs and schedule is extremely important in cost management, as without it, major discrepancies will arise. I think the included section about software was a nice touch. I am the same way too, being able to visualize all the information in front of me in a graphical or symbolic format makes it much easier for me to comprehend and understand the content. Great work!
Savannah Swartzel · March 30, 2021 at 3:43 pm
Great use of comparing a real-life activity to cost control. It really helps put things into perspective. Most people just start buying things that are needed for a project without thinking about the cost. Cost management software is a really big help to curving that.