Project managers are tasked with keeping a project on budget and must implement effective project cost management strategies to ensure that changing requirements do not drive up costs. While the project manager may be asked to do some research during the conceptual stages of the project to determine cost feasibility, the allocation of resources is generally decided at a higher level. However, like all of the initial requirements that underpin a project, cost requirements can change as the project proceeds – which is why it’s important for project managers to be proficient in a variety of cost management strategies.
To address costs that that threaten to rise beyond the initial projections, the project manager should consider how available resources can be reallocated. This can be a very useful cost management strategy that keeps the project on budget while addressing potential shortcomings. For example, a team member may be spending 10 hours a week on a manual process that could be done in an hour with the right software. If the cost of the software was equal to the first nine man-hours that it saved, it would pay for itself after the first week and deliver additional savings over the duration of the project. That team member may then be able to dedicate those “saved” hours to an area that would have otherwise required contract help that had not been budgeted for, or overtime pay that exceeded the initial cost estimates.
The above is just a simple hypothetical example of a cost management strategy that a project manager could employ to keep the project within budget. However, the core principles at the foundation of effective cost management are awareness and creativity. The project manager must keep a close eye on project costs and continually evaluate possible adjustments that can keep the project on budget – or even potentially increase its return on investment. Key stakeholders should be encouraged to do the same. Many projects are long-term, and a lot can change along the way. New materials, tools or applications may become available, or a given commodity may rise or fall sharply in price. Projects are dynamic, not static, and the individual overseeing them must employ project cost management strategies with the flexibility to adapt to changing circumstances.
Project management typically involves ongoing research and a keen awareness of changes in the business landscape that can impact a project and its budget. Professionals with a knack for problem-solving are often drawn to project management for these reasons. The ability to engage in creative, multi-layered thinking is a key asset for the successful project manager, it is essential to effective project cost management strategies.
Project managers can master effective project cost management strategies through training programs offered online. Villanova University offers a 100% online project management certificate program that is delivered via a flexible, video-based e-learning platform. Professionals explore project cost management and other critical topics in Villanova’s Certificate in Applied Project Management program. In addition to gaining the skills required to address budgetary challenges, students enrolled in Villanova’s online project management program also prepare for industry certifications – which can lead to expanded career opportunities and more successful projects.