How can project cost control help project success?

In order to achieve any goal, a specific plan needs to be executed to accomplish it.In a project, as part of the plan, cost control is one of the key performance indicators on the road to success.

Factors that help control costs include the process of planning, estimating, budgeting, financing, funding, and cost management to complete a project within a defined time frame and within an approved budget.Today, the use of project cost control solutions is becoming more common among construction companies carrying out capital construction projects.

How Project Cost Controlling Works

Project Cost Controlling is the process of checking, validating, monitoring, tracking, and controlling the actual cost of a project.Mainly involved in the following areas:
● Monitoring cost performance
● Ensuring that all changes to the original plan are properly submitted, documented and implemented
● Notifying stakeholders of any and all changes and impact on costs
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The process of managing project cost control can be divided into three steps.
1. Estimate and plan costs.
2. Develop project budget.
3. Use modern project management tools like 8Manage PM to control expenditures and track costs in real time to ensure there are no unexpected cost changes.

Cost Reporting in Project Management

An important tool for communication between the project manager and the company responsible for the project is the cost report.Cost reporting is the process used to inform clients, stakeholders or other responsible parties of the status of the project and the magnitude of the expected and actual costs of the construction project.This can be expressed as an absolute value or as a variance compared to the project budget.

Here are some of the metrics included in the cost report:

● Actual Cost - This is the actual cost of the project from inception to the present.
● Cost Variance - This is the difference between the actual cost of the project and the baseline budget that has been set.
● Planned Value - Planned value is the budgeted cost of the work planned to date; basically, this is the cost of the activities planned for the project so far.
● Earned Value - This is the cost of the actual work performed on the project from inception to the present, as a percentage of the total budget; earned value is also known as the budgeted cost of work performed, or BCWP.
● Return on Investment (ROI) - This is the ultimate profitability of the project after all costs are taken into account.It can be positive or negative, depending on whether the benefits of the project outweigh the costs.

Benefits of Project Cost Control for a Project

Effective cost control ensures that the project is on budget, the project is on schedule and completed within the planned scope.If there is no cost control, when undertaking large-scale projects, enterprises can easily lose money because the uncontrolled cost exceeds the profit of the project.

By using cost reporting, businesses will have an actual indication of the status of a project, whether there are currently cost savings or budget overruns.

This is especially useful when the client receives early indications that the project is over budget.Clients and teams can then take all necessary steps to reduce budget overruns.Early signs can take you from budget overruns to breakeven or cost savings.

Implementing Small Business Project Cost Control

Often, large or established companies already have extensive project cost control processes in place.However, many SMEs still miss out on this beneficial process.

Here are some common reasons SMBs may not have a project cost control process:

● SMBs are often focused on growing by acquiring more projects, but are unaware of the scaleControlling practices, such as project cost control, need to be implemented when scaling up.
● Small business management may feel that implementing a cost control process will take their time and effort; they may be hesitant to make changes to current processes they are already familiar with.
● Enterprise management may also hesitate due to the cost implications of these processes.Often the management of a business is so concerned with the initial cost impact that they don't realize that having such a process is actually an investment that will give them a good return and allow them to take on a wider and more complex project.

Project management and project cost control can help businesses of any size.It is as suitable for small and medium businesses as it is for large and complex projects.It is recommended that project cost containment be implemented as a regular process early (even on a small scale), and as you grow later, you will have the ability to meet challenges and handle the project with confidence.

Effective tool for project cost control

8Manage PM project management system provides accurate cost estimation and reporting methods to manage construction expenditures, bringing added value to construction companies.As a project cost tracking tool, 8Manage combines the functions of project planning, time tracking, file sharing and more importantly cost management.

- Set project budgets and compare actual costs to estimated costs;
- Track mileage and automatically calculate reimbursements for tracked trips;
- Based on employee hourly rates and information in time logsMonitor labor costs;
-Analyze project cost data by different periods, user groups and expense categories;
-Real-time reporting to visualize project planning and resource planning.

In addition to this, 8Manage PM can also integrate with third-party financial applications to further simplify expense reporting and increase efficiency.