Manage Project Cost

Surprisingly the process of managing project costs, as many other areas of project management, requires a set process to be followed. By breaking down the activities involved and following a step-by-step approach, the project team will be in position to address cost estimation, determine the budget and control the project cost.

As mentioned, the size of a project (based on scope) adds or reduces complexity. That means that certain tasks and activities in small size or scope projects will be integrated, which leads to the misinterpretation that these tasks have not been taken into account. That is not the case. Each of those steps is to be taken separately and when appropriate to be integrated. When a project manager or a project team decides to integrate tasks for various reasons, they are effectively affecting the projects lifecycle.

Cost estimation and budgeting is a common area that task integration occurs in small scope projects. Reasons such as prior experience and knowledge, pre-set costs, or fixed budgets can reduce time and complexity. 

A simplistic approach on cost estimation and budgeting can be initiated in parallel with the development of WBS. By allocating cost estimates in each activity and task, effectively a project budget can be produced. Once again, the level of complexity and detail is to follow scope specification and sponsor/stakeholder approval. On a similar note, the process of cost estimation and budgeting can be implemented in parallel with PERT development.

A number of project teams follow the paradigm of “resources pool”; a concept that there is a budgetary allocation for the project and the team is allocating monetary resources in combination with other human and non-human resources. In cases as such, flexibility is exercised and creativity is required.

Links between project cost, project time, and project quality are to be reviewed regularly and reported accordingly. Cost is a finite resource and does affect a number of project parameters. 

BL

Managing Project Time and project scheduling.

Managing project time and developing the project schedule are interrelated activities within project management that address the time parameter.

Time, alongside with cost and quality are the fundamental parameters of project management that act as the pillars for the remaining activities to progress. Project managers shift their attention to project scheduling as soon as the project scope is defined and agreed by all stakeholders.

The time frame of a project can, and it suggested, to be broken down into tasks and activities. It is this process that alerts the project team to realistic timeframes and resource allocation. Frequently, project tasks and activities are underestimated during the scoping process and a wide range of internal and external factors are not taken into account and consideration.

A number of authors on project management perceive time as the least flexible resource that influence’s project scope. It is common that projects that are described as “high-risk” exceed the original timeframe by 100% surprisingly.

Throughout this blog, we frequently highlight the relevance of project size, project life-cycle, project manager skill, knowledge and experience, as well as resource availability. Managing time is definitely regarded as a managerial task of high importance.

Scoping a project

Scoping a project is a dynamic process that presents project managers with a range of challenges. It appears that inexperienced project managers struggle with the concept, while the ones with relative experience make a number of assumptions and estimations. 

Scope definition requires input from stakeholders in developing project objectives that will be reflected in the project charter. Clarity between expectation and the project’s final output/s is of importance during the scoping process.

Addressing the fundamental aspects of time, cost and quality as part of a project’s life-cycle becomes a critical role of the scoping stage. Project managers are expected to investigate, assess, correctly justify, and seek approval for any project parameter at this early stage, in order to avoid scope creep in the future. The scoping process will be formalised with the sign-off from the project sponsor.

BL

Project Scope

Project Scope is considered as a process that identifies and documents project parameters. Scoping a project serves a number of interests.

For the Project Manager (PM), scoping a project assists with establishing project parameters based on “what needs to be done”. These parameters, fundamentally, are based on quality, time, and cost of resources required by the project. By scoping a project, the PM can move onto developing a Work Based Structure (WBS). 

The WBS is a critical component of scoping and initiating a project. The WBS is a deliverable oriented; task related and sequenced graphical representation of the project. The WBS forms the basis for the development of the project schedule.

The Project Team (PT) can be involved in the process of scoping and developing the WBS for the project.

The Project Sponsor (PS) and project stakeholders receive key information about the project. Receiving information related to project stages, resources required sequence of tasks and relationships between resources and tasks, allows project stakeholders to develop an understanding of the methodology of the project. 

BL