How do you manage project costs and budgets in your industry?

3 Create project budget and baseline

The third step to managing project costs and budgets is to create the project budget and baseline based on the project costs and resources estimates. The project budget is the approved and allocated amount of money that is available for the project. The project baseline is the original plan that is used to measure the project performance and progress. You should create the project budget and baseline in consultation with the project sponsor, the finance department, and other relevant stakeholders. You should also document the project budget and baseline in a project cost management plan, which outlines how the project costs and budgets will be managed, monitored, and controlled throughout the project life cycle.

4 Monitor project costs and performance

The fourth step to managing project costs and budgets is to monitor the project costs and performance regularly and systematically. This means tracking and measuring the actual costs and expenditures that are incurred during the project execution, and comparing them with the project budget and baseline. You should also monitor the project performance indicators, such as schedule variance, cost variance, schedule performance index, cost performance index, earned value, and estimate at completion. You can use various tools and techniques to monitor project costs and performance, such as cost reports, dashboards, variance analysis, trend analysis, or earned value management.

5 Control project costs and changes

The fifth step to managing project costs and budgets is to control the project costs and changes effectively and efficiently. This means implementing corrective actions and preventive actions to address any deviations or issues that affect the project costs and performance. You should also manage and evaluate any change requests that impact the project scope, quality, or timeline, and determine their implications on the project costs and budgets. You should follow a formal change management process, which involves identifying, analyzing, approving, communicating, and documenting any changes that occur during the project.

6 Communicate project costs and status

The sixth and final step to managing project costs and budgets is to communicate the project costs and status clearly and consistently. This means sharing the project cost information and reports with the project team, the stakeholders, and the management, and providing them with regular updates on the project progress, performance, issues, risks, and changes. You should also solicit feedback and input from the project team and the stakeholders on the project costs and budgets, and address any concerns or questions that they may have. By communicating the project costs and status, you can enhance the transparency, accountability, and collaboration of the project.