Managing project costs sustainably is a key skill for project coordinators. It means delivering the project within the budget and scope, while minimizing the environmental and social impacts. In this article, you will learn some practical tips and tools to help you plan, monitor, and control your project costs effectively and responsibly.
The first step to manage project costs sustainably is to define the project scope clearly and realistically. The scope is the sum of all the deliverables, activities, and resources that are required to complete the project. It sets the boundaries and expectations for the project and helps you estimate the costs and benefits. To define the scope, you need to consult with the stakeholders, review the project charter, and use tools such as work breakdown structure (WBS) and scope statement.
To clearly understanding the scope of work and proper accurate estimation of scope are the most imporatant pillar of to manage project costs sustainably
Defining the correct scope is one of the most crucial tips for achieving your goals. This action not only establishes the baseline but also manages stakeholders' expectations and provides a clear map for your team.
In my experience, when you are defining the project scope, the project is actually well advanced, with probably months of work undertaken already, along the with a client/product owner having established fixed ideas and expectations on what is to be achieved and for how much. The most sustainable projects, from a cost perspective, begin by closely managing expectation at the outset and garnering a deep understanding of what is in the mind of the client/product owner - what do we need to achieve, what are the outputs, what will it look like, feel like, how we will we interact with it. Aligning vision, expectation and reality at this point is where success happens. Don’t build the wrong thing righter.
The reference point for effective and sustainable cost management is the Cost Management Plan. Cost is best managed by managing schedule and scope. This is because cost overruns, most of the time, is as a result of scope creep and schedule delays. It is therefore important for the project team to clearly know the scope and to also know the budget limits for tasks and activities assigned to them. This ensures that all team members work towards delivering the project within budget.
Reduce operational cost , keeping them at the certain level . Also keeping the costs at the certain ratio with the revenue . Bring technology since it will reduce the costs eventually.
The next step is to estimate the project costs based on the scope and the available resources. Project costs include direct costs, such as labor, materials, and equipment, and indirect costs, such as overheads, taxes, and contingencies. To estimate the costs, you need to use methods such as analogous, parametric, or bottom-up estimation, and tools such as cost breakdown structure (CBS) and cost management plan. You also need to consider the risks, uncertainties, and assumptions that may affect the costs.
Cost planning and estimating in civil engineering and infrastructure projects are crucial for informed decisions. By incorporating sustainable practices, construction projects can minimise environmental impact, reduce operational costs, and enhance value for future generations. Carbon estimation is essential for accurately assessing environmental footprints and prioritising sustainability. Transparent communication of environmental implications empowers clients to make decisions aligned with their sustainability goals.
This is the the stage where the cost estimates from the requirements which were high level will be refined in detail. Due to the fact that multiple teams are involved in the cost estimate, each team will need provide assumptions and risks.
I thik power BI can give hand in this task by data visualization for every step of the construction process,I thik power BI can give hand in this task by data visualization for every step of the construction process
The third step is to establish the project budget based on the estimated costs and the funding sources. The budget is the approved baseline for measuring and controlling the project costs. It allocates the costs to different categories, phases, and tasks, and shows the planned cash flow and expenditure. To establish the budget, you need to use tools such as budget spreadsheet, cost baseline, and funding limit reconciliation.
The fourth step is to monitor the project costs regularly and compare them with the budget. Monitoring the costs helps you track the actual spending and identify any variances or deviations from the plan. It also helps you evaluate the performance and progress of the project and report the status to the stakeholders. To monitor the costs, you need to use tools such as cost variance analysis, earned value analysis, and cost performance index.
Tracking the project costs on a monthly, quarterly and annual basis will help closely monitor the costs. The variance analysis will provide a good idea on the direction the cost is going so, the sooner we know it can be controlled the better.
The fifth step is to control the project costs and take corrective actions if needed. Controlling the costs helps you prevent or minimize cost overruns and ensure that the project delivers the expected value and benefits. It also helps you manage the changes and risks that may affect the costs and the scope. To control the costs, you need to use tools such as change management plan, risk management plan, and cost control techniques.
The sixth and final step is to apply sustainability principles throughout the project cost management process. Sustainability means meeting the current needs without compromising the future needs. It involves balancing the economic, environmental, and social aspects of the project and minimizing the negative impacts. To apply sustainability principles, you need to use tools such as life cycle costing, green procurement, and stakeholder engagement.
If at all it comes to a point that the cost is not under control due to whatever the reason, the quality and timelines should not be compromised. At this juncture in the project, a decision will have to be made as to what will need to be given away in order to complete the project or will the plug be pulled on the entire project. Will it be cost, requirements or timelines that will be compromised will always be a tough one.
Agreed, better to be up front and transparent on the reality of the current challenges. The truth will come to the light at some point and it’s best to remain with integrity and approach it as an advisor not as an adversary.
Risk Management: Develop a robust risk management plan to identify and mitigate potential risks and uncertainties that may impact project costs. By proactively addressing risks, you can minimize cost overruns and unexpected expenses.