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Cost-effective project management

Noting is free in this world, specifically for project manager. He need to watch the project cost carefully to stay within budget.


Few tips for effectively manage the cost in a project:

1) Proper cost measurement:

The project cost is not calculated properly due do underestimated the number of hours a project would take, lower the price and make the sale, client tries to reduce the project cost.

Project manager need to take extra care in estimating project cost.

As a project manager need to manage the triple constraints of the project management.

For a project needs to be successful, these factors needs to be balanced. If you lower the cost you will get low quality deliverable, un-skilled resources and not meeting client expectation.


 2) Choosing right people:

Not everyone is right for every task. 

Even though you try to hire well-rounded team members, there will always be areas where one outperforms the rest. Know your team’s strengths and weaknesses. 

Be familiar with their work habits and attitudes, so that you can accurately predict how long it will take someone to do a particular task.

This doesn’t just apply to saving on project costs, either. 

If you find that you’ve got extra hours, you might be able to assign a task to a newer team member as a learning experience. It’ll take a bit longer, but you’ll have given him valuable on-the-job training.

3) Less important things come second:

When one of your team members gets bogged down in a task, ask yourself this question: “Is it essential to the project as a whole?” 

Many project managers employ the “critical path” method, where there is a “chain” of tasks that are an absolute requirement for the project to be considered complete. 

If the problem is for a secondary (or even tertiary) task, you may be better off shifting to something else and coming back to it later—even if it means setting a whole chain of secondary tasks aside.

4) Cost Control:

Cost Control is concerned with measuring variances from the cost baseline and taking effective corrective action to achieve minimum cost overrun.

Basically, you continuously have to be aware of these elements:

  • Know what has to be done.
  • Know what has been done.
  • Know the actual performance.
  • Know what remains to be done.
  • Identify and implement the corrective action.
  • Check the results of corrective action.

5) Identify risks and uncertainties early in the project:

Not addressing emerging risks at the correct time, may lead to adverse implications at the later stage of the project and eventually affect the overall outcome.

Thus, it is better to weigh risks and uncertainties early enough and save a significant amount of money originating from downtime on the construction sites.

Based on this choose correct contract type (FP or T&M).

Uncertainties pertain to events while risks are fallouts of events from probability and are dictated by statistical probability. Though both are different and have different implications, anticipating them to mitigates risks and keeps projects within budgets.

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