Why We Need Cost Management

The project manager is primarily concerned with the direct cost of the project, but the trend in project management is that the role of the project manager in cost control will increase to include more of the nontraditional areas of cost control. In the future it will be expected that more project managers will have a great deal of input into the indirect costs and expenses of the project.

Regardless of what the project manager is or is not responsible for, it is critical that the project be measured against what the project manager is responsible for and nothing else. If the project manager does not have responsibility for the material cost of the project, then it makes no sense for the project manager to be measured against this metric.

Timing of the collection of cost information is also important to the cost measurement system. The project budgets must be synchronized with the collection of the project's actual cost. For example, if a project team is responsible for material cost, should the budget show the expenditure when the commitment by the project team to buy the product is made, when the item is delivered, when it is accepted, or when it is paid for? Timing issues like these can make project cost control a nightmare.

If the project team does not properly control cost, the project will invariably go out of control, and more money will be spent than anticipated. It is the purpose of cost management to prevent this.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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