Some issues arise out of the cost estimating function. Recall that the cost estimates you derive act as inputs to the project's budget, which, in turn, might act as an input to budgets throughout your company. For example, if you're utilizing human resources from various areas in the company, various timekeeping and budgeting entities will have to be apprised of the usage of that resource so they can track their time accordingly. Lots of companies use the budgeting concept of cost centers, uniquely enumerated categories of a company's complete cost of operation. If you're using a resource from marketing, the marketing budget will have to reflect this usage in a specific cost center they have assigned for such an occasion. Also, this person's time will have to be tracked by marketing so that they know how many hours were worked on each assignment.
In larger corporations where major projects are, at the very least, overseen through a PMO (if not completely run through the office), your budget won't be overseen by you. In fact, in all but the smallest of companies, you will rarely handle your budget. As a result, there must be a constant tracking of actual costs to budget expenditures, initiated by you and maintained by the person responsible for your budget. We're talking routine meetings that keep your budget folks up to date. Also, you manage cost overruns— immediately communicate them first through the budgetary office, then through the project sponsor.
Vendors will supply specific detailed bids and contracts from which you'll develop some of your estimates. Budgetary folks need to retain a copy of these documents. There are tremendous legal implications involved in any agreement you have with contractors, and people have to be aware of the SOWs, bids, and contracts associated with the vendors for your project. If there's any doubt, run the contracts by your legal department to make sure everything's on the up-and-up.
Additionally, you have to detail when you're going to spend the dough. Prepare a plan that specifically details your spending intentions, when you're going to spend the money, how much you'll spend on a given occasion, how you'll spend it, and who you'll be purchasing from. Keep a spreadsheet as a handy way of monitoring your spending.
Was this article helpful?