By Veronika Tondon
Keeping project costs under control may seem like a daunting task, especially once the project has begun. Enhancing project understanding within the team and detailing out all the costs beforehand and throughout the implementation are key to a cost effective implementation. Here are some useful tips.
Cost Identification
Understand the cost structure of the project to begin with. Listing down all cost factors and then keeping a close watch on all of them while the project is being implemented.
- Direct Costs: All costs related to direct material, hours and employees are direct costs. All of these should be identified for the specific project, in the planning phase. To reduce direct costs, one has to allocate appropriate resources for all tasks.
- Indirect Costs: These are costs that are incurred indirectly such as administrative expenses and indirect expenses. Tracking, approving and controlling these expenses is important.
- Variable Costs: These vary while the project is being implemented. A close watch at these costs is essential.
- Fixed Costs: These are costs of infrastructure and capital that are incurred irrespective of the project implementation.
All the costs should be carefully planned for and included while billing to clients.
Planning
The most important aspect of any project is planning. Ascertaining deadlines, tasks, costs, manpower. The more accurate you are in the planning phase the more chances to controlling the costs in a proper way.
Defining the scope of work is also very important. This helps in aligning the cost structure with the goals to be achieved. The risk factors need to be clearly understood along with the costs associated.
Phases
Divide the project into phases and the forecast the cost of each phase. Every phase must consist of man-hours and goals to be achieved. These should be defined with the help of costing limitations for each phase.
Vendor Negotiation and Management
Cost negotiations should be done with all the vendors before starting the project. This is useful in keeping the external costs under control.
Using contractors and remote workers may reduce costs but one has to carefully analyse the cost of managing the work being outsourced. Using appropriate online tools helps in improving efficiencies.
Task Management
The number of tasks for the project should be clearly defined. The teams must be trained for appropriate accuracy and speed levels. Tracking tasks and efficiency at regular intervals is a must.
Team Motivation
Managing a team is an art that requires you to be extremely skillful. A happy team is always more productive. Tracking hours is critical to team productivity.
You need to assign the right tasks to right individuals. Building an understanding of the project, in the team is the responsibility of the project lead. He has to bring in the motivation as well as necessary inputs for judicious use of resources.
Constant Check
The project lead must keep a constant tab on the project expenses. It is important to hire or outsource manpower depending on the project requirements and costs involved.
Virtual Meetings
Virtual meetings don’t just reduce costs but also save time and effort. Using appropriate online tools to organise briefing and reporting sessions is essential for an efficient project implementation.
How do you keep project costs down?
