{"id":18963,"date":"2021-05-24T00:00:00","date_gmt":"2021-05-24T05:00:00","guid":{"rendered":"https:\/\/blog.planview.com\/manage-cost-project-management\/"},"modified":"2021-05-24T00:00:00","modified_gmt":"2021-05-24T05:00:00","slug":"manage-cost-project-management","status":"publish","type":"post","link":"https:\/\/blog.planview.com\/manage-cost-project-management\/","title":{"rendered":"How to Manage Cost in Project Management"},"content":{"rendered":"<p> <!-- .post-meta --><\/p>\n<p>In a perfect world, project managers could execute their wildest, most ambitious project dreams without ever having to worry about the bottom line. In reality, though, PMs are beholden to budgets &#x2013; and that means they have to know how to manage costs. Ineffective cost management is often the very reason that projects fail.<\/p>\n<p><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2017\/11\/manage-cost.jpg\" alt height=\"400\"><\/p>\n<p>Read on to learn what cost management is in project management, plus how to do it well.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/blog.planview.com\/manage-cost-project-management\/#What_is_cost_management_in_project_management\" >What is cost management in project management?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/blog.planview.com\/manage-cost-project-management\/#How_To_Manage_Project_Cost_Management\" >How To Manage Project Cost Management?<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_is_cost_management_in_project_management\"><\/span><b>What is cost management in project management?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Cost management in project management is the system of determining, distributing and controlling costs for a particular project, usually guided closely by the project&#x2019;s budget. Along with <a href=\"\/what-is-project-scope-management\">scope management<\/a> and <a href=\"\/best-time-management-strategies-project-managers\">time management<\/a>, cost management is one of the pillars of good project management.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_To_Manage_Project_Cost_Management\"><\/span><b>How To Manage Project Cost Management?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Knowing <a href=\"https:\/\/www.clarizen.com\/work\/importance-of-cost-management-in-project-management\/\">how to manage cost in project management<\/a> is often about taking a calibrated approach to your portfolio and understanding the various facets of costs that can arise during a project.<\/p>\n<p>The following are a few tips and pieces of advice for managing project cost:<\/p>\n<h3><b>Estimate and budget<\/b><\/h3>\n<p>Planning is the first step to ensuring a project manager is aligned with<a href=\"https:\/\/www.clarizen.com\/work\/manage-project-costs\/\"> the project management budget<\/a>. During the <a href=\"\/what-are-the-basic-project-planning-steps\">project planning phase<\/a>, meet with your team and compile a realistic estimate of costs. Consider all the project phases, tasks and activities the project will likely entail, and make sure the budget contains sufficient contingency. All people, material, hardware and software should be accounted for and the estimate should be used to achieve a baseline budget.<\/p>\n<p>Once the estimate has been approved and the funds have been released, the project manager will have a baseline budget to work with and use against other project management costs. The monthly budget can now be worked out by dividing the estimated project length with your baseline budget. This will give you an idea of exactly what you can spend per month to stay on track.<\/p>\n<h3><b>Establish cost controls<\/b><\/h3>\n<p>Clear cost controls should be established (including sign-off responsibilities) for every expenditure. Part of maintaining a smart project management budget is planning who oversees what monies early on. Who will be approving and signing off on timesheets? Invoices? Knowing all of this is crucial to controlling the costs of a project.<\/p>\n<h3><b>Record costs and calculate metrics<\/b><\/h3>\n<p><a href=\"\/top-surprises-thatll-blow-your-budget\">To ensure you are staying within budget<\/a>, you should be making cost comparisons between your estimated baseline and the actual amount of money being spent.Calculate metrics at the end of each reporting period, then compare the total amount spent with what you were expecting to spend. If the numbers are far apart, it means you&#x2019;ll likely need to take some action to get back on track and stay under budget.<\/p>\n<h3><b>Update forecasts<\/b><\/h3>\n<p>If any numbers are off, you need to update your forecasts to have a better understanding of how you will be using future funds more efficiently. You never want to let it get to the point where you are surprised about budget losses and need to ask stakeholders for more. Revisiting these numbers on a monthly basis will allow you to initiate any changes that need to take place and adjust the budget accordingly.<\/p>\n<p>Knowing how to manage costs in project management is all about careful planning and continuous updates. Understanding who is responsible for what costs is also helpful for a project manager to stay under budget. Creating a monthly expected budget and frequently matching your forecasts to these numbers will ensure you are aligning tasks as closely to the budget as possible. And when the budget is on point, then the project is generally successful.<\/p>\n<p>One thing that can make cost management in project management easier? Enterprise-level project management software. To learn how Planview AdaptiveWork can help you keep your projects on time, on scope, and on budget, <a href=\"https:\/\/www.clarizen.com\/live-demos\/\">set up a live demo today<\/a>.<\/p>\n<p>&#xA0;<\/p>\n<div id=\"content-g2\">\n<p>&#xA0;<\/p>\n<div class=\"first-width\">\n<div id=\"content-g2-text\">Planview AdaptiveWork has been named a Leader in G2&#x2019;s Grid Report of Project &amp; Portfolio Management Software. We have won the award for numerous consecutive seasons.<\/div>\n<\/div>\n<div class=\"second-width\">\n<div id=\"content-g2-award\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2021\/02\/g2-leader-rating.png\" height=\"150px\"><\/div>\n<\/div>\n<div class=\"third-width\">\n<div id=\"content-g2-rating\">\n<div class=\"elfsight-app-4dddabda-f792-4293-a033-11066bf074b3\" style=\"height: 130px;width: 250px;overflow: hidden\"><\/div>\n<p><a title=\"Read reviews of Planview AdaptiveWork One on G2\" href=\"https:\/\/www.g2.com\/products\/clarizen-one\/reviews?utm_source=review-widget\" target=\"_blank\" rel=\"noopener\"><img class=\"lazyload\" data-src=\"https:\/\/www.g2.com\/products\/clarizen-one\/widgets\/stars?color=blue&amp;type=read\" alt=\"Read Planview AdaptiveWork One reviews on G2\"><\/a><\/p>\n<\/div>\n<\/div>\n<p>&#xA0;<\/p>\n<\/div>\n<p>&#xA0;<\/p>\n<p><\/p>\n<div class=\"client-logo\"> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"Siemens Energy\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2020\/08\/siemens_energy-200x100.png\" alt=\"Siemens Energy\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"IIROC Success\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2020\/07\/IIROC_logo-200x100.gif\" alt=\"IIROC Success\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"Financial Services Institution\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2020\/04\/FINANCIAL-SERVICES-IMG-200x100.jpg\" alt=\"Financial Services Institution\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"M Squared\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2020\/03\/m-squared-logo-200x100.jpg\" alt=\"M Squared\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"Aliancys Success\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2019\/12\/aoc_aliancys-logo-800x400-200x100.jpg\" alt=\"Aliancys Success\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"Bonfiglioli Success\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2019\/11\/bonfiglioli_logo-800x400-200x100.jpg\" alt=\"Bonfiglioli Success\"><\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In a perfect world, project managers could execute their wildest, most ambitious project dreams without ever having to worry about the bottom line. In reality, though, PMs are beholden to budgets &#x2013; and that means they have to know how to manage costs. Ineffective cost management is often the very reason that projects fail. Read&#8230;<\/p>\n","protected":false},"author":205,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","footnotes":""},"categories":[35],"tags":[],"class_list":["post-18963","post","type-post","status-publish","format-standard","hentry","category-pmo-project-management-organizations"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.8 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>How to Manage Cost in Project Management<\/title>\n<meta name=\"description\" content=\"Managing cost throughout the life of a project is vital. In this blog, we\u2019ll discuss ways of keeping your costs in check as a project manager.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blog.planview.com\/manage-cost-project-management\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Manage Cost in Project Management\" \/>\n<meta property=\"og:description\" content=\"Managing cost throughout the life of a project is vital. 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