Topic Teasers Vol. 185: What Should I Do About Fluctuating Costs?

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  Cost Management   Estimating  

I know I’m expected to create and present a realistic cost estimate for my projects, since my company may be signing a contract with an outside client to whom the end result must be delivered at a pre-set price. But with today’s ever-shifting prices, how can a PM know what the prices will be when the supplies to create the end product are actually purchased? Do we just add a percentage of the cost of the project as a safety net.

A. There has been a specific way that teams are organized and run by a project manager that dates back to the 1960s, when PMI was created. If you are a trained PM, particularly one who holds a PMP certification, you should not move away from the mindset and practices that you learned in order to obtain your certification. This means plan your project and estimate costs at the outstart and stick to it.

B. Since making an accurate bid in a fluctuating economy is probably not possible, as a project manager you should estimate time but help the customer understand that you will not be able to give them the final cost of the project until it is completed. Otherwise, you are bound to lose money for your employer, which does not bode well for your long-term employment with the company.

C. With the …

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