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I know that project cost is an issue for most businesses. Here are some ways that you might be unwittingly making your project cost more than necessary.
1. Excess Inventory
Inventory is the equipment or stock that you use on your project. If you are building a hotel, your inventory will include bathroom tiles, carpets, bricks, pipes and so on. Having too much capital tied up in stock is a problem for any business, and can give you a problem on your project with cash flow.
Equally, you have to have somewhere to put it all, and you don’t want to be paying for warehouse space unless you really need it.
Here’s a bonus tip on this point: Holding too little stock is also a problem because you’ll have to buy at short notice if ever you need some extra. Buying at short notice is generally more expensive, because you’ll have to add priority shipping or expedited processing. It’s better to give yourself some time to plan your purchases so that you can avoid those costs.
2. Wasting Resources
This is similar, but wasting resources is more about using equipment that isn’t the right size for your business. Think: buying a server that’s too big for your business needs, or scaling up to the super-advanced mobile phone options for all staff when really the basic model would do.
All that does is add extra cost and you won’t get the benefit. It’s different if you think you will use all that extra capacity or those extra features in the next few months, but make sure you are confident in your timings or you’ve built something that you won’t be benefiting from.
3. Excess Process
Too much admin! This costs money in terms of time, and human resource effort to process it (that you pay for in salaries for your project team). Plus there’s the cost of maintaining admin processes, printing pages for sign off or whatever your process is (you don’t still print paper copies for sign off, do you?).
You might not have any specific project-related processes that you can trim, but you can certainly talk to your Project Management Office team and make sure that they are aware of your frustrations with any processes that are a little bit too unwieldly for their own good.
4. Cost of Waiting
I hate waiting.
If you schedule a task to finish and then the deliverable isn’t ready, the person next in the queue to do their work has nothing to work on.
OK, in reality they aren’t going to be sitting around and doing nothing, but they won’t be working on your tasks as scheduled because your project isn’t ready.
So you’ve wasted a resource day – maybe even one that you had to pay for in advance if they are a contractor or other third party.
Try to plan handoffs carefully so you don’t end up with problems like this.
5. Staff Turnover
Onboarding staff is something I have talked about before on this blog. It costs money to bring people on tot the project – hiring costs, admin costs, upskilling and then the cost in lack of productivity as they work out how to get on in the team and find their feet with their new role.
You might not be able to do much to influence the choice of someone who has been headhunted to a much more lucrative job elsewhere, but you can do your best to lead authentically and make the workplace as fun as it can be so that you don’t encourage your project team to go looking for other work.
Do you routinely look for these 5 ways that you might be adding cost to your project? I don’t think most people do, and it might be outside your responsibility to truly control these costs, but being aware of them is the first step to thinking like a business owner and showing your management team that you understand the business context enough to be asking the right questions.
If you prefer videos to reading lists like this, pop over to here to watch a video about this topic. https://www.projectmanagement.com/blog-post/24616/5-Costs-That-Could-Cost-Your-Project--Video-
Posted on: February 02, 2017 11:21 AM |
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