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Cost Control/Management
I am interested in the community's insight and opinions on their level of involvement in project cost control/management and what current processes/procedures/tools they have found useful. Also would like feedback on the direction a PM - who's been out of the cost control game for awhile and level of involvement is currently minimal but might be increasing soon - should go in to gain knowledge? What resources are available? I know this is a broad and sweeping question, but any thoughts would be helpful. Thanks.
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In my case, while it depends on each organization process, along the years, PM is accountable for cost control not budged control. I meant, is not about to control the whole project finance. Just the cost component. Things like EVM are focused on cost. I have experienced different ways to control cost as project manager from access directly to finance control systems to take the cost to work with a person assigned from finance buisiness unit we called "budgeteer" that help me sendng the cost assigned to the project each month in a defined date. No matter the way there are interesting things to take under consideration (for example the limit date to receive invoices from multiple sources assigned to the project to be considered in the project costs). While I can give you multiple topics to take into consideration perhaps something that is critical to me: try to get a "budgeteer" that help you with costs. If not, try to push your providers to send the invoices to you in a defined date and with a clear reference of costs associated to each project, for example by using a project ID or something like that.
Kurt,
I completely agree with Sergio. From my own personal opinion, the larger the project, the less the PM is directly responsible for the overall project cost, and our role tends to be limited to the labor cost (time * wage).

In very large organizations, contracts can span multiple projects so the PM often doesn't have visibility or control of many costs. The data is often very limited for numerous reasons, such as we don't want it to become public knowledge what our costs are or others will want to renegotiate their own contracts. In that situation, the PM largely manages the number of people working and the duration of their involvement. The total cost may be better known at the director level.

In smaller projects, there are less moving parts, less risk to data exposure, and the PM may have a lot bigger role in managing the total project costs. In other cases, I've worked PD projects where we only have a market if the total costs fall below $X so the whole development effort involves managing a project that meets the performance requirements without exceeding the target cost.

If you need more knowledge on cost management, the question in my mind becomes whether you need more knowledge in cost modeling, or whether you need more knowledge in the many contributing cost sources in whatever domain you're working.
Dear Kurt
Interesting your question
Thanks for sharing

Basically I agree with Sergio and some suggestions from Keith

The Project Manager manages the costs and they have to be budgeted.

Some steps you can take:

1. Total cost control from the moment you take on the project (work with a person assigned from finance buisiness unit)

2. Revisit the schedule, the work actually done, the cost spent and the budget

3. Use EVM as a tool to take state of play and estimate future costs and simulate scenarios

4. Think of a set of measures that can be implemented

5. Meet with the project sponsor and key stakeholders to review the project situation and propose that these corrective measures be approved for implementation.
Sorry its taken me so long to reply. I have read your responses and I appreciate your feedback - particularly the advice on working closely with the finance department. To hone in a little further: I am wondering if anyone has experience in contributing to the preparation of an annual budget and developing forecasting requirements in order to meet financial objectives.
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1 reply by Sergio Luis Conte
Nov 17, 2019 4:27 AM
Sergio Luis Conte
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I do that each year. Just to comment is not to meet financial objectives. It is to meet organizational objectives. Projects/Programs are the mean to put strategy into action. So, everything start with creating a pipeline from lot of ideas and aligned it organizational objectives. As you imaging we need to integrate the layers inside the enterprise architecture that will participate into each initiative no matter it is driven by business (application, technology, informaiton, security).
Nov 17, 2019 2:10 AM
Replying to Kurt Koch
...
Sorry its taken me so long to reply. I have read your responses and I appreciate your feedback - particularly the advice on working closely with the finance department. To hone in a little further: I am wondering if anyone has experience in contributing to the preparation of an annual budget and developing forecasting requirements in order to meet financial objectives.
I do that each year. Just to comment is not to meet financial objectives. It is to meet organizational objectives. Projects/Programs are the mean to put strategy into action. So, everything start with creating a pipeline from lot of ideas and aligned it organizational objectives. As you imaging we need to integrate the layers inside the enterprise architecture that will participate into each initiative no matter it is driven by business (application, technology, informaiton, security).
So, Sergio: in your case - a budget is established each year and you participate in decision-making around what projects are feasible from both a strategic and financial standpoint? Lets say that Leadership and you determine that you want to move forward with Project A and B for 2020. So, if Project A is allotted, hypothetically, 100k of the annual budget, and project B gets 70k, its your responsibility to determine the costs, labor and materials, etc and then monitor throughout the life of the project? Do you use historical perspective to estimate the costs? i.e. Project A is similar to the type of IT project we performed last year, and we know time and material cost us xx dollars? What techniques do you use to accomplish tracking the costs - simple excel spreadsheet, or a commercial PM tool? These are sort of the processes and procedures I've followed several years ago when I was responsible for cost control; just want to make sure I am on the right track. Sorry for so many questions!
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1 reply by Sergio Luis Conte
Nov 17, 2019 8:37 AM
Sergio Luis Conte
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No problem. Your questions give me the opportunity to share my knowledge and learn from your and other comments. First of all let me say that while budged is important is not the main reason to decide. For example, is an initiative is considered strategic. Other thing is taking into account that initiatives are cross-functional. It is hard for me to remember an initiative where application, technology, security, information layers that belongs to the enterprise architecture are not involved (obviously the business layer is the driver). So, the first complexity arrives becasue each one have its own initiatives and its own amount of money to spend. In the model I worked from years all are clients of somebody and all are selling services then all pay to others for those services (form example, if a PM is assigned to a technology project the technology areas pay for the PM to the PMO). With all that said the process, as simple as I can resume here, is: 1-during a period ideas are collected from all the company and from all people that wants to participate. 2-ideas are evaluated and understanding then are clasify basic as something we must do (to fill goverment laws for example), something should do (to keep operational stability for example), somthing could and would do. 3-after that we need to take some estimation about all resources needed. Who is the role that will help on that?: Project/program manager no matter those will not be assigned to some of the initiative when they becomes programs/projects. PM works together with BRM/Buisness Analyst to clarify all needed and estimate all type of resources. It will not take too much time. 4-with those initiatives that "survive" then program/projects are created. Regarding tools today we use Clarity for all the process including it all related to project monitoring and control.
Nov 17, 2019 8:18 AM
Replying to Kurt Koch
...
So, Sergio: in your case - a budget is established each year and you participate in decision-making around what projects are feasible from both a strategic and financial standpoint? Lets say that Leadership and you determine that you want to move forward with Project A and B for 2020. So, if Project A is allotted, hypothetically, 100k of the annual budget, and project B gets 70k, its your responsibility to determine the costs, labor and materials, etc and then monitor throughout the life of the project? Do you use historical perspective to estimate the costs? i.e. Project A is similar to the type of IT project we performed last year, and we know time and material cost us xx dollars? What techniques do you use to accomplish tracking the costs - simple excel spreadsheet, or a commercial PM tool? These are sort of the processes and procedures I've followed several years ago when I was responsible for cost control; just want to make sure I am on the right track. Sorry for so many questions!
No problem. Your questions give me the opportunity to share my knowledge and learn from your and other comments. First of all let me say that while budged is important is not the main reason to decide. For example, is an initiative is considered strategic. Other thing is taking into account that initiatives are cross-functional. It is hard for me to remember an initiative where application, technology, security, information layers that belongs to the enterprise architecture are not involved (obviously the business layer is the driver). So, the first complexity arrives becasue each one have its own initiatives and its own amount of money to spend. In the model I worked from years all are clients of somebody and all are selling services then all pay to others for those services (form example, if a PM is assigned to a technology project the technology areas pay for the PM to the PMO). With all that said the process, as simple as I can resume here, is: 1-during a period ideas are collected from all the company and from all people that wants to participate. 2-ideas are evaluated and understanding then are clasify basic as something we must do (to fill goverment laws for example), something should do (to keep operational stability for example), somthing could and would do. 3-after that we need to take some estimation about all resources needed. Who is the role that will help on that?: Project/program manager no matter those will not be assigned to some of the initiative when they becomes programs/projects. PM works together with BRM/Buisness Analyst to clarify all needed and estimate all type of resources. It will not take too much time. 4-with those initiatives that "survive" then program/projects are created. Regarding tools today we use Clarity for all the process including it all related to project monitoring and control.

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