Project cost management is often met with several challenges. Organizations aim for their projects to be on-time and on budget all while meeting client expectations. Executives and stakeholders demand transparency throughout the project life cycle, from estimating to budgeting, and controlling costs.
Accurate forecasting can be difficult if there are inadequate processes in place resulting in missed budget commitments. Manual processes expose firms to higher risks and costs. Cost overruns ultimately impact margins and the ability to execute future projects. Being able to identify inefficiencies can prevent or decrease cost overruns and can be effective and beneficial to ensuring organizations stay on course. Here are 3 tips that can help you improve project cost performance.
1. Decrease time spent managing project cost data
It is no secret that the construction sector has been slow to adopt digital technologies and processes. Manual cost management processes create inefficiencies due to the inability to properly measure performance & productivity, or scale with the complexity of a project. According to a study, 35% of a construction professional’s time is spent on non-productive activities such as gathering project information and checking for mistakes. While some manual adjustments may be made to reports to accurately reflect the current project status, a high volume of manual adjustments signals a bigger problem in your current processes.
In addition, having pre-configured templates can eliminate the need for starting from scratch every time there is a new project. Pre-configured templates save time and allow the creation of multiple configured projects allowing for better allocation of resources and reductions to project spending.
“We reduced total project spending by at least 2%, due to both savings versus the original forecast and reductions in overspending. With PRISM there’s no more just hoping to hit the budget at year-end.” – Senior Cost Controller
2. Stop housing project data in spreadsheets
Strengthen your project controls by having a centralized view of your projects. Housing project data in spreadsheets can create labor-intensive tasks during reporting cycles and data collection. It can also result in greater exposure to project and compliance risk as a result of insufficient auditable and traceable proof that the data was accurate and verified. Having a centralized view makes it easier to assess projects promptly and identify areas that may need early intervention.
Projects, programs, and portfolios are continually increasing in size and complexity. Spreadsheets are not scalable and leave the data error-prone. An inability to easily integrate project schedules and cost estimates can limit the number of projects that can be managed at once. A robust change control solution can help improve performance and streamline project management.
“We saw almost a 90% reduction in time spent on data matching/ validation, and 70-80% reduction in time for data/budget loading.” – Director, Project Management Systems
3. Gain transparency in project progress & spending
One of the most important components of any project reporting system is transparency. Stakeholders and executives demand accurate and transparent information. Data inefficiencies make it difficult to develop reports and drive those critical decisions.
Project transparency includes the ability to gain insight into manual adjustments, variances, discrepancies, and regulatory compliance. Limited access to see across all projects within a portfolio makes it difficult to get a complete picture of all project spending. Better forecasting means fewer overruns, ultimately reducing spending. Cost/schedule variances can be detectable when planned work has reached as little as 10% completion, allowing time to take corrective actions and eliminate project surprises. Effective project reporting can increase the likelihood of project success by improving budget performance & project capacity, making it easier to answer key questions like:
- Will the project be completed on-time?
- Will the project be delivered within budget?
- Will the project quality meet or exceed standards and expectations?
- Does the project meet all the requirements and scope?
Take action to reduce cost overruns
An effective cost management solution can help alleviate issues related to manual processes, including cost overruns. Digitizing data collection improves the completeness and accuracy of reports. These 3 components of efficiently managing project data, having a centralized source of truth, and project transparency, play an essential role in delivering your projects on-time and on budget. Curious to know what business impact a project controls solution would have on your organization? See what project controls professionals have to say about using ARES PRISM. Download this white paper on Driving ROI to learn more.