Cost control in projects: Best practices and pitfalls

Are you tired of your projects constantly going over budget? Keeping costs under control without compromising on quality can seem like a daunting task. Can you relate? If so, this article is tailored for you. Here, you’ll gain insight into the best practices and common pitfalls, so you’re better equipped to manage your projects.

-> Download guide: Do you have effective cost control in your company’s procurement procedures?

Best practices 

The key steps to ensure success in your projects:

Thorough planning: Identify risks, responsibilities, and uncertainties as early as possible in the project. This gives you the opportunity to take necessary actions at an early stage, avoiding potential cost overruns later. 

Clarification of needs: Clear understanding of the client’s needs is crucial to avoid misunderstandings and unnecessary changes during the project. Communicate clearly with the client to ensure all parties agree on the project’s goals and requirements from the start.
For example: 

– Workshops/meetings with key stakeholders
– Defining deliverables/specifications
– Defining acceptance criteria
– Include a testing phase before implementation/final delivery
– Quality control of deliverables
– Training and support during the delivery of technical projects 

Effective systems: Implement procurement systems and processes to ensure cost-effectiveness in the project. Good procurement practices help ensure delivery of materials and services at the right time and price. 

Standardized processes: Learn from your past mistakes as well as successes by implementing standardized processes and routines in the project. This helps increase efficiency, reduce risk, and ensures consistent execution of work. 

Securing significant purchases: Before or upon signing contracts, ensure clear terms and conditions for important purchases. This includes clarifying delivery times, quality requirements, and any warranties. Also, when dealing with significant purchases in foreign currency, evaluate the necessity for currency hedging to prevent unexpected costs or complications later in the project.

-> Download guide: Do you have effective cost control in your company’s procurement procedures?

Common pitfalls to avoid 

In the pursuit of successful projects, it’s easy to fall into traps that hinder both cost control and effective implementation. Here are some of the most common challenges you should avoid:

Unclear agreements: Ambiguous and imprecise agreements can lead to misunderstandings later in the process, which can delay progress. Therefore, develop clear and comprehensive agreements that clearly define the project’s scope, timeframe, costs, and responsibilities. This also reduces the risk of ending up in a situation with insufficient or simply wrong resources available for project delivery, which is often a result of poor planning. Do yourself a favor by spending time developing clear agreements to avoid unnecessary problems later.

Lack of preparation for changes and risks (Scope Creep): Not being prepared for changes in the project’s scope, requirements, or risks can have significant negative consequences. There may be additional requests from the customer or other unforeseen issues. In technical deliveries, failure to define the current technical situation can lead to the delivery being larger than initially assumed. By being proactive and prepared for different scenarios, you can better handle unforeseen events or changes in the project.

Manual reporting: Relying on manual reporting processes such as Word and Excel can be a real time drain in your projects. This can also increase the risk of errors and inaccuracies in the reports. This, in turn, can negatively impact decision-making and cost control in the project. Automating the reporting process with digital tools can help reduce the risk of errors and free up time for more value-adding tasks in the project. 

Scattered information: When vital information is spread across different platforms or systems, the risk of misunderstandings and errors increases. Lack of centralization of information can result in key details being lost or misunderstood. This can lead to unnecessary changes, delays, or errors in project execution. By implementing a purchase order system, you not only save time but also reduce risks by having all procurement-related documentation collected in one place.

Summary 

Cost control in projects doesn’t have to be a struggle. Avoid manual routines and complicated processes. Take control of both internal and external resources. By using best practices and being mindful of the mentioned pitfalls, you can achieve your goals within both budget and time. Good luck with your projects! 

Still unsure about your cost control? Here’s a guide that can help you: