A Guide to Project Cost Management Software
Published: 06/12/2021
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In this blog article, we will discuss project cost management software. Although it can be complex and detrimental if chosen poorly, the right tool is the cornerstone upon which the success of every project depends.
Project cost management is the process of estimating, planning, and strategically allocating project budgets to control expenses. When applied consistently, this approach gathers valuable insights. It enables accurate forecasting of future project costs, minimising the risk of exceeding the budget.
After completing the project, compare the predicted costs with the actual costs. This actionable data will assist in planning your future assignments.
Cost management is essential for any company. It serves as the initial step in developing a project plan. You cannot start mapping and forecasting the project without understanding what resources will be needed.
Here’s an example: you want to build a new website for your company. To achieve this, you must hire a web designer, a developer, and maybe a UX specialist. You will need to pay them whether they’re salaried or work at an hourly rate. There are also other expenses, such as web hosting, domain names, stock images, and others. To estimate how much this will all cost, you will turn to cost management to determine the approximate budget before you even begin.
Cost management encompasses various aspects, including budgeting, resource planning, progress and performance measurement, fund allocation, time planning, forecasting, reporting, and more. The good news is that you don’t have to handle it all on your own. Project cost management software can assist you.
There are several reasons why Excel spreadsheets are unsuitable for project cost management. First, they require manual updates, which allows for significant human error. Second, they cannot handle large amounts of data without becoming very slow or even crashing. Third, they remain stand-alone documents that cannot be integrated into a streamlined workflow.
A designated piece of software addresses and solves these three key points. While you will still be required to log new data manually, the existing figures will change accordingly. Unlike Excel, project cost management software can identify and address patterns. It doesn’t just store data but also analyses and presents it in a digestible format within seconds for you to review. Thanks to integrations, it can also transfer this data to your other digital solutions, building a seamless, automated workflow.
Specialised solutions are created to tackle the significant challenges of managing project costs. They offer a centralised view of the entire project and enable you to examine individual elements for greater context and clarity.
With improved visibility of the situation, you can identify potential gaps and exercise greater control over resource allocation. Focusing on siloed areas provides you with more data, which becomes the cornerstone of informed decisions.
Software designed to enhance your control over the project budget is holistic in its functionality. It improves data tracking and utilisation while also supporting your efforts in other areas.
Some projects rely on an outsourced workforce. Navigating various pay rate conditions can become quite complicated. This adds risk of mishandling invoices and client billing, which can damage trust and lead to potential financial losses. In Timesheet Portal Project edition, we addressed this issue by adding a Client Billing module so you can instead focus on areas that require your direct involvement.
There is a lot of different software available on the market. While your choice will largely depend on your business's individual needs and whether the solution meets them, three core features are essential.
Digital solutions help you create streamlined workflows with minimal manual input. Integrations are essential for achieving this. In short, integrations connect different solutions, enhancing their functionality and data collection.
Project cost management software needs to integrate with other tools, such as your accounting and project management platforms. By linking these solutions, you will have a holistic overview of the project. This will give you visibility into how your decisions in one area may influence the results achieved in another.
Keeping track of and maintaining control over employee expenses is a crucial element of cost management. However, it is often susceptible to human error or lacks a clear process. Both issues can lead to significant financial losses that may be challenging to trace back.
A decent piece of software should include a module solely dedicated to expense management. This will address the previously described issues and potentially prevent your business from losing large sums of money.
Finally, every project needs measurement to determine its success. Speaking specifically about project cost management, as stated at the beginning, you assess success by comparing the forecast with the actual expenditure. The latter is primarily revealed through a project analytics dashboard.
An in-depth analysis presented in a visual format will provide valuable insights. It covers what’s going right and what needs improvement as the project progresses. By the end of the project, the analytics will also help in calculating the ROI. A powerful analytics platform is a selling point for most digital solutions, and it’s a significant advantage when you can also build custom reports within it.
At Timesheet Portal, we have designed our Project software as a comprehensive tool for project management. Thus, it includes modules tailored to address various elements you may encounter, such as cost and expense management. Rich in integrations, our solution evolves with you, providing extensive options for automation and streamlined workflows.
Being cloud-based, the platform enables multiple users to access it simultaneously and make changes in real time. This fosters better alignment through visibility and transparency, thus enhancing overall performance. Additionally, a flexible reporting system allows you to create custom reports, tracking unique metrics that are important to your business.
Project cost management is an essential part of any project and is crucial for overall success. However, it is a complex process with many elements that are susceptible to human error. These errors can be difficult to detect early on, leading to significant damages.
The best way to minimise risk is to automate as much of a process as possible. This not only serves as a risk management measure, but it also helps free up time typically wasted on repetitive manual tasks that add no value to your business. Additionally, adopting a digital automation tool will provide you with many new insights. Furthermore, these tools come in an easy-to-analyse format that will lead to better decision-making moving forward.
Not sure how to select reliable project cost management software? We can help you.