A Guide to Project Cost Management Software

In this blog article, we will discuss project cost management software. Although complex and damaging if chosen wrong, the right tool is the cornerstone on which the success of every project depends. 

What is Project Cost Management?

Project cost management is the process of estimating, planning, and strategically allocating project budgets to control project expenses. When repeated frequently, this approach gathers valuable insights. It enables accurate forecasting of future project expenses, minimising the risk of burning over the budget.

After finishing the project, measure the predicted costs against the actual costs. This actionable data will aid in planning your future assignments. 

What Makes Cost Management Important?

Cost management is crucial for any company. It is the first step of putting together a project plan. You cannot begin mapping and forecasting the project without knowing what resources will be required.

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 name, stock images and others. To estimate how much this will all cost, you will be turning to cost management to determine the approximate budget before you even begin.

Software for Project Cost Management

Cost management involves many things: budgeting, resource planning, progress and performance measurement, funds allocation, time planning, forecasting, reporting, and more. The good news is that you don’t have to do it all yourself. Project cost management software can assist you.

Wave Excel Sheets Goodbye

There are multiple reasons why Excel spreadsheets are not suitable for project cost management. First, they must be updated manually, leaving much room for human error. Second, they cannot store much data without becoming very slow or downright crashing. Third, they will always be stand-alone pieces of documentation that cannot be included in 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 said data to your other digital solutions, building a seamless, automated workflow.

Visibility and Resource Allocation

Specialised solutions are designed to address the major challenges of managing project costs. They provide a centralised view of the entire project and allow you to inspect separate elements individually for more context and closure.

With better visibility of the situation, you can identify potential gaps and have better control over resource allocation. Zooming into siloed areas grants you more data, becoming the cornerstone of informed decisions.

Invoicing & Client Billing

Software built to give you better control over the project budget is holistic in its functionality. It enables better data tracking and utilisation and supports your efforts in other areas.

Some projects rely on an outsourced workforce. Navigating different pay rate conditions can get very complicated. This adds risk to mishandling invoices and client billing, which leads to damaged trust and potential financial losses. In Timesheet Portal Project edition, we addressed this issue by adding a Client Billing module so you can focus on areas that require your direct involvement instead.

Key Criteria for Digital Solutions

There is a lot of different software available on the market. While your choice will highly depend on your business's individual needs and whether the solution addresses them, three core features are a must.

Integrations and APIs

Digital solutions help you create streamlined workflows with as little manual input as possible. Integrations are the key to this. In short, integrations link different solutions together, expanding their functionality and data collection.

Project cost management software, specifically, needs to integrate with other tools, such as your accounting and project management platforms. You will have a holistic overview of the project by linking these solutions. This will grant you visibility into how your decisions in one area may influence the results achieved in another.

Expenses Management

Keeping track and maintaining control over employee expenses is a crucial element of cost management. However, it is often prone to human error or suffers from a lack of a clear process. Both lead to potential big financial losses that can be difficult to track back.

A decent piece of software should include a module dedicated solely to expense management. This will address the above-described issues and potentially prevent your business from losing lump sums of money.

Project Analytics

Finally, every project needs to be measured in order to determine its success. Speaking of project cost management specifically, as stated in the beginning, you estimate its success by comparing the forecast with the actual spend. The latter becomes known largely through a project analytics dashboard.

An in-depth analysis presented in a visual format will give you valuable insights. They cover what’s going right and what needs improvement as the project runs its course. By the end of the project, the analytics will also contribute to calculating the ROI. A powerful analytics platform is a selling point for most digital solutions - and it’s a huge plus when you can also build custom reports within it.

Real-time, Automated and Collaborative Cost Management

At Timesheet Portal, we have designed our Project software to be a one-stop tool for project management. Therefore, it has modules designed to address different elements you may encounter, such as cost and expense management. Rich in integrations, our solution grows with you, offering extensive options for automation and smoother workflows.

Being cloud-based, the platform allows multiple users to access it simultaneously and make changes in real-time. This contributes to better alignment through visibility and transparency, therefore improving overall performance. A flexible reporting system also allows you to build custom reports, tracking unique metrics that matter to your business.

Key Takeaway

Project cost management is an essential part of any project and is highly responsible for overall success. However, it’s a complex process with many elements susceptible to human error. These errors can be difficult to catch early on, resulting in huge damages.

The best way to minimise risk is to automate as much of a process as possible. Not only is this a risk management measure, but it is also a great way to free up time typically wasted on repetitive manual tasks that add no value to your business. Additionally, adopting a digital automation tool will grant you many new insights. As an extra, they come in a format that’s easy to analyse and will lead to better decision-making moving forward.

Not sure how to choose decent project cost management software? We can guide you.