7 Best tips to prevent Project Cost Overrun!

A project manager must be constantly vigilant for cost overruns, or any type of expense that pushes a project beyond the agreed-upon budget. There are several methods for avoiding cost overruns.

Here are seven tips to help you stay on track with your budget:

1. Thorough Project Planning

The best way to avoid cost overruns is to plan for them before you start working on a project. The more detailed and accurate your estimates are, the more likely you are to stay on budget. There are risks, but they can be managed with a comprehensive risk management strategy. You must consider all possible scenarios when planning any project, using historical data, interviews, and experience. Have the project's stakeholders sign off on the plan once it's been detailed, so everyone is on the same page in terms of expectations.

1. Know Your Vendors

Many projects will hire outside contractors to complete specific tasks or provide materials and equipment. Any outside vendor relationship exposes your project to cost overruns that are often beyond your control. As a result, it's critical to do your homework before committing to a relationship. To begin, determine the vendor's capacity and whether or not they will be able to meet your requirements. Make sure the cost quoted by the vendor is correct. Then, before signing the contract, do some research to see if the vendor meets deadlines and what others have to say about their experience working with them.

1. Keep to Planned Scope

Scope creep is one of the most common causes of project cost overruns. Project managers' desks are always clogged with change requests. These can come from clients or stakeholders, but they can also come from team members. They all have desires and requirements. Many of them could be useful and appropriate for the project. However, too many changes can have a significant impact on the project, resulting in unavoidable cost overruns.

1. Use a Project Planning Tool

It is self-evident. A good tool will make a project manager's job easier, increase project productivity, and increase efficiencies. It will also help to keep cost overruns to a bare minimum. A scheduling tool such as a Gantt chart will aid in keeping the project on track and avoiding cost overruns.

1. Keep Stakeholders Updated

Delays are unavoidable if there isn't a clear line of communication between stakeholders and project managers. Cost overruns are caused by delays. There's far too much of a chance that work will begin on the wrong thing at the wrong time. This squandered time threatens to throw the entire project off course. Stakeholders and teams both require effective communication, but each must receive the appropriate information. Teams want specifics, while stakeholders want broad strokes to ensure the project is on track.

1. Monitor Progress

The real-time dashboard is ideal for tracking project progress in real-time, rather than after the fact. Issues can be resolved before they become problems that threaten to throw the project off track and over budget. The real-time dashboard tracks not only the project's progress, but also the workload of the team, planned and actual completion dates, project slippage, and more.

1. Reassign Resources

If you discover a project is going over budget, you'll respond by reallocating resources. However, you can prepare for this scenario by assessing your resources ahead of time and placing them where they will be most effective. This is especially true when it comes to your most important asset: your team. You can have a more productive and efficient project by assembling the most experienced and skilled team members. These resources may be more expensive, but if you plan ahead and set aside funds, you'll save money in the long run when there are fewer issues to deal with.

Want to learn more tips to prevent Project Cost Overrun? Take on the PMP Certification today!

Richard Pierce An expert in Pmi and Iiba Certifications.