How do I best control cost?

3 weeks ago

Many people think that they are controlling cost when they approve invoices or sign cheques. In reality, the cost is already long since committed at this stage whether payment is made or not. Cost must be controlled at the planning stage. It costs little to make changes to the plans at this stage but the impact on the final cost can be quite significant. Therefore it is essential to establish realistic cost estimating for every component of the project before it is committed to implementation.

It must also be realized that project costs that are already committed or expended are sunk costs and cannot be controlled further. Only future uncommitted costs can be affected and therefore controlled. Consequently, the primary focus of all project management cost reports should be on estimates of future costs, and hence on the total cost-to-complete of each component of the work.

Barshat Yadav
Sep 25, 2021

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