List and describe four reasons why it is important that the PM understands committed costs on the project.
List and describe five things which a PM may do to manage costs
2. A project manager could consider accrued costs in line with the planned budget, in order to give a more realistic view of the budget. Accrued costs are associated with the work that has been done but not yet invoiced for. Not accounting for these costs may give an inaccurate picture of the planned costs to actual expenditure.
A project manager could forecast any future anticipated costs which may have not yet been incorporated into the planned budget. Cost management and budgeting is an iterative process as the project developed. Forecast costs may include unplanned material costs due to the availability of a resource at a particular time.
Regular monthly cost reviews will enable an assessment of budgeted to actual expenditure to be made. Regular reporting is important so the project manager can take any preventative measures to ensure that costs are managed within budget in order to deliver the project to time and quality objectives.
As part of the regular reviews of costs a project manager may consider efficiencies to reduce over expenditure currently. The project manager will also consider future progress to plan and may have to make resource decisions which may impact time and cost. For example resource levelling (moving staff around/ making changes to resources for the tasks), may make the most of limited staff and deliver the project to the desired time objectives. They could also consider ways to improve efficiency or modify the project scope.