Manika
Cost overrun is one of the most critical hurdles hampering the success of any project. Studies reveal that 70% of projects fail to achieve the expected outcome. Though challenging, it’s crucial to create a roadmap that helps you to prevent cost overrun in project management. You can ensure projects are completed on time, within budget, and meet stakeholder expectations.
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An IBM study says that only 40% of projects meet schedule, budget, and quality goals. So, what about the remaining 60% of the projects that fail to see the light of the day owing to cost overrun? Well, that is the reason that makes it essential for project managers to use an intuitive project management software!
If you’re struggling to navigate the complexities of successful project completion, you’ve come to the right place. This blog will walk you through the process of cost overrun prevention and thwart this hurdle altogether by clearing any sort of disruptions from your way of completing the projects.
Before we conduct project estimation workforce analysis and prevent cost overrun, let’s first understand what cost overrun is.
Referring to a situation when an unprecedented change occurs in the project budget, thereby surpassing the planned cost for that very project. While several factors may contribute to the escalation in project cost, primary reasons for it include inaccurate estimations in the project planning stages, alteration of project scope and unexpected delays.
To diagnose symptoms of this issue, project managers need to have a clear strategy to understand how the project is progressing. Listed below are common signs indicating potential budget breaches:
In the sphere of over-expenditure, constructional project cost over budget is quite rampant. As per studies, 9 out of 10 construction projects experience expense overrun. So, what could be the possible causes of project over budget? Let’s find out:
A study by the Access Group says businesses have identified “capturing time/costs against projects” as their biggest project management obstacle. Therefore, ensuring precise project cost calculation is supercritical. Let’s have a look at the top 5 effective strategies that you can implement to control your budget and have a tighter hold on your project escalations:
One of the most brilliant ways to ensure project success is to plan projects accurately and effectively. If you plan the project budget estimates precisely, the chances of staying within the budget will be maximized.
Research properly and craft a detailed budget with a concrete work breakdown structure. Further, make sure to have a risk management plan in place to help you out in case of exigencies. As needed for your sprint planning, make sure to establish time estimates.
Tracking the project completion rate periodically to check if the desired objectives are being fulfilled is essential to affirm its success.
Several projects demand strong collaboration with reliable third-party platforms or vendors. You may need the support of these vendors to carry out diverse tasks, starting from sourcing materials to outsourcing work to freelancers or independent contractors.
It is essential to check if your team members are exercising thorough scrutiny before establishing a professional relationship with the suppliers. You may never know when these vendors start quoting higher charges, thereby leading to cost overrun. Hence, communicating your requirements and budget with these vendors is a must to ensure that project costs do not exceed.
Follow these steps to curb the excess expenditure of project resources:
As per a study conducted by the Project Management Institute, 50% of projects witness scope creep. Therefore, it is crucial to eradicate the root of scope creep at the very beginning.
Poor planning and multiple requests from end users and stakeholders may escalate the cost of a project. An ideal way to combat scope creep is to take into account all the cases before planning and fixing the project estimate.
When you receive new requests to make certain changes or modifications, review these carefully to ascertain if these are needed and whether you have buffer resources that you allocate.
According to a report by Straits Research, the project management software research market is projected to reach a staggering growth at a CAGR of 10.67%. As per reports, teams using Project Management Software with in-built communication features have reported a 52% improvement in team communication.
No wonder why using an ideal project management software platform such as TeamTrace can give a fillip to overall efficiency and project over-spending! Apart from managing project resources smartly, it can aid you in scheduling tasks in advance to avert loss of time or resources.
A PWC study has revealed that 77% of high-performing teams use good project management software that offers a diverse range of in-built features. Using software that includes embedded communication channels is beneficial for fostering seamless communication. As a result, things stay on track without any delays.
Key stakeholders will also be able to obtain a broad overview of the project’s progress in real-time. Further, teams working on the project will also be able to gain easy access to all the work details just by using a single, unified platform for the same.
While understanding project risk management and overspending of resources compared to what was planned, it is crucial to stay aware of certain project cost-advance case studies.
Initially, $93.7 million was set as the estimated cost for the development of the Healthcare.gov website, which is an online marketplace for health insurance under the Affordable Care Act. However, the actual cost exceeded $292 million. Owing to poor project management, last-minute scope creep and poor coordination among contractors, the planned cost soared higher.
Around $260 million was decided to be the total budget for bringing to life a statewide case management system for California Courts. However, $500 million was spent on developing this until the project was canceled. This happened because of ever-changing requirements and the absence of clear governance.
These examples point to the fact that projects can spiral out of control owing to factors like inefficient planning, scope creep, constant changes to the project roadmap, poor communication and mismanagement. Therefore, using streamlined project management software is essential to eradicate hiccups in the path of attaining project success.
It’s time to kick-start efficient project management by using TeamTrace. Achieve all your outcomes by utilizing a broad array of tools that you need to plan, monitor, and complete tasks.
Use TeamTrace, an easy-to-use fully featured project time management software integrated with the desktop app, that lets you track progress and stay informed while gaining access to detailed reports & analytics.
TeamTrace is not a regular project management tool, that only focuses on handling client requirements and project flows. This lets the organizations take control of the project budget by collaborating time, and resources with the project, the key elements of a successful project.
How TeamTrace focus on efficiency for transparent project billing and cost control?
TeamTrace’s resource and time-tracking features are instrumental in preventing project budget overruns. By providing real-time visibility into resource utilization and task duration, TeamTrace empowers project managers to:
Identify potential overruns early: Track project progress against budget and identify areas where costs are escalating.
Optimize resource allocation: Allocate resources effectively based on project requirements and availability, preventing underutilization or overallocation.
Make data-driven decisions: Use detailed reports and analytics to identify cost-saving opportunities and make informed decisions.
Prevent scope creep: Maintain project scope and avoid unnecessary expenses.
Improve project estimates: Use historical data to create more accurate project estimates.
Get started today and kick-start the process of efficient project management today!
