We all struggle with project costs.  There are many tools available to estimate, record and track costs – yet it is one of the most common project management issue.

Without a reliable cost estimate, you won’t be able to anticipate how much money your project will require and how long it will take to complete.

We find that some of the issues relating to estimation relate to inappropriate assumptions, taking the best-case scenario, not being involved in the business case, change management taking longer that expected, increased costs for resources and the list goes on and on.

So can this be overcome? 

It depends on who you ask and are pitching to. 

For example:

· Your financial controller may want one cost for the project for budget purposes, it would be very difficult to satisfy them so you may feel you need to overestimate.

· The sponsor may just want to know if it will come on on budget and aligns with the business case plus some allowance.

· The project team may expect that project cost overruns are part of any project so do not worry too much.

There are several ways to create more accurate and mature cost estimates these include:

· Taking into account the history of similar projects, what were their costs, how did they come up with them, what were the risks and assumptions etc.

· Include in your project team the people with the right skills to help, bring in people from the finance team, vendors, resources etc.

· Include a variance for budget and the business case.  This is not just let’s say add 20% just in case but using evidence for the variance and include an upside and downsize variance e.g. budget could be 7% under or 24% over due to the following ….

· Make sure you or people in your team have the right skills to estimate.  Understand some of the financial terms and what they mean so you can speak financial language.

· Politics, this is a big one.  Too often there is pressure to underestimate project costs and overestimate the benefits.  It is a hard one to avoid but education the sponsor and others on the costs and why they are what they are.

Hope this helps and please contact us if you would like more information and assistance.