Cost management is concerned with the process of planning and controlling the budget of a project or business. It includes activities such as planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget:
Step 1: Resource planning - is the initial phase of a project, helps to define the required resources needed to complete the project activities. Once the resource types (required time, material, labor, equipment, etc.) and quantities are known the associated costs can be determined.
Step 2: Cost estimating - helps to predict how much it will cost to perform the project activities.
Step 3: Cost budgeting - the cost estimate forms together with a project schedule are the input for cost budgeting. The budget gives an overview of the periodic and total costs of the project. The cost estimates define the cost of each work package or activity, whereas the budget allocates the costs over the time period when the cost will be incurred. A cost baseline is an approved time-phased budget that is used as a starting point to measure actual performance progress.
Step 4: Cost control - is concerned with measuring variances from the cost baseline and taking effective corrective action to achieve minimum costs. Procedures are applied to monitor expenditures and performance against the progress of a project. All changes to the cost baseline need to be recorded and the expected final total costs are continuously forecasted.
We offer a full cycle of Cost Management services starting with sending bid requests, through purchase and work orders, till final invoicing.
Specifically developed financial tools in Buildertrend allow do it perfectly, making the whole process much more efficient. Still have questions - contact us for more details.