Generally, I believe there are five primary causes of cost overruns: 1- Improper risk and uncertainty management (for example we should always be careful in environmental analysis and a risk response strategy), 2- Estimation error (To avoid cost overruns, aim to improve your cost estimators’ competencies and skills and increase accountability for forecast inaccuracies within your projects), 3- Uncontrolled scope changes (The success of the project in the context of constant change depends on how controlled that change is. Therefore, to prevent scope creep and consequent cost overruns, Agile Certified Practitioner, Chuck Millhollan recommends implementing a change control strategy), 4- Project performance failures, 5- Errors in project design.
I do believe that project cost in critical with the development of the product. Companies want to make sure that they are receiving as much profit from their products. However, depending on what sector, it may be hard to determine the financial risk when it comes to new medical devices and products. Although, a company can look at past reflections of products, what if this product /device is new? How could you determine the price if it is the first of its kind? Another reason for increase cost is situations with third parties. In 2021, there is a massive shortage of semi-conductor chips on a global level. How can a Project Manager plan for this type of mishaps? If you needed a semi-conductor for your project or device, how would you mediate this issue?
Project cost is a critical aspect of the project, first, the cost plan is the most important part for investors to make sure they are going to make a profit at the end of the project. It also determines the life span of the project, based on providing the personnel and the material necessary to start the project. What are some reasons that increase the cost of the project, and how to avoid them?
Project cost is definitely a critical part within a project. A reason for increase cost of the project is technical issues and this is due to the budget not being assessed correctly. Ways to avoid this within a project is to have very thorough planning, know all the vendors that will be used for the project, and monitor your process. This is to ensure that these issues are avoided the best way possible. This will allow for the project to go through the complete project lifecycle and avoid major changes with the scope of focus.
Project cost is a critical aspect of the project, first, the cost plan is the most important part for investors to make sure they are going to make a profit at the end of the project. It also determines the life span of the project, based on providing the personnel and the material necessary to start the project. What are some reasons that increase the cost of the project, and how to avoid them?
Some reasons that increase the cost of a project include errors and deadlines. Errors are often not included in the plan and can cause redirection of the project. It is always good to have extra funds for errors so the setback is not really a determining factor in the outcome. And deadlines can increase the cost of projects due to pushing the date back, not having enough product, pay, etc. Both play a large role in the cost and should be included in funds as emergency funds because you never what could happen.
The reason for high project costs could be changes to the project's scope, unplanned costs for the project, communication breakdown and even times lack of leadership. For a project with a change in scope for example, a recommendation is to design of a lean project workflow in order to be more adaptive to alterations in the environment and keep away unnecessary complexities in the course of work. Also Define of preliminary project scope, as well as the development and approval of scope documentation, to set more explicit boundaries and make more reasonable project change decisions.
Some reasons that could increase the cost of a project are poor budget estimates, scope creep, and even inflation could be a factor. Before executing a project, the budget should be carefully planned out with an accompanying risk management plan detailing historic data and previous experiences. Scope creep could also be a factor of increased budget estimates. Even if a well-planned budget is created and abided by, changing the scope via requests from team members, stakeholders, or clients could run a project over budget.
The article discusses the importance of managing project costs in order to ensure profitability and the success of the project. It also identifies some common reasons why project costs can increase, such as poor planning, scope creep, resource constraints, and unexpected events. The article suggests some strategies to avoid these cost increases, such as conducting regular reviews and analysis of project costs, setting clear project objectives and scope, developing a contingency plan, and having open communication with stakeholders. Ultimately, effective cost management requires a proactive and ongoing effort by project managers and their teams.
