Project managers must always remain vigilant. In addition to monitoring team behaviour and ensuring the quality of deliverables, depending on the approach, they also need to be mindful of project budget overruns. Quantity surveyor reports can be instrumental in identifying potential risks early and keeping the project on track financially. Since excessive project costs can lead to disastrous consequences, including failure, it’s crucial to know how to prevent them and stay as far as possible from overspending.
Not sure where to start? Do not worry! The following tips include the best practices and insights that managers and leaders can adopt to avoid cost overruns in project management. Check them out!
1. Always Plan Before You Execute
Pre-planning may make some individuals anxious – but it’s essential for avoiding project cost overruns. When there is a clear forecast of what will be done and the costs associated with each stage, supported by quantity surveyor reports, it becomes much easier to adhere to the budget and meet expectations.
Ideally, when planning, avoid being overly optimistic or pessimistic. An overly optimistic approach can lead to unexpected project cost overruns. Conversely, overly pessimistic budgets may prove unfeasible, as they often involve exorbitant and sometimes impossible resources, making viability a challenge, especially for complex projects.
For this reason, aim for balance and create a cost management plan that reflects reality. Use real (and recent) data and research to substantiate the stated figures, avoiding assumptions.
2. Be Careful with Changes to The Project Scope
Sometimes, to align work with team preferences or final requirements, managers may make too many changes to the original scope – leading to project cost overruns.
Try to align daily activities with the original plan and carefully consider the overall picture before making changes that incur avoidable expenses. Always discuss significant changes with the project stakeholders – especially when they involve substantial costs and deviations – to avoid future confusion and misunderstandings.
3. Constantly Monitor Project Progress
Without a doubt, one of the best ways to avoid project cost overruns is through frequent monitoring. When a manager and their team closely follow the progress of work, it becomes easier to identify issues that could compromise the project’s schedule and cost. Using tools like quantity surveyor reports ensures that you have clear visibility of financial performance at every stage.
4. Use Comprehensive Software to Track Expenses and Forecasts
One of the biggest challenges for project managers when it comes to costs is balancing expenses with the budget to avoid overspending. But how can you do this if you don’t even track what’s being spent on each activity or stage? Or how much was allocated for it?
It’s essential to constantly monitor project income and expenditure.
You can maintain full control by using tools that provide detailed overviews of costs, and quantity surveyor reports can help support these efforts, ensuring accountability and adherence to the budget.
5. Be Cautious When Contracting Suppliers
Does your project rely on external suppliers for successful completion? Whether for labour or material supply? If so, be mindful of how such agreements are made and stay prepared!
Before signing a contract, check with the supplier about their limits and how far demands can be met, ensuring the partnership is viable.
6. Identify What Causes Cost Overruns in Your Project
If things go off track and events lead to excessive project costs, it is crucial to pinpoint the barriers preventing balance. Referring to quantity surveyor reports can help identify the root causes, whether it’s inaccurate calculations, scope changes, or unforeseen expenses. This step is essential for creating actionable solutions.
7. Communicate Costs to The Team and Discuss Priorities
It is common for managers to avoid sharing project costs or budget cuts with the team to prevent demotivation. However, when managing project expenses, it is essential that the team understands priorities and availability.
Transparency fosters conscious spending, promotes teamwork, and adds positive value to the collective relationship.
8. Be Ready to Reallocate Resources as Needed
Facing project cost overruns? Not all is lost! Minimise spending to return to budget by reallocating resources.
This is particularly relevant for human capital.
Redirecting highly qualified professionals to the project can improve efficiency and productivity, reducing long-term project costs despite higher initial investment.
Do You Need Help with Your Project?
With over a decade of industry experience, Section 94 qualified building quantity surveyors are AIQS certified with a fast turnaround time and clear communication. Give us a call today at 0413 953 869 or email us at info@section94.com.au to discuss our quality budget services for residential and commercial builds.