THE IMPORTANCE OF PRICING IN PROJECT MANAGEMENT
Updated: May 30, 2022
One of the most important aspects of project management is pricing and cost control. Sticking to stringent budgets while trying to achieve a high build quality and the right aesthetic isn’t always easy. Cost control is vital to a successful overall outcome. To discuss how our project management could help you control the costs of your project, get in touch. Email us at email@example.com, give us a call on +44 (0)203 488 0172 or contact us online
Why Cost Management is Important
Establishing good budget control can make a huge difference in the smooth running of any project. Being conscious of where funds are needed at different stages of the project and being aware of any alterations that need to be made. Allocated funds may need to be fluid at times such as an unexpected rise in material costs. Construction materials cost increases reach a 40-year high with fabricated structural steel, particle board, and concrete reinforcing bars seeing some of the highest price increases in 2021. It’s important your project manager can analyse budgets throughout the project and adjust expectations and time scales accordingly.
To be able to control the project budget a project manager needs to be able to identify the source of the costs in the initial stages of planning. Your project manager should be constantly keeping an eye on several key areas:
Current ongoing costs and agreed budgets;
Forecasted and actual costs; and
Funds that cannot be reallocated if necessary.
How To Successfully Manage Costs
Even the most experienced project manager can encounter budget discrepancies. Often unexpected costs can’t be avoided but a good project manager will be able to identify them quickly. When foreseeing discrepancies early, their impact on the overall project can be reduced. To successfully manage a project and control costs your project manager should:
Look at your project holistically in the initial stages of planning;
Gain input from any stakeholders;
Identify cost categories and look at which areas could be fluid;
Liaise with the entire project team; and
Act swiftly should unexpected costs arise.
A project schedule should be in place from the start of the project. This will help to identify, monitor and determine when a budget is in danger of overrunning.
At Pario Construction we plan, design and build every project meticulously from start to finish.
We genuinely care about our clients and the projects that we deliver;
We take thorough steps in our pricing and always deliver a specification to ensure our clients understand what they are purchasing; and
Our project management plan is a weekly updated project plan, this allows communication between the business and our clients and allows for regular updates.
If you have a project in mind, get in touch to see how we can help.
Most Commonly Overlooked Project Risks
Even the most skilled project managers can encounter issues that threaten to put a project plan at risk. Common risks which are usually accounted for early on such as lack of available resources or unexpected costs pose little risk as they’re so regularly encountered. There are, however, some unusual but not unheard-of risks that can occur.
Weather Based Delays
As we know all too well, in the UK the weather can be somewhat unpredictable at times. That said, experience can determine the likelihood of delays caused by the weather. A good project manager will allow for a buffer for anticipated delays such as in the winter months but it’s important to be aware that even the most skilled project managers can’t predict unusual weather events.
Delays Caused by Absences
Project teams are comprised of humans and naturally from time to time, humans become unwell or have events happen that mean they require unexpected time off. A project manager should check with team members at the start of a project to determine if they have any planned absences such as prior commitments or holidays. This will allow schedules to be adjusted accordingly.
Delays Caused by Operational Changes
Operational risk involves changes in the company or team processes, like an unexpected shift in team roles, changes in management, or new processes that your team must adjust to. You can’t predict or prevent all operational risks, but if you know a team shift or process change is coming, you can adjust the effects of the changes. Make sure your team is prepared for the change and has time to adjust through team meetings or additional training.
Underestimating The Delays Caused by Project Risks
It’s vital that a project manager properly evaluates the significance of changes and delays. When the impact of a delay is properly calculated, timescales and budgets can be adjusted accordingly. It is important that the whole team is aware of the delays and the impact it will have on their individual role and expectations.
Transparency of Pricing in Project Management
Full transparency of where each portion of a budget is being spent is vital for a successful relationship between client and project manager. You should be aware of what is being spent where and why that is needed.
Transparency shouldn’t end at simply knowing where your money is being spent. Your project manager should be making clear exactly how work hours and materials are being spent. They should also be making you fully aware of any adjustments to budgets or timescales that arise so that you can manage your expectations and personal time frames.
Find out more about the benefits of project management in our previous article.
The Costliest DIY Mistakes People Make
While it may seem like a great idea to do some DIY to cut costs, it can end up costing you significantly more than anticipated. Some of the most common DIY mistakes people typically make are:
Cheap tools, no tools or the wrong tools - you can start a job thinking you have all the right equipment but hammering a nail in with the back of your shoe isn’t going to cut it. Neither is that cheap saw you bought.
Saving too much money on materials - make sure you know where to draw the line. ¼ inch drywall may save you a fortune, but it’s about as effective as a pair of curtains for soundproofing.
Measuring once - “measure twice, cut once.” You’ll know what we’re talking about if you’ve ever cut anything to length only to realise that you measured it totally wrong. Bang. Your money is down the drain.
Rushing the prep work - rough finishes, spills, drips and messy edges all result from poor preparation.
Any paint will do - you don’t want flat paint on anything other than a ceiling (put it in a kid’s room and watch what happens when you try scrubbing off the crayon and marker pen).
There’s a full article of costly DIY mistakes at wisebred.com that will make you think twice about lifting that drill up to the wall.