Project pipeline management for accounting and tax

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[Music] today we're talking about the basics of project cost management well there's so much to say about cost on projects but today I want to focus on three areas I want to talk about why it's so important I want to talk about what it really is and then I want to provide some tips that I found helpful for me and managing the cost of my projects well first of all let's talk about why it's so important well it's important because by using cost management on your project it helps you to set the baseline for your project cost and then therefore that governs the actions you take to keep the budget on track so ultimately what we're doing is we're trying to prevent going over budget but if we don't use it here's some things that could happen the company might lose money because some of the cost could exceed the project and also could cause your customers to be invoiced incorrectly so let's look at what cost management really is well cost management is a process for managing your cost of your project and it includes estimating your cost so all the cost on your project so that you get a detailed list of all the estimates at a task level then you take that and you develop your project budget so the deliverable is you have your project budget that you baseline all your cost again at the task level and you take that and it's used to control the spending for your project so you ultimately have a set of action steps you take to keep on track so let's look at a project budget template so when we look at this we look at the project and we have all the tasks or even maybe some sub tasks what we look at we look at the labor of material cost and all of the cost so the labor is measured in how many hours for that task and how much we're paying per hour the task may have some kind of material costs where we measure that in units and there is a dollar cost per unit then we have other costs like maybe your travel cost maybe any kind of equipment or and any other fixed or miscellaneous cost then at the task level you have your budgeted amount and as you track along the way you ultimately get to what it actually costs for that task so in the end every task and even at the full project level you look at where you come out like are you under budget or you over budget at the task level and at the project level again we're looking to go under budget so there are a few things I want to point out on the template so some costs are easier to collect some of those look like your labor cost or even your consulting fees maybe your raw materials or even software license and even your travel cost and then some of the cost may change or they may be shared among other projects or they may even carry over to other projects and some of those look like your telephone charges maybe even your office space or office equipment maybe your general administration and your company insurance so let's look at some tips on how you can improve managing your cost well first of all you want to plan for inflation if you happen to have a project that is short in duration it may not be as I'm impacted by inflation but if an unexpected event occurs it could impact the inflation on your project and again if you have a longer project in duration that expands couple of years inflation may impact it made even make your cost increase or it may cause that's caused them to decrease you also want to account for natural disasters and we've all probably been impacted or we know people who have been impacted by these natural disasters that can cause your cost or even may impact some of the resources on your project so you also want to account for any other potential events for instance some industries are impacted maybe by union labor or any kind of strikes or things that go on so you also want to include unexpected cost and some of those may look like some legal fees may be didn't anticipate or any kind of penalties maybe in certain industries they sometimes get penalties and even labor costs for instance if for any reason you need a subject matter expert those costs may be more than you anticipated you also want to track these in real time so you can respond promptly because what we know is if these if any deviations happen they tend to compound and impact your project negatively so you also want to size and scale ingly so some people think maybe they're small projects they don't really have to do cost management but any kind of deviations can really impact their budget negatively and then large projects what you want to do is you want to do your cost management and typically at a greater level of detail but both of these small versus large it's typically the same process but if you need tool that can help you manage your cost of your project then sign up for our software now at projectmanager.com