Running the business is all about planning and controlling your budget. Your startup ideas shouldn’t be just great. It should be profitable in order to survive in a competitive market. Managing and forecasting costs can be pretty challenging since there are a lot of details to consider. Contingency costs, inflation allowance, and needs of stakeholders have a direct impact on your business performance.
A forgotten step or miscalculation can cause the company to fail. That’s what happened to New Coke project in 1985. The Coca-cola company was dragged into fierce competition with Pepsi at that time. They tried to do anything to become a market leader. The launching of a New Coke project cost $34 million… and it didn’t work. It is still considered one of the biggest fiascos from a respected company. However, it was possible to prevent financial loss by implementing smart cost management.
That’s why all companies are required to use cost management tools to keep better track of their financial projects. According to research conducted by Hubstaff, using software can increase employees’ productivity by 30%.
Cost management tools can help you set a baseline for your project cost and keep your budget on track. Let’s take a closer look at the necessary features of cost management software for managing projects.
You should test different tools and choose the one with the user-friendly interface. Cost management is difficult as it is, so you need to simplify the task for your employees and yourself. According to Project Management User Research, 47% of employees consider ease of use one of the most important features when it comes to project cost management. Needless to say, easy-to-use software can increase your work effectiveness.
Some cost management tools can also offer you easy navigation and complete profile of employees’ online activity. Project cost management requires to keep track of progress, and it might be pretty tricky especially when you have everything in different places. The software can put everything in order and save you time.
You need to forecast the price of the complete project so you can set up your budget. There are different types of cost estimation, such as indirect and direct, fixed and variable. One thing you should understand is that cost estimation is more than a list of costs.
A cost estimate report should include assumptions, exclusions, and accuracy. You can use this data to interpret the total project cost. The software can help you choose between alternatives and make investment decisions. The cost management tool can also update price estimation so that you can make all necessary adjustments to your project.
Developing a project budget
After you define your direct project cost, you will need to develop your budget. The cost management tool can approve and finalize it. You can also set up a baseline to prevent going over budget. More than that, you will get weekly and monthly reports on your business performance. When your budget is close to its limit, you will get the notification. The good thing is that you will have time to put in place some kind of action plan.
Making a report
Your cost management software can send you daily reports on your business performance. It is necessary especially when you are running multiple businesses. You should look for a tool that doesn’t require additional manual help. This data can help you to make future forecasts adjusted to market conditions. You will get a rounded view of the resources that are being used and how much progress your project is making. Also, you will see whether you are within your budget and on schedule. The dashboard is updated in real time. It should also include actual and planned costs, the percentage of completion and your baseline.
Project management tools offer low-cost options to help manage your income and expenses and predict impending expenditures. You can even find a user-friendly interface for 5 dollars a month. It is the cheapest option. However, you should choose something that will increase your productivity, and that is flexible to suit your needs. Some customer management tools can offer you a 14-day free trial.
History provides us with examples of corporations and startups that failed to plan their budget and take actions when it was needed. It has led to the business collapses.
Right now there are a lot of extra tools that can replace whiteboards and spreadsheets. It will make your documentation more clear. You will be able to use your data effectively. Only detailed software reports can show you how your project is performing on the market. It can also help you make a forecast which is crucial in terms of business. While choosing your perfect cost management tool, consider features such as budgeting, cost estimation, affordability and project performance measuring.
Using cost management tools on your project can ensure your business longevity.