Accurate cost estimates are critical for any project to be delivered on budget. We can come close to complete accuracy by the following:
- First, the estimates should be done not only at the planning of the project, it should be done during the life of the project, A rough order of magnitude (ROM) budget estimate should be prepared in the beginning of the project then it will be followed by more accurate estimates , the definitive estimate must be revised and updated as necessary throughout the project.
- The organization should build a database and records of all projects information including the estimates that will help the staff “The people who develop software and hardware cost estimates “ who lack the experience in estimating in doing more accurate estimates, those staff also should be provided with enough training.
- The project managers and top management should consider the additional costs needed for integration and testing of IT projects. In addition, project managers should use their negotiation skills to stand by the good cost and schedule estimates. Many methods of estimates should be used and then trying to find a midpoint among them.
- For preventing cost overrun, many procedures could be followed. First, the project manager should look to the previous similar projects to be familiar with not only the cost estimates, but also how much time it takes for each activity and the project, it is important to look to the lesson learned to see if previous projects faced unexpected costs.
- Defining the project scope, what is and what is not included in the project is also very important so both the organization and the customer will be in the same page, which help preventing unexpected costs due to the misunderstanding of the customer of the project scope.
- Cost must be tracked all the time so any variance could be noticed early and an correction action could be made.
Keep in mind that the project manager will need to make sure the project is on schedule while continuously focusing on reducing and controlling costs. The project manager must follow the cost estimating, cost budgeting and cost control measures determined by the project management team. Continuous performance monitoring plays an important role in preventing cost overruns.