Effective project cost control is at the heart of successful project management. This ensures budgets stay on track, risks are managed, and financial goals are achieved.
During The Expense Summit, we had the privilege to interview Jorden Oud, co-founder of Bold Advice. We were able to gain valuable insights on mastering cost control in project management.
With extensive experience across aviation, maritime, and energy sectors, Jorden shared practical advice to help finance professionals streamline processes and improve outcomes.
In this article, we will discuss how project budgets, estimating costs and project plans impact the overall financial performance of a project.
How to ensure effective project cost control mid-project
How can finance controllers manage project cost control, especially when joining midway?
Ideally, finance controllers should be involved from the start. But if you join midway, Jorden recommends a back-to-basics approach:
“Go back to the original budget, review what has been spent, and create a solid cost report that everyone can trust. It’s about building a clear picture from the beginning.”
Transparency and regular communication with project managers and clients are essential to solve budget issues early.
Strategies for cost control in project management
What are the most effective strategies for cost control in project management?
Project cost control depends on clear processes and ongoing oversight:
Define project scope: Start with clarity to avoid confusion about which expenses belong where.
Update budgets regularly: Stay aligned with project goals by reviewing and adjusting budgets.
Advise, don’t decide: Jorden states, “As a finance controller, my role is advisory. I suggest actions, but the final decisions rest with project managers and clients. It’s all about effective communication.”
Essential steps for risk management in project cost control
What steps should finance controllers take for risk management?
Effective risk management can greatly improve cost control in project management:
- Host a Risk Session: Bring together all parties for example: project managers, controllers, and estimators. Allow time to discuss potential cost variations, especially in long-term projects.
- Establish a Contingency Budget: “Maintain a 10% contingency in your budget,” Jorden advises. “It gives you flexibility to cover unexpected costs without derailing the project.”
How should finance controllers address unexpected budget issues?
Go back to basics when unforeseen expenses occur:
- Reassess the budget: Understand the original contracts and track where the money has been spent.
- Create a reliable cost report: “I always go back to the start,” Jorden explains. “You need to build a cost report that can be trusted by both the project manager and the client.”
Best practices for invoice management in project cost control
What’s the best way to manage invoices for effective cost control?
Managing invoices is critical to project cost control:
Verify before approving: Cross-check invoices with the project scope to ensure they match what was agreed.
Clarify expectations early: “I like to sit down with contractors at the start to explain my expectations for invoicing,” says Jorden. “It prevents confusion and errors down the line.”
What’s your advice for handling unforeseen expenses in long-term projects?
For long-term projects, it’s important to:
- Scrutinise inherited budgets: Identify discrepancies and cost variances. Address these factors early.
- Prepare for market changes: Maintain a contingency fund to cover unexpected costs or cost overruns.
- Reassess priorities regularly: This keeps clients informed and ensures proactive cost adjustments.
How can finance controllers prevent fraudulent expenses?
Fraud prevention is essential in project cost control:
- Watch for unusual expenses: Be alert during the monitoring and controlling phase. Look out for personal items or unrelated tools claimed as project costs. Obviously, someone raises an eyebrow when someone submits an invoice containing 16 Rolexes.
- Question and verify: “If something seems off, I always ask questions.” Jorden says. “Don’t approve anything without clarifying it first.”
- Set clear policies: Ensure contractors and project managers know what’s acceptable.
The role of technology in cost control in project management
What role does technology play in project cost management?
Technology has streamlined many aspects of cost control and cash flow management, but Jorden warns against over-reliance:
- Digital tools for efficiency: Platforms like DocuSign simplify invoicing. While cloud-based systems help track budgets and help get an overview of where you can reduce costs.
- Always include human oversight. “Technology helps, but a human check is needed to catch errors,” Jorden emphasises. “It’s about blending efficiency with accuracy.”
Expert advice on enhancing skills in project cost control
How can finance controllers improve their skills in cost control for future projects?
Jorden’s best practices include:
- Start early: Engage in budget planning of project expenses from the start.
- Maintain clear communication: Keep open, regular dialogue about cost performance with stakeholders.
- Ensure detailed documentation: Track all contracts, budgets, and reports meticulously.
- Ongoing monitoring: Regularly update cost reports and monitor expenses.
- Ask questions: “Don’t be afraid to ask questions if something doesn’t make sense. It’s better to clarify than assume,” advises Jorden.
What’s the secret to maintaining effective project cost control while keeping the big picture in mind?
“The key is to remember that every expense represents real money,” Jorden says. “Whether it’s a small invoice or a million-dollar item, it should be treated with the same level of scrutiny. Maintaining this mindset helps finance controllers stay focused on the project’s financial health.”
By following these insights from Jorden Oud, finance controllers can navigate the challenges of project cost control with confidence.
Effective risk management, clear communication, and smart use of technology are important strategies. They help projects finish on time. They also help keep projects within budget.
They also ensure strong financial oversight.
Conclusion
As Jorden Oud highlighted, the key lies in clear processes, effective communication, and strategic risk management.
By focusing on transparency, regular updates, and leveraging technology wisely, finance controllers can help projects stay on track and within budget.
If you found these insights helpful, we invite you to watch the full session with Jorden Oud from The Expense Summit.
Gain deeper understanding and practical advice on managing billion-dollar budgets, improving project outcomes, and enhancing your skills in cost control.
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