3 steps to better project cost management
Any business that does project work has to manage the cost of every project wisely to ensure it remains profitable. It’s great to have a pipeline full of new and exciting projects, but taking your eye off the ball for just a moment amid the flurry of activity can turn a potentially lucrative job into one that ends up costing you money.
This makes good project cost management more than just a project manager’s concern. It’s hugely important for the entire business and if you’re a finance director, it’s vital that project costs are managed effectively to ensure you can forecast accurately, monitor cash-flow and keep the company running as profitably as possible.
Here are three steps to better project cost management that businesses in the project engineering, contract services and professional services industries should find useful. Each one can be achieved by using an integrated business management system like SAP Business One with job costing functionality.
- Share job and project data
A project is comprised of a lot of different costs. It seems obvious enough that keeping records of these different costs in disparate places or systems will make them more difficult to manage. However, this is still what a lot of businesses do – often with a collection of highly customised spreadsheets that cannot share data with each other.
This approach makes a ‘single version of the truth’ hard to come by, while also affecting your speed of response when circumstances change. If you have to wait for figures to be transferred from one place to another, or manually updated in a spreadsheet by the one person who knows how to use it, any response will often come too late to keep project costs on track.
Job costing in SAP Business One provides a central place for all the information on a specific project, both financial and non-financial. Finance director and project manager, and any other member of staff with the necessary access permissions, can therefore monitor progress using the same system.
- Use alerts to manage projects proactively
Another advantage of integrating project data and keeping everything in the same place is that it is easier to manage proactively – responding to emerging situations before they become problems.
SAP B1 contains an alert function that can be configured to automatically notify selected users whenever certain events occur in the system. The function is simple to set up and you can customise alerts for each user, as well as choosing to receive them by email, text message or fax.
The result is that you don’t have to rely on instinct to spot when a particular cost centre on any given project is starting to slip (something that gets more difficult as your business grows and projects become more numerous). The system will automatically raise a red flag and you can then respond accordingly.
- Make time tracking more efficient
Tracking employee time efficiently – and making sure it’s being spent efficiently – remains one of the biggest challenges for project-based companies. It’s particularly tricky if your business is in an industry like engineering services, where much of your workforce is mobile and out in the field all day.
Our Job Costing solution powered by SAP Business One includes web timesheets – a simple but effective solution for increasing the accuracy and availability of your time data. Instead of waiting for engineers to submit timesheets at the end of the week, or when they get a chance to log on at the end of the day, you can pull in their data instantly because they can access the system via a mobile device.