Project On Project Cost Management

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Project cost management is a series of activities for estimating, allocating, and controlling costs within the project. It allows determining and approving budget for the project and controlling spending. For example, in construction project cost management it is vital to estimate cost of materials, equipment, salary of workers, etc. (McConnell, 2010). Project cost management deals with the cost of the resources needed to complete an organization’s projects. Project cost management also considers the effect of project decisions on the cost of using the project product.

Different elements of the organization perceive cost differently, as the timing of a project cost identification affects their particular organizational function. To be an effective project manager one must understand each cost, and realize that the timing of cost identification can affect both project and corporate financial performance (Meredith & Mantel, 2012).

There are three perceptions of cost. Those three perceptions are as follows: commitments, expenses and cash flow. Commitment is simply agreeing to pay the vender a retain amount of money. This is typically a concern of the project manager. The commitment made by the project manger is taken out of the budget of the overall project. Unfortunately, many accounting systems are not structured to support project cost reporting needs and do not identify commitments. This plays havoc with the project manager’s fiscal control process, as he cannot get a
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