Technology Usage in Costing and Budgeting

Technology Usage in Costing and Budgeting

The estimates of costs for various components of the project are developed into a comprehensive project budgeting document that allows for ongoing project tracking and cost control. Advances in information technology and software packages have transformed the way cost estimation and budgeting of projects is completed, allowing for advanced costing methods, real-time cost tracking, budget reporting and dashboards, and various methods to prevent and control cost overruns.

For this week’s discussion explain how both small and large organizations can utilize technology to assist organizations and their project managers in costing and budgeting a project. You must also discuss how technology can be utilized to overcome common problems with cost estimation.  Use at least one peer-reviewed source beyond the text, course content, and course readings to support your position.  

Example of one of my peer’s response – answer needs to be project specific

At the start of any project, a project manager needs insight and control over how much a project will cost, the time it will take to complete the project, and what objectives are to be achieved. One of the crucial aspects of any project is managing the project’s budget, which includes planning and managing cost and revenue estimates, controlling costs and ensuring the project tasks are completed within the specified budget. Managing the project’s budget is one of the most important benefits of using project management software. Project management software packages allow the project manager to put cost estimates on the activities listed on the project schedule. The software will then automatically calculate the total costs. Reports can then be run on the cost information via the software and track budgeted versus actual expenses.

Harris (2014) points out there are many project management software packages to choose from including Asana, Basecamp, Google Docs, Microsoft Project and Primavera. The article does a good job describing each of these programs as well as how to use it and each programs’ pros and cons. Benefits of using technology in managing a budget include (i) helping the project manager realistically plot a project while increasing transparency and ultimately streamlining the budgeting process (ii) when project parameters change, the software immediately details the effect on the budget, so the project manager can adjust accordingly and executives can see the impact on the bottom line (iii) the software further allows project managers to compare historical data with currently available funding, helping project managers justify their case to executive approval committees or to rethink unrealistic goals.

Heldman (2011), however, makes a good point that the software, whatever program it may be, is only as good as the effort that is being put into it. “Automating processes certainly helps with scheduling, planning and tracking functions, but the user still needs to understand how the results seen on the screen are produced (p. 38). Just like in elementary, we were taught how to perform math calculations by hand and expected to memorize the multiplication tables. Even though these functions can be done on a calculator, kids need to understand why 4 pops up on the calculator when 2×2 is plugged in. In project management, if the formulas, processes and theories used to produce the results are understood, the individual will have a much better grasp of the impact the changes and risk may have on the project.

References:

Harris, T. S. (2014). Project Management: Picking out the right software for you. Officepro, 74(1), 10.

Heldman, K. (2011). Project Management Jumpstart. Indianapolis, IN: Wiley Publishing, Inc.

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