Project Cost and Finance Management Challenges

There are numerous challenges in project cost and finance management. The cost management functions are quite complex as different projects come with different complexities. Many emerging projects pose different challenges in terms of their characteristics (Akampurira, 2013). The complexities then call for varied management practices.

We will write a
custom essay
specifically for you

for only $16.05 $11/page
308 certified writers online
Learn More

Resource Planning

Resources in a project include people, equipment, place money and many more things that help in making a project succeed. In order to do so, the resources must be well- managed as every activity should have the right and adequate resources assigned to it. Resources management requires a lot of due diligence. In most cases, people plan for resources without establishing their availability.

Even before this, it is important to determine the time and condition those resources can be availed. Other resources need early scheduling as they may only be available during a particular time. Challenges occur when some of the aspects in resources planning are not adequately addressed (Akampurira, 2013).

Due to time constraints, most project managers find it difficult to employ adequate resources to estimate resources. Therefore, some resources managers may rely only on expert judgment. This involves seeking information from experts who have handled similar projects (Luckey & Phillips, 2006). The experts may miss out on one or two things. The alternative analysis tool may have its downside as it may be difficult to get a reliable option.

Activity Duration

Estimating activity duration is a challenging task. This requires considering the scope and resources that project will take. Determining duration of an activity calls for the establishment of the effort to be used (Luckey & Phillips, 2006). This is not an easy task. While duration constitutes the time a particular activity takes, effort refers to the person-hours required. All in all, thinking through all the specific tasks of an activity poses a challenge when calculating project costs (Harrington, 2006).

People form the most important resource to a project. They constitute what is referred to as “the project team.” This is because different projects require different expertise at certain stages. A single organization can have several projects running concurrently and this may call for different project teams with the varied talent pool ( Shi & Chen, 2006).

Managing a project team is a challenge for the project. The team needs to be motivated and well managed for excellence (Harrington, 2006). It is, therefore, imperative for the planning stage to establish all the levels of expertise that project will require. This comes with cost implications. Apart from regular pay, the team needs personal growth and feeling of accomplishment( Shi & Chen,2006).

Get your
100% original paper
on any topic

done in as little as
3 hours
Learn More

Training of the project team takes resources. It is important for the project manager to run through all the training requirements needed for the success team. This may be a challenge since some deficiencies may occur when the project is on-going. This may have a bearing on the total cost of the project. If the management does not have the required soft skills to enhance the productivity of the team, the milestones may not be met within the stipulated time and this could push the costs higher (Pinto & Venkataraman, 2013).

Managing project team’s outputs is another challenge. Inevitable staffing changes may disrupt a project plan and eventually its costing (Leavitt, 1986). This might cause the time of the project to be extended, and the budget stretched to accommodate the changes. These may include moving people from different assignments, sourcing for labour elsewhere or even replacing the workers who will have left (Shi & Chen, 2006).

Risk Management

Risk management is a significant challenge to project managers. Projects never go on course as planned. It is the work of the planner to gather enough input and develop trust while establishing the parts of the project that are likely not to go according to plan. The project manager creates worst-case-scenarios for these unexpected challenges. The problem is that the magnitude of the risk cannot be anticipated and this makes project costing very difficult. Many more people should be requested to identify the potential risks of the project (Thomsett, 2010).

Procurement and Materials

Supply management is another challenge to a project. One is supposed to establish the type of contracts to be used (Project Management Institute, 2008). The project manager may need to be guided on area where they will need unilateral decisions and those that will require a collaborative approach. They are supposed to be guided on those procurement aspects that may constrain the project (Thomsett, 2010). Purchasing managers may need to be updated on sources from which the materials will be sourced. This may be challenge as it affects the overall cost.

Conclusion

In conclusion, it can be seen that project cost and finance management can be a big problem. This is because there is a lot of aspects of the project that need to run smoothly. The area of resources is so broad, and it is important that everything to do with resource management has been critically looked into. Human resources are particularly a delicate are that calls for careful analysis.

References

Akampurira, A. (2013). Project planning and management: An aspect of development. Place of publication not identified: Manhattan: Anchor Academic Publishing.

Harrington, H. J. (2006). Resource management excellence: The art of excelling in resource management. Chico, Calif: Paton Press.

We will write a custom
essays
specifically
for you!
Get your first paper with
15% OFF
Learn More

Luckey, T., & Phillips, J. (2006). Software project management for dummies: plan and manage large-scale projects from start to finish. Hoboken, NJ: Wiley.

Pinto, J. K., & Venkataraman, R. R. (2013). Cost and value management in projects. Hoboken, N.J: Wiley.

Project Management Institute. (2008). A guide to the project management body of knowledge: (PMBOK guide). Newtown Square, Pa: Project Management Institute.

Shi, Q., & Chen, J. (2006). The human side of project Management: leadership skills. Newtown Square, PA: Project Management Institute, Inc.

Thomsett, M. C. (2010). The little black book of project management. New York: American Management Association.

Print Сite this

Cite this paper

Select style

Reference

StudyCorgi. (2021, March 11). Project Cost and Finance Management Challenges. Retrieved from https://studycorgi.com/project-cost-and-finance-management-challenges/

Work Cited

"Project Cost and Finance Management Challenges." StudyCorgi, 11 Mar. 2021, studycorgi.com/project-cost-and-finance-management-challenges/.

1. StudyCorgi. "Project Cost and Finance Management Challenges." March 11, 2021. https://studycorgi.com/project-cost-and-finance-management-challenges/.


Bibliography


StudyCorgi. "Project Cost and Finance Management Challenges." March 11, 2021. https://studycorgi.com/project-cost-and-finance-management-challenges/.

References

StudyCorgi. 2021. "Project Cost and Finance Management Challenges." March 11, 2021. https://studycorgi.com/project-cost-and-finance-management-challenges/.

References

StudyCorgi. (2021) 'Project Cost and Finance Management Challenges'. 11 March.

This paper was written and submitted to our database by a student to assist your with your own studies. You are free to use it to write your own assignment, however you must reference it properly.

If you are the original creator of this paper and no longer wish to have it published on StudyCorgi, request the removal.