Successful transport decision-making - Osmose

FS 11: Managing resources: costs
Vol 2 - Table of Contents
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T3
Managing costs
Good financial management is essential if a project is to be
completed on time and to budget. Management of a project's
cost requires careful advance planning and careful monitoring
of expenditure to ensure that the budgets for each task are not
exceeded. It can also require flexibility, as it is possible that
changes in circumstances can result in changes in costs.
It may be tempting to delay formulating a detailed plan for
expenditure until financial support for the project has been
secured, but this brings with it risks. It is easy to underestimate
the minor costs on a project. Where a range of options are
being considered, it is important to ensure that cost estimates
have been prepared for each option and have been carried out
using the same assumptions and to the same level of detail to
allow fair comparison.
Cost management for projects
Financial barriers are a common cause of delay or cancellation
of projects. It is important that costs are carefully managed.
Planning costs and other resources for the life time of the
project, including any operating and maintenance costs, can
help to ensure that the project can be implemented and
operated effectively. If the success of the project relies on a
change in travel behaviour, remember to allow funds for
promoting the scheme.
For most projects, it will be necessary to have a contingency
plan in place. This should identify potential sources for
additional funds and/or any aspects of the project which could
be reduced in scale or cost if necessary. Take care to prioritise
funding carefully; an over-spent budget can result in insufficient
funding for future stages of the project.
Cost management for engagement
The costs of engagement activities must be carefully planned
and included in the cost of the total project. It is important to
plan an engagement strategy from the outset. This will help to
plan the resource requirements, but will also allow you to have
a clear level of commitment to engaging stakeholders. Whether
you need to devise an engagement strategy which meets a
fixed budget, or have devised a strategy and need to determine
its cost, it is essential to consider the costs of all aspects of the
strategy.
Some costs, such as staff time or the use of venues owned by
your organisation, may not need to come directly from the
project budget. It is still important to be aware of these costs to
ensure that the strategy you design can be implemented
successfully. A well planned engagement strategy can save
money in the long-term by ensuring that stakeholder priorities
are addressed.
Managing costs throughout your
project
In the initial stages of problem identification and scheme
definition you may often have no idea of the total budget for your
project, as the final cost will inevitably depend on the scheme
design. However, even at this early stage you will need to
identify in broad terms the funds which might be available. For
example, there may be a range of funding procedures in your
country depending on the capital or revenue funds required for
a project. In this case, identifying which procedure will be
followed at an early stage will mean that the work plan can be
designed with the approval process in mind. This can save on
time and effort for exploring options which are unfeasible.
As the project develops, it is important to track the expenditure
of the project carefully so that any overspend can be quickly
identified. This can allow the work plan to be adjusted to prevent
the problem escalating or, if necessary, seek additional funding.
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