Every IT and Tech organization’s goal is to deliver each project meeting clients’ expectations while reaching the set project target. This is not always the case, especially for IT leaders who are not abreast with project management techniques.
A recent report shows that about 14% of IT projects end up as failures. Only about 56% of tech projects meet the set financial targets set by the managers. Other projects exceed the initial costs, leaving the parties involved in a budget deficit. Source: UMSL
This report raises concern about IT companies’ need to adopt workable project management procedures to save project costs. Cost overruns have severe consequences on IT businesses. It limits the outcome of a tech project and blocks off the possibilities of completing future projects.
Hence, leaders in the IT industry should have a detailed understanding of the concept of project management and how to apply it to tech projects.
This informative piece outlines the concept of project management, steps, implementations, and its importance in cutting down on IT costs.
This guide covers in details:
● What is project management?
● Why is project cost management important to IT managers?
● The role of project management in saving IT costs
What Is Project Management?
Project management involves the different costing processes, budgeting, and managing financial costs through various project stages. The sole aim of project management is to keep the cost of completing a project within the budget allocated for the project.
What makes a project successful?
● It meets all the scope and requirements.
● High-quality execution
● Delivered within the appropriate schedule
● Completed with the allocated budget
Cost management serves as a yardstick for financial management for IT projects. IT managers can better manage their projects by having good knowledge of project costs.
Why Is Project Cost Management Important to IT Managers?
Cost management creates a sense of financial direction in IT projects. It is difficult to complete a tech project without the right financial baseline and projections.
Research shows that organizations with successful project management strategies save more and spend less on completing their projects.Source: CIO
Unlike most other industries, tech and IT projects can have greater flexibility in their budgets. Hence, the need to make critical financial decisions at different stages of a project. Leaders in the industry cannot make informed financial decisions without a predefined cost analysis.
It is also difficult to define a tech project’s success and progress without the right cost information. It becomes even worse for IT leaders managing many projects. Problems like unexpected costs and changes in the initial cost projections can ruin a project and put the managers upside down within their budgets.
IT managers who put in place workable financial management practices can:
● Set reasonable project expectations and communicate with stakeholders
● Manage every stage of the project and make informed decisions with stakeholders
● Take proactive decisions within a short period of unexpected changes to project scope.
● Avoid running into loss and improving ROI while maintaining the results and expected returns.
● Track the cost trends of similar projects and generate project data for future projects
The Role of Project Management in Saving IT Costs
IT managers and directors in the industry can use project management methods as it is a very powerful map that aids navigation of project catastrophes.
Thus, project management plays an essential role in helping IT project managers cut down on costs. Here are some of the significant roles of project management in the IT industry.
Project management provides leaders and directors in the IT industry with clear directions to projects. It makes it easier for project leaders to have the right vision and motivation necessary to complete a project.
Sadly, many project leaders ignore the importance of proper project management in the planning and organization of projects. Reports show that only 42% of organizations practice a workable organizational strategy. Source: Planyard
Armed with the right motivation, leaders can, in turn, push team members to reach their potential. Without the right project management processes, a project lacks direction, purpose, and control.
Cost management is an important part of every tech project. When project leaders have no control over the cost management, the project is likely to spiral out of control.
It is also difficult for project managers to be transparent and accountable without the right cost management principles. Hence, project management infuses leadership, direction, and purpose to tech projects.
Reasonable Project Objectives
Project management aid directors and project managers set realistic objectives for a project. Aside from setting clear objectives, project managers can also make workable plans and strategies on how to execute target objectives using project management.
Without project management, project managers will have incomplete briefs, ambiguous objectives, and direction. The team will have no clear expectations, and financial mismanagement will be difficult to avoid.
With the right project management method, managers can break down a project into smaller tasks and assign the right budget to these tasks, cutting down on the overall cost of completing the project.
Breaking down an enormous project cost into smaller milestones also helps the manager determine the possibility of completing the project. It’s easier to project cost overruns and circumvent them.
Aside from sound financial management, Breaking down a project into smaller parts ensures the team stays focused on the big goal while completing the smaller tasks.
Project managers can identify risks and oversights when a project is in different bits. They can call up the right risk management to handle these oversights and refocus on the project’s goals and objectives.
Project managers in the Tech industry can only set realistic targets and expectations with a workable project management method. With project management, directors can set a workable timeline, plans, and budgets for a project’s completion.
Improper project management leads to over ambitious timelines, underestimated budgets, and poor projections. This would lead to late delivery, cost overruns, and complete failure of the project.
Project managers who set expectations based on similar projects are bound to make mistakes in the long run.
Project management helps managers set realistic targets, reasonable milestones, and cost estimates for every project. It ensures the managers understand the time and cost implications of the project without compromising the delivery quality.
With project management, managers can analyze the tasks necessary to complete the project, make accurate resource projections, set realistic delivery expectations, and develop a schedule to complete the project.
With this, the manager can set out a clear process and deadline for the project. The project’s team and stakeholders will have the right project information and cost estimation for the project. Thus, nobody will have unclear expectations and inflexible work schedules in the course of executing the project.
Quality Control Checks
While project management may help cut down on the cost of completing tech projects, it ensures project managers do not compromise on quality and consistency.
Project managers in the tech industry are always under pressure to deliver a successful project within the estimated budget. Yet, without the proper project management, it’s easy to give in to this pressure in executing a project.
When this happens, managers fasten the project process under tight schedules, tasks are underestimated, and the entire project is rushed. The result will be a catastrophic output and waste of resources.
Project management not only ensures that the time and resources for completing a project are available, but it also makes sure the output meets the stakeholders’ expectations.
Project managers achieve this by periodic quality control checks at different stages of the project. Project managers in the IT industry can phase the different stages of a project and test for quality output at different phases.
Orderly Financial Reports
One of the benefits of project management is the accurate tracking and progress reporting it offers to project managers. Aside from regular status reports and documentation, project managers can keep accurate records on the project’s cost against the progress. It’s easy to see when things begin to go out of the plan and take proactive actions to ensure things stay on track.
A lot of projects fail not because there wasn’t a plan, but the inability of project managers to place progress against original objectives and spot course deviation.
Regular financial status reports also show transparency to the stakeholders and management involved in the project. The clients can also track the project’s progress, work completed, hours used for the progress so far, and how the progress reflects the project’s goal.
Poor communication and documentation can lead to the failure of a project. Cortex’s recent study reveals that about 57% of projects fail due to poor communication between stakeholders. Source: IT Cortex
These reports also give insights on discrepancies, risk assumptions, and issues faced at the projects’ course.
The data from regular financial reports will come in handy in future projects and records. They also help solidify client’s and stakeholders’ trust in the process and company. Thus, the project manager can build a robust client relationship.
Project directors in the IT industry face the risks associated with completing and delivering quality projects. These risks become worse without project management.
Team leaders without workable project management skills or methods face the risk of unclear objectives, cost overruns, poor project results, late delivery, unrealistic targets, and chaotic management.
Project management offers a blueprint to plan, execute and deliver a project without going over budget or compromising on the quality of project deliverables.
Online Project Management Training Classes for Top IT Leaders
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