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5 Things a Cost Manager brings to the Table

May 5, 20230

Modern businesses always look for new ways to become more efficient and save money. For many companies, that is where a cost manager comes in. A cost manager is essential in project management, including planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the wider team can complete their work within the approved budgeted cost.

Project cost management is crucial to forecast and manage costs effectively to keep projects within the approved budget. Without cost control, projects can exceed their budgets and become a loss. Cost management determines the project’s baseline and ensures the project runs within the budget and planned scope. Time, scope, and resource management are equally important in project management, but cost management ultimately affects a project’s outcome. The project manager’s proficiency in cost estimation lies in organizing tasks while keeping an eye on the costs to stay within the estimates.

Here is just a few of the benefits effective cost management brings to the table:

 Identifying Opportunities

A cost engineer or cost manager can assist project managers in identifying the potential benefits that their project will bring to the organization, including cost-saving opportunities and opportunities to reduce expenses and maximize potential returns across the entire project.

The project cost manager can also identify vendors that offer the best pricing, considerably reducing material or labor costs. As most of the overall project budget is used for procurement, cost estimating and cost analysis are essential to ensuring that the project runs effectively within budget restrictions.

The cost manager will ensure that the project delivers its intended benefits by closely monitoring the progress and objectives, keeping the tasks on track, and identifying any potential pitfalls that could prevent successful project delivery.

 Potential Cost Savings

A cost manager analyzes all the costs associated with the project and looks for opportunities to save money without compromising the quality of the project. The cost manager can identify opportunities to streamline processes, improve resource planning, reduce waste, or negotiate better prices with suppliers by evaluating project costs.

Many companies, for example, overinvest in technology that doesn’t necessarily contribute to the project’s success. Cost budgeting ensures that there are constraints that force project management teams to think twice about project expenses.

Money saved is money earned, and the funds that would have been spent on less useful tasks can be redirected to future projects and activities. Cost management closes the plug on leaking money and ensures that the company is better able to reach its overall fiscal goals.

The cost manager will keep a close eye on the actual vs. expected cost of every project by monitoring spending and implementing cost-saving measures wherever required, eliminating budget overruns that can negatively impact the project schedule or lead to cancellations.

 Clarity Over Finances

Managing project costs is about more than tracking expenses. Effective cost control requires a disciplined approach to financial planning and accounting practices. A cost management professional can dramatically improve budget planning and transparency so that the right resources are allocated at the right time and place. They will also set upper limits for spending in the project’s budget so that teams are equipped and clear regarding spending boundaries. Cost managers can also provide regular financial reports to the project team and stakeholders to keep everyone informed of the project’s financial status.

A cost manager can help ensure that the project’s financial data are accurate and up-to-date, establish financial controls to prevent fraud or other financial irregularities, and ensure that all financial transactions are properly documented.

 Peace of Mind

One of the most significant benefits of having a cost manager on the project team is the peace of mind that they can provide. By ensuring that the project stays within its approved budget and delivers its intended benefits, a cost manager can help to reduce stress and anxiety for the project team and stakeholders. They can also provide a buffer that eases the pressure on payments by managing costs carefully throughout the project life cycle.

A cost manager can manage expectations by communicating realistic timelines and budgets that reduce the risk of disappointment or frustration when the project does not meet unrealistic expectations.

The project manager will be provided with a breakdown of all cost estimates and activities that lead to overspending so that they can take necessary remedial action in time.

Less Financial Risks

Having a cost manager on the project team is an important part of risk management in your projects. By identifying potential cost savings opportunities and ensuring that the project stays within its approved budget, a cost manager can help to minimize the risk of financial losses. Cost management also leads to greater accountability among team members. Because the team is assigned definite tasks with clear deadlines and budgets, they are far more likely to avoid slippage and stay within the defined parameters.

In addition, a cost manager can help to ensure that the project’s financial records are accurate and up-to-date. Doing so can help control costs, prevent financial irregularities and reduce the risk of legal or regulatory issues.

In Conclusion

A cost manager plays a crucial role in project management and can bring significant benefits. From identifying cost-saving opportunities and providing clarity over finances to reducing financial risks and providing peace of mind, cost managers are essential to modern businesses. By managing costs effectively, cost managers can ensure that projects are completed within budget and deliver their intended benefits.

Get in touch with Churchill Cost Consultants if you would like to know more.

Blog, News

The Benefits of Cost Management in Data Centers

April 27, 20230

Data centers are essential to the smooth operation of many businesses, from small startups to large corporations. Data centers provide organizations with cloud based services the opportunity to compete in the market, with disaster recovery and storage capabilities to ensure business continuity.

However, a traditional data center is extremely costly to build, use and maintain. Some estimates say it can cost between $600 to $1,1000 per square foot to build a data center and that global data center spending will reach $222 billion in 2023.

If services or equipment are overallocated or underutilized, expensive overheads and wastage can cost a business its competitive edge.

In this article, we’ll explore the pros of leveraging cost management in your data center assets and why having a cost manager on each data center construction project is essential.

 Why Cost Management Is Key

Cost management in data centers can be highly complex. The cost of owning a data center includes facilities, server technology, networking and bandwidth fees, and hiring technical staff. It’s important to size things properly upfront to avoid wasting investment. Predicting and designing for ultimate utilization is crucial in determining the total cost of ownership. Other relevant factors include electricity, engineering and installation staffing, power and server equipment, facility space, service and maintenance, HVAC equipment, servers, energy costs, project management, rack hardware, and system monitoring. All of these factors need to be taken into account while budgeting.

Engineering staffing, facilities, and utility-related costs make up most of the capital required to run and operate a data center. Sizing the data center design correctly can save nearly 60% in total cost, and leveraging modularity, scalability, and virtualization is crucial for significant savings and profits.

A procurement and cost manager can help the organization acquire the proper infrastructure at the right price to increase efficiency and optimize existing physical infrastructure and resources to reduce costs. Here are just a few of the benefits of involving a cost manager when building or running a data center facility for your organization:

1.      Reduced Risk of Cost Overruns

Cost overruns are a common problem in construction projects, and data centers are no exception. There are many reasons why cost overruns occur, including poor planning, inadequate budgeting, unforeseen complications, and changes in project scope. A cost manager can help to reduce the risk of cost overruns through careful planning and budgeting.

In assessing the total cost of a data center, there are five main factors to consider.

  • The first is the cost of constructing the physical data center facility, which accounts for around 45% of total data center costs on average.
  • The second is the cost of acquiring IT infrastructure, such as servers and networking equipment, which can vary widely depending on the specific equipment needed.
  • The third factor is the energy and utility cost required to power and cool the data center, which depends on the energy consumption of the IT equipment and the cost of electricity.
  • The fourth is data center utilization, which can affect costs positively (by increasing efficiency) and negatively (by requiring more infrastructure and energy).
  • Finally, staffing costs are a significant factor to consider, with smaller data centers requiring fewer employees and more automation leading to lower staffing costs.

Cost managers can work with the project team to develop a detailed cost estimate, considering all potential costs, including equipment, materials, labor, and operational costs. This estimate is regularly updated throughout the project to ensure actual costs are tracked to the forecast.

Risk management is another critical component of cost management. By identifying potential risks, such as unforeseen complications, changes in project scope, or unexpected delays, cost managers can develop contingency plans to mitigate the impact of these risks on the project’s budget.

2.      Reduced Risk of Delays

Cost management and cost allocation are critical factors in ensuring that data center projects are completed on time and within budget. A cost manager can identify and manage potential risks that may delay the project, create contingency plans, and ensure that the project stays on track.

A cost manager can also implement cost-saving measures that can reduce the likelihood of delays and cost overruns. For example, they can identify opportunities to use prefabricated or pre-engineered components, significantly reducing construction time and costs, or suggest potential uses of existing resources or legacy infrastructure. They can also work with suppliers to negotiate favorable pricing for materials and equipment, reducing costs and delays.

By managing costs effectively, a cost manager can ensure that data center projects are completed on time and within budget, minimizing the risk of delays and cost overruns. This helps to ensure that the data center network can be up and running as quickly as possible, providing the necessary infrastructure to support the organization’s operations.

A cost manager can provide regular financial reports to the project team and stakeholders, keeping everyone informed of the project’s financial status. This transparency allows for early identification of any potential budgetary issues and allows for swift action to be taken to keep the project on track.

3.      Improved Resource Allocation

Data centers require a significant amount of resources, including equipment, materials, and personnel. Effective cost management ensures that resources are allocated efficiently and effectively so the right resources are used at the right time and in the right place. A cost manager can help to ensure that resources are used effectively, leading to lower costs and improved performance.

By involving a cost manager early in the design process, potential cost savings can be identified and integrated into the design. The cost manager can work with the design team to find the most cost-effective solutions, such as using more efficient equipment, optimizing the layout of the facility, and selecting appropriate materials. This may lead to the teams uncovering additional capacity or additional efficiencies, saving money in the long run.

4.      Increased ROI

Data centers have ongoing operational costs, such as electricity, cooling, and maintenance. Effective cost management can help to minimize these costs by identifying opportunities for energy efficiency, optimizing cooling systems, and reducing maintenance costs.

Implementing cost-saving measures, such as server consolidation, virtualization, and energy-efficient practices, can significantly reduce operating costs, while effective ongoing cost management techniques can increase the efficiency of data center operations, leading to improved performance and productivity. This, in turn, can translate to faster service delivery and higher customer satisfaction, which can improve the data center’s reputation and attract more business.

During construction, capital expenses can represent a significant investment for data center operators. By implementing effective cost management practices, data center managers can optimize their capital expenses, reduce the costs associated with equipment acquisition, and ensure that capital investments provide a maximum return on investment.

Conclusion

Without effective cost management, data center projects can easily exceed their budgets, leading to delays and other issues that can impact the organization’s operations. By working with a cost manager, organizations can ensure that their data center projects are completed successfully, on time, and within budget, maximizing their investment in every way from start to finish.

Get in touch with Churchill Cost Consultants if you would like more information.