Cost Monitoring and its Importance to stakeholders
Cost Monitoring is critical for project success. The information on cost monitoring is essential so that we can make management decisions. Cost Monitoring is necessary to ensure that we meet financial targets. Cost Monitoring can avoid budget and project overrun.
Stakeholders include contractors, financers.
1.Contractor. : Cost Monitoring affects productivity, efficiency and performance of management, trades-people, labours, subcontractors and also suppliers. The contractor should utilise Cost Monitoring very effectively for the success of the project. It plays a vital role to identify potential cost overruns, bottlenecks and inefficiencies due to lack of resources, inefficient resources, expenditure, poor management and under-pricing.
Cost monitoring can be used by contractors to make significant decisions for the selection of resources, management of resources and scheduling of resources.
2.Impact on Principal.: Cost Monitoring gives information to the principal about the performance of the contractor and the consultant, sales and Revenue of the project and the validity of the current business strategy.
The principal using cost monitoring can make decisions on Business Strategy, Project Scope and Phasing considering the changes in bill of material. This also helps in making decisions on the final product. If the project is not meeting the financial goals, restructuring of the finance can be done.
3. Impact on Financer. : The financer can maintain the financial health of the project. He can abstract all the data in the balance sheet and create up to date financial reports. This can help financer to give an overall review of the project. The financer could restructure the financial report based on cost monitoring if any changes are to be done.
