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SECTION 5

BUDGETING AND
COST CONTROL

Cost Management: The Weakest Link

A generic definition of project management would undoubtedly talk of plan-
ning, controlling, and balancing the scope, schedule, resource, and cost as-
pects of the project. Yet, when we read about project management, discussion of
the latter item, cost, tends to get the least attention. This is often carried over to
the design of software for project management. Many of the heavy-duty products,
at least back before the PC era, addressed scope, schedule, and resource manage-
ment and ignored cost management entirely. They left the design of the cost com-
ponent of the software up to the user. And with good reason.

If you were to ask a dozen project management experts to list the primary
functions and protocols of scope, schedule, and resource management, they
would speak with almost a single voice. Although there might be variations in em-
phasis and style, the fundamentals would follow a similar philosophy and purpose.
But not so for cost management.

Ask those same dozen project management experts about cost and you might
get 15 opinions. First of all, many project management applications mainly ignore
cost. And those that do consider cost have varied motives and objectives. Second,
cost is usually the domain of the firm’s financial staff, rather than that of the proj-
ect managers. Frankly, financial managers and project managers are from two dif-
ferent worlds. Without favoring either group, I can say that generally they have a
different view of what has to be managed, how to manage it, and how structured
they are in performing their duties. Furthermore, if we also define project man-
agement as attempting to satisfy the wishes of all the stakeholders, we will find
that the accountant stakeholders have a different definition of success from the
other stakeholders.

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