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Praveen-kumar Prashanth

Praveen-kumar Prashanth

DGM Project Management Civil, VSL India Pvt Ltd

PUTTING YOUR UNDERSTANDING OF COST TO WORK

Most project managers believe that their total contribution to the firm's profitability is restricted by the ability to limit and control project cost, but they can do much more Once the different perceptions of cost have been recognized, the project manager's effectiveness is greatly enhanced The manner in which the project manager plans and executes the project can improve company profitability through influence on financing expenses, cash flow and the reporting of revenue and expenses To be a completely effective project manager one must be totally versed in the cost accounting practices which affect the firm's project cost reporting.

Cost is not a four-letter word to be viewed with disdain by the project manager. It is a necessary element of the project management process, which the project manager must comprehend despite the apparent mysteries of the accounting systems employed to report cost. The concept of cost is more than the expenses incurred in the execution of the project work the manner in which cost is treated by the organization's functional elements can affect project performance, interest expenses, and profitability. Therefore, the conscientious project manager must develop a complete understanding of project cost and the accounting systems used to record and report costs. The project manager should also recognize the effect of the timing of project cost, and the differences between commitments, expenses, and cash flow. The project manager should insist on the accounting system modifications needed to accommodate project cost reporting and control requirements Once an appreciation for these concepts has been gained, the project manager can apply this knowledge towards positively influencing project and organizational profitability in all areas of cost through control of the project schedule and the execution of the project's work.