What is the importance of money management in projects?

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Tight control on capital expenditure would ensure project success

Importance of money or 'budget' management needs no emphasis. It is one of the most vital aspects of any project and has the significance right from the approval and planning phase.

At every phase in the project, it has to be monitored if the money involved is being utilised properly for the purpose allocated (like materials, wages etc) and the variance has to be also reported.

Any delay in the project for various reasons can lead to more costs and therefore the budget will exceed. Any fluctuations in the economy can also lead to change in the cost of raw material (for example, with the introduction of VAT, the cost of so many materials have gone up, but these would not have been catered in the project plan which was made a year ago).

Therefore, money or fund management/budget management is one for the most important aspects of any project.

 

1. Team A project team is comprised of a group of people who will realise the project result. The group is often comprised of people who have various backgrounds, each of whom contributes knowledge and skills. 2. Goal A product result (or goal) is desired. After a project has been completed, something has been realised. A new piece of software has been written, a re-organisation has been carried out or a bridge has been built. The project goal is sometimes vague or less firmly established. In many projects, it is necessary to adapt the goal as the project proceeds. 3. Limited resources The amount of time and money that is available for completing a project is always limited. No project is completely free of time pressure.

Money is by far the most important resource involved in Project Management. All other Ms (Manpower, Materials, Machinery) are directly or indirectly related to Money - hence, its importance is vital and must be a top priority!