Cost-management closure process

The delivery of a completed project does not indicate its closure. A project's closure stage requires finalising accounts and documentation. This final phase of the project life cycle should also include a formal review to assess the project, its success and its challenges. Comprehensive reviews provide crucial information for future projects and organisational improvement.

Project closure should ensure:

• Completion of all works according to the project management plan
• Execution of all project management processes
• Approval and agreement from all stakeholders.

Information obtained from the project closure process aids:

• Planning and risk assessment for future projects
• Organising support and resources for future project deliverables
• Identifying appropriate project management personnel and training
• Developing policies and procedures for project management contracts, deliverables and budgeting.

Project closure plan

A thorough project closure plan details the transition of information, resources and training for stakeholders to manage and maintain the project output, i.e. the produced service or product.

Official project closure will ensure client satisfaction and guarantee the reputation of the project management team. Project closure is a critical phase of project management that must be factored into the project budget and financial project management processes.

How to close a project:

• Every project has an ending, or closing phase
• A comprehensive closing phase involves several steps
• Use this 7 steps process to ensure your projects are successful:

  

  1. Formally transfer all deliverables
  2. Confirm project completion
  3. Review contracts and documentation
  4. Release resources
  5. Conduct project review
  6. Archive documentation
  7. Celebrate

Successful closure of a project benefits from a project management review. This process ensures that all project deliverables and objectives have been achieved for project completion. The project review team is responsible for undertaking the review process and presenting their findings to the project manager in the project management review report. This internal briefing process shares confidential information between the review team and the project manager about the project's status. This critical process in project management requires clear communication to prevent costly errors or delays in the project life cycle.

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Phase review form

The project management review report contains information about the project's progress, including schedule and budget, in the phase review form. The phase review form is part of the quality assurance process conducted by the quality assurance team. The completed phase review form is presented to stakeholders for approval to proceed through the project life cycle.

Review types

There are two types of project management reviews: Standard and Special. Standard reviews are conducted twice during the project life cycle and consist of three phases: Initiation, Research and Report. Special reviews occur at the stakeholder's request when the project is considered non-compliant.

Project management review report

Project management review reports categorise the project as:

• Red (non-compliant)
• Yellow (areas for amendment) or
• Green (compliant).

The determined project status indicates whether the project complies with project management standards. Action plans must be implemented for any projects that are yellow or red. Project reviews identify areas of the project requiring specific attention for their successful completion.

There are three project review phases:

1. Initiation phase
2. Research phase
3. Report phase

The project management review report includes:

• Project determination: Whether the project is compliant or at risk.
• Executive summary: A brief one-page summary of review findings.
• Project metrics: Report the comparison between the metrics and project management standards.
• Findings: Summary of issues identified in the review process.
• Recommendations: Recommended actions to correct findings.

Project reviews are an integral part of project management. They provide valuable information that keeps projects on track and within budget. Post-project reviews present an opportunity to improve the performance of project management teams. Areas for improvement are highlighted in project review reports, including resource allocation and personnel training. Data from project reviews facilitate the budgeting and forecasting of future projects. Comprehensive project reviews incorporate stakeholder consultation across all aspects of the project and its life cycle. Stakeholder involvement reduces misunderstanding and increases the likelihood of project success, including cost management.

Resource

Learn the eight easy-to-follow steps to conduct a project review.

Projects are complex, and many cost-management issues can occur during the project lifecycle. These issues can be identified through concise documentation and review processes.

Common issues in managing project costs can be addressed through:

1. Cost analysis
   • Reconciliation of data must be accurate. Capital planning and cost analysis should involve possible scenarios to plan and analyse project data.
2. Effective budgeting and forecasting
   • Standardised budgets and forecasts increase the reliability of planning and forecasting the project across its life cycle.
3. Collate progress data
   • Progress data should be collected from all subcontractors to evaluate project progress and ensure accurate record-keeping and cost analysis.
4. Integrate schedule and cost
   • Project schedulers focus on work breakdown structures. Finance managers and cost analysts manage transactions, cost codes and fiscal periods. Integrating these two aspects of the project is important for a comprehensive project overview.
5. Align data from multiple source systems
   • Data from various sources is necessary to manage project costs. These sources include data from timesheets and management systems, such as asset, funds and contract management systems. Many organisations use spreadsheet software to collate data. Ensure software solutions retain security and version control to maintain confidential cost performance records.
6. Optimise reporting time and effort
   • Consolidate data for reporting via cost controls and scheduling systems to streamline the gathering process, reducing the risk of error and associated costs.
7. Manage customer relationships
   • Negotiating customer expectations can minimise issues during the project life cycle. Clients must understand the project scope and cost considerations, and they may request evidence of cost and performance measurements during the project.
8. Accurate reporting processes
   • Clear and concise reports must provide accurate accounts of the WBS and costs of the project. These reports need to be easily understood by everyone involved in the project and as historical records.
9. Sufficient resource control
   • Cost reports and scenario analysis is used in complex environments. Large-scale projects often involve mergers, acquisitions and collaboration between numerous organisations. Accurate and detailed reporting facilitates resource control and timely reporting to best manage project costs.
10. Control change
    • Cost management can be complex when changes occur. Budgets should always have provisions for scope and variation. However, unforeseen changes can—and often do—occur. Organisation rules and contingencies can mitigate issues that may jeopardise project success. Possible issues include:
      1. Inadequate resources
      2. Errors in data collection and compilation
      3. System failure
      4. Differences in perspective
      5. Data structure incompatibility
      6. Inappropriate change management processes.

Project Budget Report

Below is an example of a simple project budget report to provide a summary of the project outcomes and improvements to address cost management issues for future projects.

Cost management improvements

Current trends in project management cost control address these challenges by:

1. Standardising cost controls processes to allow project flexibility
2. Integrating cost control systems through automated reporting to reduce the occurrence of such challenges
3. Developing comprehensive strategies to optimise organisation project management processes.

Implementing a cost control system improves flexibility to meet the organisation's needs.

Process standardisation increases the visibility of project performance and facilitates accurate reporting. Continual improvement in project management processes enables better cost management during the project life cycle. Effective cost management keeps the project on track. Successful projects are completed within scope and budget, so cost control is essential in project management, as the primary goal of every business is profit.