How to Set up Cost Tracking With a Software Company

Cost tracking is the process by which you can manage outsourced projects that have a great number of parts. Although it has traditionally been used in the manufacturing and construction industries, cost tracking is proving increasingly popular for outsourced software development. This stands to reason, of course, as creating software is often compared to building a house. If you have contracted with another company to design and deliver a large-scale software solution, it is essential to stay on top of both rates and progress as they become available.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Cost tracking software
• Conduit for ready communication with your software development company
• Detailed contract that includes benchmarks for every step of the process

Choose the Model

1. Speak to your software development company about cost tracking and whether they have worked with a specific model in the past. Generally such procedures fit well into existing frameworks, but there may be some negotiation as you hammer out the details.
2. Set up goals and benchmarks that correspond to the different parts of the software build. Often such functionalities will come in sections, making them easy to tie discretely to given dates and teams.
3. Agree on the framework before you begin, up to and including any allowances associated with cost overruns for materials and manpower.

Make Your Cost Tracking Work

4. Communicate with your project manager to ensure you are getting the kind of detail you desire for your cost tracking. Companies that use free-flowing models may be unaccustomed to such reporting, but it is in your interest to stay in the loop.
5. Check your daily and weekly progress reports against the timeline and benchmarks you have set. If problems arise, you want to address these constructively with your liaison to ensure they will not represent major delays or budget issues.
6. Limit your financial outlay for each section of the process. This is by far the simplest way to keep budget overruns to a minimum--anything beyond a certain set figure and you simply will not be responsible for paying that premium.
7. Develop a dynamic cost-tracking protocol that lets you and the development company maintain identical records. If there are any discrepancies, these can be addressed in real time without controversy.

Tips & Warnings

• Using proprietary cost-tracking software is the easiest way to maintain order in a big, sprawling contracted project.
• Back up your data frequently to ensure you don't miss progress reports and budget figures that need to be referenced down the line.
• If your software contractor is in the habit of requesting more money before benchmarks are met, be sure you understand why before sending any funds.

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