When should costs be entered to help identify project overruns early?

Entering costs when they are committed is crucial for effectively managing a project's budget and identifying potential overruns early. Committed costs represent financial obligations that the project will incur in the future, such as contracts for services and materials that have been agreed upon but not yet paid.

By tracking committed costs, project managers can gain insights into the overall financial status of the project before these costs are actually paid. This proactive approach allows for better forecasting and financial planning, ensuring that any discrepancies between budgeted amounts and actual costs can be addressed promptly. Monitoring committed costs aids in keeping the project within its financial limits and allows for timely adjustments to the project scope or execution if necessary.

In contrast, entering costs when they are paid would provide a historical perspective on spending but would not alert managers to potential overruns until it is too late. Estimating costs, while useful for initial budgeting, does not reflect the financial obligations created by decisions already made. Similarly, entering costs only at project kickoff delays tracking until after the project has started, which is not conducive to early detection of budget concerns.