Keeping the project budget in line is one of the most difficult things in project management
– and yet it is a huge factor in determining the overall success of the project when the engagement winds down. The goal is to keep it in line throughout and avoid falling into emergency mode at any point with a huge budget overrun that you have to either fix or find yourself at the brink of  project shutdown.

Three processes are extremely  helpful to me as you try to keep project budgets in check  especially on multiple projects at any given point in time. Project managers are busy with many  things beyond managing the budget on the plate.

Image result for managing cost in project management

Developing good processes and habits will help significantly reduce the likelihood  that your project budget will turn into a catastrophe.

Let’s review each of the three ways to minimize your project budget exposure more closely….

1. Review and revise the project budget at least weekly

The first thing you can do to protect your project budget is probably the easiest thing
you can do and it is definitely the least invasive thing you can do. All it requires is
you – and the proper information provided to you on a weekly basis.

Get weekly information from Accounting concerning the charges to your project and revise
your information diligently every week. This may seem simple…even mundane. But it is
suprising how so many project managers get lazy and let it slide for a week or two and
then eventually longer.
Related image
Well, it’s amazing how the little things build up – and they can build up fast.  Stay on top of the budget – don’t let a week go by without comparing forecast to  actuals and re-forecasting, if necessary. It’s much easier to fix a 10% budget  overrun now before it gets out of control than it is to fix a 40% budget overrun a  month from now after it is already out of control.

Related image

And which one is management going to be more pleased about hearing? Which one will
the customer be more understanding of and flexible in working with you on?

2. Make your project budget high profile

This is also a fairly easy one and it has worked extremely well for so many organisations.
And if your organization is a matrix organization with everyone working on
multiple projects at once, even better. Here’s the scenario….

You are a project manager running five projects at once. Each of your technical team members are on – on average – three different projects at the same time.  And let’s remember that – in all honesty – 80-90% of all employees calculate their project charges for the week at the last minute, usually on Friday.

Related image

Very few accurately document their time during each workday or at the end of  the day. And we all remember most of what we did each week … but there’s always  that four or five hours that we really can’t pinpoint exactly what we were doing. We know we worked 50 hours this week, but can only accurately account for 45 of them.  They have to go somewhere. Where do they go? They go to the project that they feel  those hours will be least noticed in. And that is usually the project that those
personnel know is not being monitored closely.

So don’t let that be your project. Make sure your team members know you’re watching  the project budget – and the hours that they charge to it – like a hawk. Discuss the  budget with them at every weekly internal team meeting and give them a status update  on how the project budget is standing up to the original forecast. Share your concerns with them.

Image result for african american project managers

Periodically question them on charges just to keep them on their toes. Don’t be disrespectful, just ask them questions about the charges and the work that was being performed.  If they know you’re that aware, it’s highly unlikely that any of your projects  will be recipients of the ‘grey’ hours at the end of each work week.
3. Manage scope closely

This is probably the hardest one to do and can have the most devastating affect on  the project budget. The problem here can be two fold.

You have the issue of managing the project scope from your project manager perspective
and negotiating changes and change orders with the customer. But you also have the task
of managing your project team members closely as they work with the customer.

Related image

The customer makes a small request, your developer thinks it will be no problem to incorporate this ‘new’ request quickly and you end up having a developer spend a few hours – which can mean a few thousand naira – of your precious project budget  on a customer request that is likely beyond the original scope of the project.

None of this was malicious or even on purpose – they were just helping out the  customer on a small request. Inform your team, warn them of these situations,  and then ask them about their customer interactions and any requests that may be coming their way when you meet with them internally on a weekly basis.

Leave a Comment