Managing Your Project’s Budget
By: Savitha Meda | Project Manager/Solutions Analyst
As a project manager, I love the beginning of a new project. I always look forward to having that first kickoff meeting with your team where everyone is excited to tackle a new challenge. As a project manager, you work on ensuring everyone that a great idea is in store for them for next several weeks or months.
When working in a firm like TekStream, project managers are often involved in the sales cycle. Therefore, we have a solid plan on how to deliver the project. With any project, our ultimate goal is to deliver a solution that our customers are excited about and that will add value to ultimately improve their business processes.
How does this relate to managing your project’s budget? Easy, none of us have a crystal ball or can predict the future. The status of the project’s budget helps us keep our finger on the pulse of how the project is tracking and ultimately how we are driving customer satisfaction. A project that is running over budget can be warning signs of issues such as scope creep, improper resource mix, or even not being able to meet delivery timelines promised.
The ultimate goal of a project manager is to deliver a project on time, on or under budget, that meets the customer’s needs. If a project goes over budget (which can happen for numerous reasons) the project is not considered financially successful and may not deliver the solution a customer expected in the timeframe they specified.
Here are a few strategies for successfully managing a project’s budget:
Manage Project Scope
Without knowing all of the variables at the beginning of a project there is always the possibility of unplanned work finding its way into the project plan. Either customers change their minds after design or development has started, or the team uncovers some additional work that needs to be addressed. Scope changes are considered okay if at the end of the day it helps us deliver a better solution. The key is to minimize the impact it has on the budget and the timeframe of delivery. Communicating these changes up front to the customer in a timely manner helps us determine if this extra work is really necessary. If it is, a Project Change Requests (PCRs) should be executed for work that was not covered in the project’s initial scoping efforts. PCRs authorize additional funding to cover the cost of extra work, and keep the project at its new budget.
Manage the Plan in a Timely Manner
The key to this strategy is to review your project plan often and ensure it reflects what is happening “on the ground”. This is done in a few ways. The first way is to compare all the tasks that were needed to be completed in a certain time span (I do this on a weekly basis) against what has actually been completed. This helps assess what was supposed to be completed and if any further reprioritization is needed for the work that still waiting completion. If it looks like tasks are being finished earlier than anticipated, then that may allow for a buffer in case other tasks take longer. Or, more importantly if tasks are taking longer to complete, this may be a warning sign of scope creep or the need to change that resource working on the task. Either way, these overruns need to be escalated with management in a timely manner and communicated to the customer in case it jeopardizes the ability to deliver a project on time.
Meeting with your project team regularly will also help ensure the project budget stays intact since your team members will contribute to the project costs as well as drive revenue (as they record billable hours). Weekly team meetings help with the process of reviewing the tasks needing completion as well as informing the team of next steps. Sometimes, these meetings uncover the need to add extra team members or swap out tasks between team members to maintain the project budget and timeline. Typically, the project manager owns managing the project plan. However, the plan should be reviewed regularly with the team to assess if the project is on track for on time delivery and help to ensure everyone is being utilized effectively. Not only does this help ensure the plan is reflecting what is actually happening “on the ground,” but provides a shared sense of responsibility amongst the team for a successful project delivery.
Hopefully you have noticed that communication is the common theme in the above strategies. The project budget helps provide the data we need in order to communicate changes to scope, not only to customers, but to management and the project teams as well. It also uncovers resourcing opportunities/challenges and ultimately helps asses if we are going to deliver a project on time and on or under budget. The project budget is a living, breathing animal and needs to be reviewed regularly. In my experience, project managers who follow the steps above have a good grasp on their budgets throughout the life of their projects and are able keep customers and management happy.