Budget Blowing Mistakes and How To Avoid Them on Your Project
Project managers always have an eye on the budget, or they should do anyway. Their task is to turn their client’s invested capital into a highly effective, deliverable orientated project, packed with as much added value as they can muster. Wantonly going over budget without a care for the consequences is simply not on the radar of most project managers, but sometimes it happens anyway.
Occasionally the budget is blown due to circumstances beyond the control of the PM, but these cases are rare. More often than not, a little diligence and awareness of some of the common pitfalls is enough to avoid a financial disaster in your project world. Here are some common practices that put budgets at risk every day, all of which you should be avoiding like the plague:
- Failing to monitor the budget: You don’t even have to do this job yourself, because delegation is all part of the process. However, if your expenditure and progress are not being accurately managed, you will eventually lose track of where your budget is, and by the time you realise this it could be a major problem.
- Going on estimates until late in the project: Estimates are good. They ensure you have enough at the start to (hopefully) get the work done. However, they are what they are – educated guesses. As expenses start to mount up, it’s important to reconcile your estimated spend with your actual spend so you know in real time what is left in the pot.
- Failing to negotiate on the small stuff: High cost items usually give the PM a chance to get their aggressive negotiating hat on, but what about the small stuff too? Smaller value items typically outnumber the bigger ticket items significantly, and by reducing these smaller but numerous costs, the overall budget can be more flexible.
- Assuming there is more money available: Presuming that if you do overspend, your executive can simply stick his hand in the till and produce a few grand more is a dangerous game to play. It will usually result in a rather awkward conversation with your client at best, and could end up bringing everything to a grinding halt at worst. Project managers need to know how to manage a project budget and must do so. It is one of the core project management skills taught on every project management course.
- Giving equal importance to all costs in the project: If you try to scrutinise every single expense with the same amount of diligence, you’ll end up drowning in paperwork or overlooking those areas you should be focussing on. Most projects will have a high risk area that you should concentrate on monitoring more closely, so focus down on this and don’t sweat the small stuff too much.
Keeping on top of your budget during a project delivery is not only essential for a successful project manager, it’s an issue of trust too. Your client needs to know you care about his cash as much as he does, and knowing exactly where you are at any moment in time is one way to ensure he can feel confident in your project management abilities.
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