Every project has a cost – that cost comes in the form of a budget. Budgetary overruns are the number one cause of project failure in all industries. Even if you manage to achieve the goals of the project, if you do so by going over your budget, you can’t consider it a success. Blowing your budget is never a good thing, but there are a few ways that you can keep an eye on costs and ensure that you stay within the bounds set for the project.
Know Your Budget
Obviously, the first step in staying within the bounds of your budget is to know what it is. This should be set during your planning and initiation stage, but there’s a problem here. Sometimes, project managers are not brought onboard until after this stage. This is particularly true in instances where the project was planned by upper management and then delegated out afterward. If you don’t know what your budget is, find out. You’ll need to communicate with upper management and the program’s sponsor to get this information. If they are unable to provide it, that should be a red flag – the project should go on hold until you have this data.
Tracking the Budget
In addition to knowing what your budget is set at, you also need to make sure that you’re tracking your budget at all times. This will require that you do some very specific things. First, make sure that there is someone responsible for tracking the budget at all times – that might be you, the project manager, or it might be a stakeholder, manager or even a team member. The point is, a very close eye needs to be kept on your budget, and how your project is faring in regards to it.
Constant Reporting
Yet another vital element here is that your team members all understand the importance of constant, accurate reporting where costs and time are concerned. This applies directly to the amount of time they spend working (the number of payable hours they’re racking up) each day. For team members that struggle with time management, this can be a challenge. Thankfully, there’s a whole host of time tracking software out there that can help make this more feasible. Make sure you have a solution in place for this and that your team members use it.
Project Your Costs
Finally, you need to be good at forecasting your costs in terms of the amount spent at the end of the project. How far over budget will you be if no changes are made in the meantime? Will you come in under budget? Is there a way to authorize more money? With accurate forecasting, you can take preemptive steps to ensure that you are able to remain within your budget, or get approved modifications to increase the funds available to you.
With a proactive stance and the right steps, you can avoid the most common failure to plague the world of project management.