Published on Sunday, March 29, 2009
I’ve talked about Budget Management in other articles, but it’s such a huge issue it’s worth another look or two. Depending on how your organization is setup and how your PMO mandates projects to be tracked, the concept of budget management may not be getting as much visibility as it should…but it’s still critical and extremely important to your customer.
The Status Quo
All good Project Managers know all about managing their projects well with formal weekly status reports, formal weekly project status meetings, delivering a revised project schedule on at least a weekly basis and conducting at least weekly status calls with your internal delivery team members. But when you’re acting in the role of a PM, the target is firmly planted on your forehead. That means that anything….ANYTHING….that goes wrong on your project will be perceived to be at least partially your fault. Because if it’s something you didn’t know about, then everyone will want to know WHY you didn’t know about it.
That brings me to the concept of budget overruns. The key expense that is churning through your project budget is delivery team man-hours. As the PM, if you’re not tracking your project team members time charged to your project on a weekly basis, then you better start – better late than never.
The common problem is the Project Manager who is very intent on managing the project with the status report, project schedule and regular status meetings, but who forgets to track the hours and expenses on the project. If things are going smoothly, how can the budget be out of whack? Easily….each professional on your team wants to charge as many productive hours as possible and if they are charging to multiple projects and you’re the PM who isn’t tracking hours, then you’re the one who is going to get any ‘grey’ hours charged to your project. And it could be that they are legitimate hours anyway, but most IT pros go through the week concentrating on their detailed work and don’t give much thought to actually tracking where their hours were spent until they have to…on Friday or the following Monday.
It’s easy for extra hours to get logged to projects and you’re a sitting duck if you’re not running through the budget and forecast with your team on a weekly basis so they know how many hours they can charge and what you’re expecting to see each week.
In this scenario of over-trusting your talented staff to charge as few hours as possible, it’s very easy to get ¾ of the way through the project only to find that you’re now forecasting the project to be 30% over budget. This is not good news to either your customer (who may have to pay more for the project) or your organization (who the customer will complain to and who may have to eat the $$ if your customer decides they shouldn’t have to pay for the budget overrun). And who looks bad in the scenario? The PM – and justifiably so.
The moral to this story is that it’s critical to maintain a tight control of your project budget. It’s just as critical as the project schedule, project status report and project status meetings. Keep the team aware on a weekly basis of what you’re forecasting in the way of effort for them on the project. And keep the customer informed of the budget status on a weekly – or at least monthly basis. That way, the team will feel more accountable and the customer will be more aware and likely more confident and satisfied…which ultimately is a very good thing for the Project Manager.
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