For this article, we’ll discuss the concept of taking corrective action once your project budget starts to get out of hand.  Let me re-phrase that….. once your project starts to go over budget.  I need to state right now that I firmly believe two things based on experience…

1)    If you manage the project budget closely – reviewing it and reforecasting it weekly – then it will never get too far out of hand barring, of course, a catastrophic event.  And if it never gets too far out of hand the corrective action you need to take will be small and manageable.

2)    You can recover from a 10% budget overage that you might experience if you’re managing the project budget closely like I’ve mentioned so far.  However, if you’re not – you can easily get into a situation from which there is no budget recovery.  No amount of corrective action will fix it.  So don’t let yourself get there.

Given what we’ve talked about so far then, let’s imagine your managing the project budget tightly and it starts to run over the amount that you’ve forecasted.  Before you can take corrective action, you must first determine the cause.  It’s usually going to be one of two things – so let’s look at each of these and the type of corrective action you might take for each one…

Inaccurate time charges from your project team

If you find that your project is getting dumped on by one or more of your team members in terms of extra hours being charged to the project in order to ‘fill out’ their weekly timesheets, then you have an issue on your hands that needs to be resolved quickly.  If you’re watching your project budget closely and your team knows it, then this isn’t likely to ever happen.  So if it is happening, part of the blame is yours.  Make sure they know how important the budget and forecast is and make sure they know what you’re expecting them to charge each week.  If your team members know you’re watching and checking all of their time charges that closely, it likely won’t happen again.

Project time management

Unplanned effort required on the project

This sounds like either a requirements issue or a schedule/task effort issue.  For this one, you’ll need to first discuss it with your project team and then review the requirements.  If it’s work that falls outside the scope of the project, halt it immediately, draw up the necessary paperwork for a change order and meet with the customer to ensure that it is needed and get their approval/signoff.  If it’s work that is currently required by the project as indicated by the requirements but it’s just taking longer than planned, then you have a different issue.  Either the original estimate was off or the work may be being performed inefficiently.  Go to the resource again and figure out if they need help or if you need to offload this work to another resource that can handle it more efficiently.  Either way, you have to stop the bleed quickly or the project budget will be in even more danger.