Since my last post did you have your cup of tea and or coffee? Did you put on some good music and get down to business with the day’s paperwork? In handling dreaded paperwork that was one of the recommendations in yesterday’s post. It’s probably applicable to today’s post so pull up a seat, let me pour you a cup and we’ll tackle the budget.
Under budget or worse, over budget, the numbers can be the worst part of the project. Why?
Expert’s Input: In an article about personal budgets the author lists 28 Reasons Why Budget’s Suck! (& What Really Works). Yes, this list can be considered typically for the home but the ones of the 28 listed here I believe are relevant to any budget and why they suck!
- Budgets are boring
- Budgets are too time-consuming
- Budgets are prone to A LOT of errors
- Budgets are not empowering
- The word “budget” itself is cringe-worthy
- Budgets are more about tracking money then about what really matters to people
- Budgets fail more often then they succeed
- Budgets don’t factor in the variables of life
- Budgets can actually INCREASE spending!
- They’re frustrating
Ten out of 28, the point is clear, preparing and or balancing the budget is not something that is looked forward to.
Expert’s Input: In a downloadable PDF, John Cammack talks Project budgeting related to sponsor funded programs. It has a lot of great detailed information but what I want to share here is his answer to the question: “Who is responsible for a budget?” His answer and what your answer should be is: “Managers and staff responsible for the activity should prepare and monitor budgets and see detailed transactions. Finance staff are a technical resource, who often provide information and make sure that the process is completed professionally. Trustees should monitor a summarized version of the budget and ask questions about the big picture.”
He breaks it all down very well. You are responsible and your financial staff are there to provide you with the information needed to track the budget. Don’t get caught in the easy assumption that the financial staff has your budget under control. Because when the trustee’s come and ask questions, they are not headed to your financial staff for the answers.
Before You Get Into the Numbers
Expert’s Input: On the website PROJECTinsight, they discuss: Project Management and the Comprehensive Project Budget. It’s a good read on the ‘S’ curve in its analysis of project expenditures and Work Breakdown Structure (WBS). But for this post I want to just pass on a couple things: “A comprehensive budget can only be developed as a result of the project schedule and resource plan.” the Project Schedule could have its own post entirely but the point is clear, unless you know where your project is on your established timeline, your numbers in the budget aren’t going to give you a ligament picture of what’s going on.
They also say: “A key role of the project manager in the planning process is to build consensus from the team and sponsor on each of the WBS task elements, recognizing that as you elaborate on those tasks, the budget associated with that task may change.” This reinforces the need that you have a comprehensive picture of the tasks related to your project in hand before tackling the budget.
How to Keep the Books:
Expert’s Input: Jason Westland in Project Management: 4 Ways to Manage Your Budget he puts it bluntly: “If a project goes wildly over-budget (as they often do), it will not be considered a success, even if it’s delivered on time and meets end users’ needs.” He then goes on to list “four strategies for maintaining control of your project budget and preventing massive cost overruns.” My thoughts of support are after each point.
- “Continually forecast the budget: A project run without frequent budget management and reforecasting will likely be headed for failure.” I personally really struggle with this. Getting the motivation to tackle the budget the first time around is hard enough, repeating the exercise is even more difficult. I talked yesterday about some habits that aid in the paperwork process and could be applied here again today. What works for me the best establishing a habit; typically at the end of the day, right before bed. It sucks at that time of day but if done on a daily basis the process is really quick and I’ve found I sleep better and wake more refreshed knowing the numbers are inline. It’s a good feeling and frees your head to focus clearly as the day starts streaming in.
- “Regularly forecast resource usage” This ties into knowing where your project sits in the overall schedule. If you aren’t aware of your resources, the numbers in the budget are not going to mean anything that can be effective.
- “Keep the team informed: An informed team is an empowered team that takes ownership of the project. By keeping the team informed of the budget status, they will be more likely to watch their project charges …” This is something new I’m going to adopt. Typically in the recent past after going over the numbers and going to bed, I send it out for the group to review on their own. And only if the budget am I bringing up the budget and throwing cautionary snippets here and there. That’s not effective. If I were to instead go over those numbers with a few of the individuals reporting directly to me, working along side me, then they become engaged in the project which is more likely to lead to effective management of spending.
- “Manage scope meticulously: Scope creep is one of the leading causes of project overruns.” A good way to keep it in check “Change orders authorize additional funding for the project to cover the cost of extra work, and thus keep the project to its new budget.”
The author has a great closing statement to wrap this piece of but for me, knowing the budget is kept within the bounds necessary allows me to effectively deal with all the other aspects of the project. Why? Because all the other aspects relate back to the budget in some fashion and knowing where you’re at, it will allow you to steer safely to a successful project completion.
What to Avoid:
Expert’s Input: In Late And Over-Budget? A Method To Avoid Project Management Disasters, Philip Moscoso talks about “Breaking Molds”. In particular “Just because certain kinds of projects are managed in a traditional way does not mean this is the best way. Sometimes it is possible to achieve substantial improvements with alternative approaches.”
This is so huge. I know I’m guilty of it and especially with budgets it’s an easy trap to fall prey to. Just because it worked for your last project doesn’t mean it should be used on your next. A reevaluation needs to take place from top to bottom, constantly refine and know there is ALWAYS room for improvement even on what you experience might might be considers the elusive “perfect” project.
Expert’s Input: Stef Gonzaga also has a great list on How to Complete Your Project on Time and Under Budget. Her second point is: “2. Assemble a Team Who Believes in Your Project. Research shows that the biggest barriers to project management success is actually rooted on people factors—changing mindsets, disagreements, miss-communication, etc.” I love it when I come across something that is research based. I kept to link of where the extensive research came from and it’s compelling.
She follows up: “With this in mind, your project team should comprise of people who truly believe in your project and are dedicated to seeing and making it succeed, even if it means reminding you of your own tendencies to sway from the original plan.”Make a note and remember when choosing your team, you need to be surrounded by people who tell you what you need to hear not what you want to hear. If you’re humble enough to embrace this form of communication, the whole project will benefit and you’ll grow as an individual along with it.
The End is Nigh:
So, the project is over, what now? Close out the project by going over the budget once more. If you were over budget there might be a few areas that are glaringly the reasons. But don’t stop there; if you were over in areas chances are you were under in other areas. Even if they were minute savings, examine those with the same scrutiny for the keys to costs savings in your next project.
And if you’re under budget? All the more important to get into the numbrs so you can answer why were you under budget? Was it less material or were you operating more effectively? Can those costs saving measures be used else ware? Can they be repeated? It’s not until you look at the data that you can you understand the project. And it’s in the data that the answers to your next efficient and effective project can be found. The numbers never lie.
So, get out there, put another pot of coffee on and get after your next Paper Cut.
Image Credits: Sketches by Author