Tips For Keeping Project Management on Budget

Here are some tips for keeping project management on budget: plan thoroughly, create contingencies, monitor the budget, and remind team members of the original focus. The last tip: keep the project's scope as small as possible. While you're evaluating the budget, think about possible ways to save money on the project. These include: using free-form tools to record budget estimates, and creating a contingency fund for unexpected costs.

Plan carefully

To stay within budget, project managers should first get input from stakeholders themselves. They should also carefully vet vendors and suppliers. They should also account for any hidden costs. While a project manager should always try to stay on budget, there are instances where extra costs can sneak up. A few sneaky expenses are overtime, currency exchange rates, and consultant fees. Stakeholders will want frequent updates, so determine what format they prefer for this communication. It's important not to downplay problems or concerns, as this can quickly become a crisis. Instead, keep them informed and in the loop so they can resolve the issue as soon as it comes up.

It is crucial to develop an accurate baseline budget for a project. This will help the manager compare it to all other expenses. Divide the baseline budget by the estimated duration of the project to calculate a monthly budget. Identify clear cost controls for each expenditure, including who oversees what monies. Regardless of the method used, clear sign-off responsibilities should be established for each expenditure. Knowing who is responsible for which monies will help project managers keep their budgets within control.

Cost estimates should be detailed so that stakeholders can understand the costs of individual activities. Subtotaling costs by activity can help determine the total cost for each activity. Remember, however, that no project will proceed exactly as planned. Therefore, it's vital for project managers to be able to identify when costs vary from their original estimates and manage them effectively. However, it's important to keep project management on budget and make the necessary adjustments to the plan when costs do.

Create contingencies

It is critical to create contingencies in project management. Contingencies are plans for contingencies, and they are your final line of defense when something goes wrong. By preparing ahead of time, you can avoid problems and ensure that the project is completed on time and on budget. This is especially important in times of economic uncertainty, when every dollar counts and time is money. Here are some tips on how to create contingencies.

First, calculate the cost of identifying risks. For large-scale projects, the budget can be too generous. But assumptions can be dangerous. Use a probability distribution model to simulate a wide range of costs. This way, you can reduce the risk of spending money you don't have and start a costly project. This method helps to avoid overspending and over-budgeting. It's also easier to explain to your project sponsor why risk management is important, and it is more efficient to plan a project budget that includes risks.

Next, calculate and manage a project contingency. This amount can be drawn from and used to accommodate changes in scope. This type of contingency should never be used to cover changes to building size or production specifications, or any major force majeure event. Wildfires, a hurricane, or a natural disaster are some examples of unforeseen costs that can occur. In addition to the budget, a project's timeframe should be well-planned.

Design contingencies, on the other hand, account for items not included in the current estimate. These tend to be large during early stages of the design process, when many design details are still incomplete. Typically, designers use a sliding scale for design contingencies, which starts with a factor of 30 to 40% for PI plans and gradually reduces to 0% for PS&E documents. If there are any issues that arise, the designer can use design contingency to compensate for them.

Remind team members of original focus

One of the easiest ways to keep a project on budget is to remember the original focus. Remind team members of this focus during meetings and set up a clear communication schedule for your team. By doing so, you can prevent scope creep and stay on budget. Scope creep occurs when the project's original focus changes and the project begins to go off track. Unplanned work can be costly in the form of billable hours, external expertise, additional tools, and other resources. To avoid scope creep, remember to always budget for the additional work.

Avoid scope creep

Using a project management triangle, identify the three key constraints of a project: time, scope, and budget. While it may seem like the client is the one making the changes, this is not always the case. Sometimes, it's a project team member who is not fully aware of the scope of a project. Identify the main causes and propose solutions to your stakeholders. Then, embrace the changes and incorporate them as much as possible.

Float is a time-tracking, budget reporting, and resource planning tool that helps avoid scope creep. This tool also alerts project managers when work exceeds budget or schedules. It's available free of charge, so you can try it for a few days before you commit to paying the full price. For more information, visit float.com/help. To get started, sign up for a trial and see if it's right for your team.

Knowing the causes and prevention of scope creep is crucial for project managers. By understanding the nature of this problem, project managers will be better prepared to deal with it and avoid it from stealing their projects. However, prevention is always better than cure. If the problem has already started, apply the tips below to keep project management on budget. So what are the possible causes of scope creep? And what can we do to prevent it?

Scope creep is a problem for any project. It takes away from the fun of doing what you love. Avoid scope creep by developing well-defined projects, ensuring that the project's objectives remain the same, and communicating with your client regularly. And, as a last resort, always have a backup plan in place. And remember that scope creep is never a good idea unless it is accompanied by budgetary constraints.