Project Managers are faced with the pressures of keeping the project’s budget under control. This pressure is the result of organizations having a real need to deliver projects that are successful, and ‘Cost’ is just one of the many constraints that need to be monitored closely.
As a first step, it is important for Project Managers to actively participate in the process of determining a budget for the project, ensuring that all budgetary items have been covered (e.g. equipment, man hours, consultants, etc.) and that these items have been allocated properly.
A few more steps pertaining to a project’s budget must be taken to ensure a successful delivery.
- Project Managers must create financial models that compare the amount of work that has been completed against expenditures, and most importantly, a model that can forecast the future cost based on the inputs that the Project Manager is receiving from team members. Forecasting also ensures that the Project Manager is monitoring any budget shortcomings and can take actions to address those issues.
- Scope, scope, scope! That’s what the Project Manager must monitor at all times. Scope creep must NEVER be allowed and change requests must be tightly controlled to ensure that they provide the correct amount of effort needed to complete the work. Extra hours put in by project members (unplanned) can also create problems. Make sure that the ground rules are in place, and only authorize extra hours if they are actually needed and the budget can accommodate.
- Monitor risks and issues closely. While it is impossible to stay away from these, a Project Manager must keep and closely monitor a risk register and issues log. While not all projects require a risk session, if the Project Manager feels the need, he/she should involve key members of the team and actively involve them in monitoring risk. A plan that contains mitigation and risk response must be created for each risk.
- Communication must be open at all times and the team members need to be aware of anything that is going off track. The project team must participate actively in turning a project around, or in ensuring that the project stays on budget.
Strictly monitoring the project budget will help a Project Manager ensure that it is kept within the forecast from the start!
Jackson Bruno, PMP, Prince2, MBA is an experienced Finance Project Manager. You can read more from Jackson on his newly created blog.
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