Who hasn’t heard of an IT project that was understaffed and over budget? But as Marian Haus for the Voices on Project Management blog explains, even these predictable shortfalls can be controlled internally through effective project cost planning. Here are six ways to avoid the obvious.
The Savvy Six
- Underfinanced projects have a high risk of budget overrun, but knowing from the start how the project manager wants to handle a budget overrun can soften the blow.
- Cost estimates based on intuition alone will almost certainly not pan out in the long run, but one can recruit those who are knowledgeable about relevant subject matter to analyze the project in manageable components and apply proven estimation techniques.
- The presence of factors such as complex financing and new regulations fill today’s projects with nasty, unintended surprises, but again, it pays to segment the project into packages or phases, and to avoid over-planning.
- If meeting deadlines offers no guarantee that a project will stay within budget, then extending schedules due to missed deadlines is a sure sign of budget overrun. Sticking to a critical path and being transparent with stakeholders makes overshooting budgets a bit more bearable.
- Any neglect of the project buffer will spell catastrophe due to scope changes and additional surprises, but a buffer or built-in contingency budget may be adequate to predict such changes in scope or other fluctuations.
- It is never wise to ignore the costs associated with labor, which can rise significantly and unexpectedly during the course of a project, but one can: First plan the scope, then the required work to be done, and then the related assumptions, dependencies and risks. This will facilitate a better understanding of the work needed to be done and hence will help better assess the right equipment, amount of resources and required skill sets.
Read the entire blog at: http://blogs.pmi.org/blog/voices_on_project_management/2014/08/6-obvious-budget-overruns-to-a.html