Project Management: 4 Ways to Manage Your Budget

Even if a project manager completes a project on time and with every stakeholder requirement met, the project can still be considered a failure if they go over budget. Because of this, project managers need to be aware and vigilant about where their project budgets are during the entire life of the project. This article by Jason Westland provides 4 ways that project managers can focus in on the health and status of their project budget. The first tip is to consistently forecast the budget. The constant forecasting of budget allows project managers to more rapidly identify budget overruns and address them before they spiral to a point of no return. Catching budget overruns early and monitoring for overruns often is the best defense against being caught off guard by a show-stopping budget problem. Another tip is to manage scope creep as meticulously as possible: Scope creep is one of the leading causes of project overruns. As unplanned work finds its way into your project, billable hours mount and the project budget can get out of control. Project managers must carefully manage scope by creating change orders for work that isn’t covered by the project’s initial requirements. 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 final two tips are to regularly forecast resource usage (are you using too many people or too few?), and keeping the team who is performing the work informed of the budget forecast. Even if they aren’t directly concerned with the project’s budget, they will be more aware of the considerations that the team leader is making for the work at hand. This means they may be more vocal when there is a problem that may affect the project budget.

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