Project Management

How to Budget in Advance for Project Scope Change

If things could stay the same forever, all you would ever have to budget is your allowance when saving up for that must-have new toy. Tragically, you grew up and got bills instead. Such change is inevitable in projects too. A post for the PM Perspectives Blog articulates how to budget for scope changes on your project.

Calculate around Products

If a project manager elects to ask for more funds from management on a case-by-case basis that change requests are approved, he or she is going to spend a lot of time campaigning for money. This of course equates to sizable time and resources squandered from actually working on the project. It is more practical to have a change budget in place from the beginning.

A change budget can be specifically defined in these terms:

The change budget is a planned estimate of forecasted requests for change during a project. Once approved, the management of the budget resides with the Change Authority, usually the project manager or the Change Control Board. Only an approved change request can be funded by this budget.

The temptation to use the change budget to take care of tolerance-error and omission of estimation should be avoided. The change budget is also different from a contingency budget, which is a budget set aside for a contingency plan and should only be used when the risk occurs.

In order to actually prepare the change budget, begin by dividing the project practically into its corresponding “sub-products” and use product-based planning to determine the cost of each. Then decide upon a given percentage to derive from the cost of each sub-product and add those up in order to arrive at your change budget. How to decide upon that percentage however is itself a discussion point. For instance, if the cost of a sub-product cannot be easily determined, perhaps that indicates some details of it are still sketchy, thus increasing the likelihood of changes later. Hence, you would want to include a higher percentage there. Stakeholder attitudes and expectations toward various sub-products will also likely affect how you decide to budget.

Now you know how to budget for scope change. I cannot help you with the adulthood thing. You can view the original post here: http://www.esi-intl.co.uk/blogs/pmoperspectives/index.php/budgeting-project-scope-change/

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