Budgeting is super exciting, right? Not. I’m guessing your idea of a great Friday night doesn’t consist of analyzing project budgets. But guess what? It’s important. Just as with personal finances, if you don’t know what’s coming in and going out, you’re likely to come up short.
The same principle applies to project management. Someone has to own, review, and hold accountability to the budget. Relax; it doesn’t have to be you. We’re going to cover 3 reasons well-planned projects go over budget, so you can effectively assign this task to one of your team members.
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1. No Budget Owner Defined
Seems simple enough, right? But you wouldn’t believe how many companies don’t do this. Yes, of course, they have project budgets, but no one is driving accountability to them. It’s like setting a great personal budget for yourself, and then never looking at it again. It’s pointless. So assign someone to post expenses, update the budget weekly, and send weekly updates to relevant internal team members.
Quick Tip:Does every member of your team cringe at the idea of managing project budgets? Partner with your local college, and offer an accounting internship every semester. It’s a win-win. They gain work experience, and you’ll have a pool of talent to pull from later.
2. Time Creep
Time is money. So nail down a timeframe, and stick to it. This ties back to setting milestones. We set milestones to achieve the desired end date. But really it’s more than that. By dragging out a project, and putting it on hold multiple times, you lose momentum. Every time you pick the project up again, team members need to be refreshed, so you’re spending more time, and making less margin. Keep projects on track with a professional service automation tool.
Quick Tip: Find your client’s “why” for the project. Time creep most often happens because the client loses sight of the end goal, and places priorities elsewhere.
3. Scope Creep
We talk about this a lot because it’s important. It’s to your client’s advantage to milk you for all you’re worth. They might not even realize they’re doing it. Sometimes clients simply don’t understand the scope of a request, so calmly explain it to them in simple terms. Set expectations upfront that activities which fall outside the existing statement of work will be billed at an additional cost. By doing this, you’ll avoid heated conversations later.
Quick Tip: Word SOWs carefully to protect yourself against scope creep.
Congratulations! You’re well on your way to managing project budgets more effectively, and driving greater profits in the process. Just remember to assign a project budget owner, manage to the timeline, and word your SOW carefully to stave off scope creep.
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