Project Management Best Practices for Controlling Project Budgets

As a project manager, when running your project(s), it’s your responsibility to not only deliver a product but to deliver it on time and, more importantly (and notably), on budget. There are many reasons a project’s budget can rapidly expand, and you’ll need to stay on top of it to ensure you’ll have the funding you need to see the project through to the end. 

Luckily, there are also a wide variety of effective ways you can ensure the budget stays in the course throughout the project. Many start right before the project has even started. By being clever at the outset, you can help ensure your financials will easily cover an entire project – even if there are little bumps and diversions along the way.

Have a Realistic Budget

No matter the project, ensure that the budget you put into place is actually realistic. You can get a baseline of what to expect by looking back at previous or similar projects or talking to stakeholders or experts. Prep your project and set it up for success by having a realistic figure in mind, so you don’t fall short halfway through. 

Put Tools in Place to Track Your Budget

Technology really can work to your advantage here. Look for tools that can help you track and manage time and expenses. Trying to keep track of everything (and everyone) manually may be too tricky, so lean into helpful tools like Salesforce, Zoho, or others to handle proper budgeting.

Build in Communication

Chances are, you won’t be the only person managing the budget. For example, a finance team may be responsible for doling out funds as the project progresses. Even HR may be involved in terms of covering your workforce. Clients or customers may also want regular financial updates. Therefore, before the project gets going, ensure you have a communication strategy in place and have explained to all stakeholders how they can get or find information for all aspects of the project – including the financials. 

Be Ready for Contingencies

There will always be elements that fall out of your control. Perhaps a team member suddenly leaves the project, or maybe the client wants to add an unexpected element. Understand how changes to the project could potentially shift costs and build contingencies into the budget so that, if something does change, you’ve already financially covered the eventuality. 

Have a Real Understanding of What a Stakeholder Needs (and Wants)

To stay on budget, it’s imperative that you, as a project manager, take some time to really dig into what a stakeholder (or client) expects. Have many conversations up front and then lay out the expectations in writing. This includes the budget and everything that the agreed-upon budget will cover. If a client wants to add something in, you can easily show them how it will affect timelines and costs. If a customer wants to move ahead with the changes, they’ll have to address the budget while agreeing to the scope change.

Factor in Time for Training, Testing, Updating, Etc.

Your budget should include the time needed for things like training existing/new team members, testing the product at strategic intervals and other miscellaneous adjustments that naturally occur throughout the project’s life. It’s a good idea to try to err on the side of providing the most time possible. Remember, nothing goes like clockwork. If you build your financials around the most efficient best-case scenario and not around reasonable time constraints, you’re setting the project up for failure.

Stay Flexible

Whatever your final plan, make sure you also make room for flexibility. This might mean being ready to pivot, add in or take away certain aspects of the project or handle a certain amount of scope creep. Stakeholders will expect you to be able to adjust to their whims, and your projected budget needs to be ready to answer that or to show how changes can be accommodated if more time and resources can be allocated (depending on how significant the change is).

Foster Accountability

While flexibility is essential, it’s also integral that, when budgets shift, there’s a certain level of accountability. Eventually, and inevitably, the bill will come due, and if you have an agreement as to what a project will cost and then an inflated number that’s way over budget, you’ll need to account for that difference. If a client requests a change, it’s best to get in writing what they want the change to be and how that change will be reconciled with the existing or updated budget. However, suppose you unilaterally sign off on the change and pour resources into it without genuinely verbalizing the repercussions to the agreed-upon budget. In that case, that shortfall might end up in your lap.

Conclusion

No matter how tight the budget is, it’s essential to be realistic about what is possible with the financials at hand. Where possible, try to make room for project changes and contingencies and respect that adage of underpromising and over-delivering. 

Do you use Slack and Jira? 

Take them to the Next Level with our integration 

→ Try it For Free ←



Want more Bitband insights? Check out:

    Contact Us