When you’re thinking project management practices, what comes to mind?  Are these things you do when the CEO is watching?  Things you do if you’re part of a project management office (PMO)?  Things you only do if you’re running a $1+ million engagement? 

I hope not…but sadly it is an easy trap to fit in to.  When you’re running a two-month, $10,000 project, you have to admit that it’s hard to get into the details of applying best practices to your project...especially if you have four or five other projects happening at the same time.  Let’s say, you’re running a large JD Edwards ERP solution implementation with significant executive management buy-in and oversight at the same time you’re leading an effort to upgrade the website of an internal business unit in your organization.  Which one gets the most attention?  Which one might fall through the cracks?  Yes, the popular thought would be to apply best practices to the large project and do as little as possible for the internal customer, right? 

Well, in a true best practices organization it really can’t work that way…and it shouldn’t.  Not if you’re really trying to build a consistent PM methodology and have repeatable practices and processes that lead to ongoing success.  You can make those processes scalable – certainly.  You don’t have to create a 30-page communication plan for a $10,000 project…2-3 pages will probably do it.  But still do it.  So, even for the small stuff, be sure to:

Kick the project off right.  No matter how big or small the project, conduct a formal kickoff session, even if it’s a short one for those extremely small projects.  Don’t blow this off – it’s a bad way to start any project off.  Start off doing it right and be thorough about it – it sets a nice example for the project team because I’m sure you want them operating at the top of their game for every size project, right?

Conduct weekly status meetings.  Always product a weekly status report and revised project schedule and always…always conduct a weekly status call or meeting with the customer.  It doesn’t matter if it’s just a five-minute phone call some weeks, but be sure to do it. The minute you start letting yourself and others skip it or cancel it, is the minute the project may start to slip away.  And I don’t care how small the project may be, the customer can still get frustrated.

Keep the customer engaged.  Keep tasks assigned to the customer throughout the engagement even if it’s a small project and they seem like meaningless or ‘filler’ tasks.  Keeping things assigned to them forces them to report on them and forces their attendance on a weekly status call.  Trust me, this one is important.

Forecast and reforecast dollars and resources.  Finally, don’t forget to review the resource usage and upcoming needs weekly as well as the budget actuals and forecast.  It’s easy to fix and get back on track if you stray a little as long as you’re watching it weekly.  Don’t think that just because the budget is very small that it’s ok to just let it go.  It’s not.  If you can keep a project within budget by watching resource usage and dollars expended, then do so…it means the difference between project success and project failure.

Managing the project budget sometimes seems like the most monumental task in the world, destined to take all of your time and still result in frustration and cost overrides.  However, it is one of the most critical tasks you can and will perform – right up there with ensuring proper requirements definition (and surprise, one can’t really be very successful without the other).

I’d like to discuss what I believe are four myths about managing project budgets and forecasts.

1.    Reporting project budget status to the customer will scare them.

When the project budget comes up as a discussion item with the customer, it’s usually not to give them good news.  That’s especially true if it’s not been something that was part of ongoing discussions or project status calls.  If it’s the first time you’re talking to the customer about the budget, it’s probably to tell them something is wrong. 

The budget and ongoing forecast updates are items that should be in front of the customer throughout the engagement.  If it’s good news, they’ll see that you’re managing the project well.  If it’s not such good news, they can help you and your project team make adjustments to try to get the project budget back on track.  And it’s always easier to fix budget issues if they’re not too far gone yet.  Keep the budget status in front of your delivery team and in front of the customer from the outset through deployment and you’re far more likely to remain within that acceptable +/- 10% range.

2.    If it’s a visible or mission critical project, the budget doesn’t matter.

Some project managers will go through a project thinking that since their particular project is critical for the customer or critical to their own company then budget doesn’t matter.  If it’s over budget and the customer HAS to have it, they’ll pay and they won’t care about budget status.  Or if it’s over budget and it’s critical to your own company, then your company will cover the overage.

That simply is not true.  There may be instances of that, but there’s no guarantee that any project is that important that budget won’t matter to the delivery organization or to the customer.  I once took over a trouble project where the client was a major government agency and I was led to believe that if it went over budget the agency would just request and receive more funding for the project.  It was well over budget when I acquired it and the bleeding never stopped – it just got worse. 

Eventually I – and my executive management – was blindsided when the government agency simply canceled the project.  This was after already spending more than $1.2 million on it and nearly 18 months of effort.  It can happen anywhere, anytime.  Surprise!

3.    All the eyes in the world can’t keep an out of control budget in line.

I am a firm believer that there are bleeding budgets out there that, given the proper management and oversight, can come back in line – at least to some sort of acceptable point.  The issue is to stop the bleeding.  When you figure out why the money is pouring out the door and halt it – and it may take a temporary work stoppage to do it – then it’s easier to wrap good budget management practices around it.  And a well-tracked budget is much easier to diagnose and fix then one where the checks are just flying with no accountability.

As the PM, if you’re taking over a project that is out of control or even if you’ve let one get out of control due to lack of oversight, stop where you are and prepare to take drastic action.  Freeze expenses immediately, forecast weekly all expenses (based mainly on forecasted resources hours and their associated rates, usually from the project schedule), track those weekly using actuals against forecast, and dutifully report that information to your project team, your executive management and the customer on a weekly basis. 

You may never get the budget fully back on track, but your extreme oversight will likely keep it from getting any worse and will be very appreciated by both the customer and your organization.

4.    Project team members charge their time accurately.

We stock our projects with skilled and highly trained professional resources.  We expect them to be accurate with their work and we expect them to be accurate in how they charge their time.  The truth is, very few of us actually meticulously track our time during any given week – we usually throw our timesheets together at the 11th hour because we’re busy with real work.  News flash – that’s what our project team members are doing, too. 

Just like the PMs, these team resources are working multiple projects at a time.  What’s different about your team members – the BAs, the tech leads, the data specialist, etc. – is that they aren’t responsible for the project budget…they just have to charge to it.  As the PM,  you must make them aware of the project budget and the ongoing forecast on a regular basis.  If they know you’re tracking it closely and they know how much time they’re supposed to be charging to the project, then that’s what they’ll charge. 

Pity the project manager who isn’t tracking their project budget, because that is where the ‘grey’ hours go.  That’s those 5-6 hours every week that you simply can’t account for but you know you worked them so you have to charge them somewhere.  Your project team members will charge them to whatever project’s budget isn’t being watched closely.  Make sure that’s not your project.

I originally authored this article for the Projects@Work website - the original post appears here.