This article was originally authored by me for the Projects@Work website and published there on 11/5/09. Go here to view the original article.
As project managers, we’re judged by our management or company executives by certain criteria and by our project customers sometimes by a very different set of criteria.
Your company executives want to see on-time delivery, on-budget delivery, change orders, and customer satisfaction (or no customer complaints). Your project customers want few change orders, they want a workable solution upon delivery, and they don’t want to pay too much for it. They are often not as concerned with on-time delivery because they realize that their needs and requests sometimes push schedules out. They are usually more concerned with functionality and cost.
A common criteria for satisfaction on both the delivery side and the customer side is budget management which leads to the actual project cost realized by the customer. Manage that budget well and more times than not you’ll come out looking like a successful project manager no matter what side your on. Let’s take a look at five key ways to keep your project budgets in line with plans and expectations.
Review the budget and forecast customer regularly
How you and if you keep your customer informed of the details of the budget is a decision that needs to be taken care of at the beginning of the engagement. Since they are paying the bills and are truly part of the overall, I highly recommend keeping them informed of budget status throughout the project.
Customers don’t generally like surprises, and finding out the budget has been exhausted with two month’s worth of work remaining is a very bad thing to spring on the customer. If you’re managing the project in such a way that the customer is aware weekly of where the budget stands and how any changes they are requesting have affected that budget, then they’re basically responsible for it almost as much as you are. Remember, they want you to succeed because then they succeed, too. And they want you and your team to succeed as efficiently and economically as possible. Keep them engaged and aware and let them share in decision-making processes along the way. Fewer surprises = happier customer.
Review the budget and forecast with your team regularly
As important as it is to review the budget regularly with your customer, it may be even more important – at least in some organizations – to do so regularly with your project team. Why? Because you are most likely managing very skilled resources whose talents are being used by other project managers on other projects at the same time they are working for you. Just as you may be managing 5-6 projects at once, your lead developer and business analyst may each be working on 3-4 projects at the same time.
I’m going to make some assumptions here, but they come from years of experience. When the week draws to a close and you have to account for your project time, you’re often doing a ‘best guess’ on Friday morning, right? That’s not always the case, I realize, but about 90% of us don’t chart our time on project work hourly or even daily. We do it on Friday afternoons…or worse yet…on Monday mornings when accounting is calling us.
Newsflash…your tech resources on your projects are doing the same thing. And when they can’t remember every hour of work they did last week but they know they worked 60 hours, those 60 hours are going to get charged to projects one way or another. If you are the project manager who isn’t managing your resources, forecast and budget closely, then that’s where they’re going to charge their ‘grey’ hours…those hours they know they worked but can’t remember exactly what they did. If they know you’re loose on your budget management oversight, then that’s where those hours will go and you’ll be very surprised to find yourself up against a wall on your budget even though things might be running smoothly.
Likewise, if they know you’re watching the budget very closely and reporting it weekly both to them and to the customer, they’ll be more mindful of the time they charge to your project. Watch what they charge weekly to your project – make sure it’s in line with what you expected of them as per the project schedule and your detailed forecast. Discuss it with them on every weekly formal internal team meeting before revising the budget for the customer. Keeping them engaged on budget reviews will keep stray hours from landing on your projects.
Manage scope with an iron fist
During the formal project kickoff with your team and the customer, you reviewed the project scope and statement of work as well as the project schedule. From that day forward – along with help from your skilled team – pay close attention to customer needs and requests that fall outside of that agreed upon scope.
If it is outside the scope and has a timeframe and/or budgetary affect, put it in front of the customer in the form of a change order. If it’s important, the customer will pay for it and if it’s not, they’ll skip it and it won’t affect the project schedule or budget. Either way, you win.
Change orders usually result in increased budget to accommodate the change – thus eliminating the scope change from running your project over budget. Plus, you’re implementing a change that the customer agrees is both out of scope and necessary for the project. Likewise, in a show of good faith, it’s ok to give away some freebees if the budget can handle it….in the end customer satisfaction is what we care most about.
Keep resources engaged
Keeping resources engaged on the project means less project turnover and less loss of productivity. Revolving door resources mean extra costs in ramping up the new resources to get back on track and to handle knowledge transfer. Work with your executive management to minimize the affects of resource transitions – explain your budget concerns and the critical needs of your customer for that particular resource. You won’t win every fight, but make sure you shout about it – the customer will appreciate it and executive management won’t be so quick to blame you if your project goes slightly over budget due to changing resources.
Stay on top of issues and risks
Keeping issues and risks tracked and in front of both project teams throughout the engagement can definitely reduce budget risks on the project. The more aware everyone is of the potential issues and risks the better prepared both teams will be to avoid them or mitigate them should they occur. Preparation and communication will go a long way in helping you manage those issues and risks and greatly lessens the likelihood of a major surprise that you hadn’t counted on that can knock they budgetary wheels right off your project.
As project managers, we’re judged by our management or company executives by certain criteria and by our project customers sometimes by a very different set of criteria.
Your company executives want to see on-time delivery, on-budget delivery, change orders, and customer satisfaction (or no customer complaints). Your project customers want few change orders, they want a workable solution upon delivery, and they don’t want to pay too much for it. They are often not as concerned with on-time delivery because they realize that their needs and requests sometimes push schedules out. They are usually more concerned with functionality and cost.
A common criteria for satisfaction on both the delivery side and the customer side is budget management which leads to the actual project cost realized by the customer. Manage that budget well and more times than not you’ll come out looking like a successful project manager no matter what side your on. Let’s take a look at five key ways to keep your project budgets in line with plans and expectations.
Review the budget and forecast customer regularly
How you and if you keep your customer informed of the details of the budget is a decision that needs to be taken care of at the beginning of the engagement. Since they are paying the bills and are truly part of the overall, I highly recommend keeping them informed of budget status throughout the project.
Customers don’t generally like surprises, and finding out the budget has been exhausted with two month’s worth of work remaining is a very bad thing to spring on the customer. If you’re managing the project in such a way that the customer is aware weekly of where the budget stands and how any changes they are requesting have affected that budget, then they’re basically responsible for it almost as much as you are. Remember, they want you to succeed because then they succeed, too. And they want you and your team to succeed as efficiently and economically as possible. Keep them engaged and aware and let them share in decision-making processes along the way. Fewer surprises = happier customer.
Review the budget and forecast with your team regularly
As important as it is to review the budget regularly with your customer, it may be even more important – at least in some organizations – to do so regularly with your project team. Why? Because you are most likely managing very skilled resources whose talents are being used by other project managers on other projects at the same time they are working for you. Just as you may be managing 5-6 projects at once, your lead developer and business analyst may each be working on 3-4 projects at the same time.
I’m going to make some assumptions here, but they come from years of experience. When the week draws to a close and you have to account for your project time, you’re often doing a ‘best guess’ on Friday morning, right? That’s not always the case, I realize, but about 90% of us don’t chart our time on project work hourly or even daily. We do it on Friday afternoons…or worse yet…on Monday mornings when accounting is calling us.
Newsflash…your tech resources on your projects are doing the same thing. And when they can’t remember every hour of work they did last week but they know they worked 60 hours, those 60 hours are going to get charged to projects one way or another. If you are the project manager who isn’t managing your resources, forecast and budget closely, then that’s where they’re going to charge their ‘grey’ hours…those hours they know they worked but can’t remember exactly what they did. If they know you’re loose on your budget management oversight, then that’s where those hours will go and you’ll be very surprised to find yourself up against a wall on your budget even though things might be running smoothly.
Likewise, if they know you’re watching the budget very closely and reporting it weekly both to them and to the customer, they’ll be more mindful of the time they charge to your project. Watch what they charge weekly to your project – make sure it’s in line with what you expected of them as per the project schedule and your detailed forecast. Discuss it with them on every weekly formal internal team meeting before revising the budget for the customer. Keeping them engaged on budget reviews will keep stray hours from landing on your projects.
Manage scope with an iron fist
During the formal project kickoff with your team and the customer, you reviewed the project scope and statement of work as well as the project schedule. From that day forward – along with help from your skilled team – pay close attention to customer needs and requests that fall outside of that agreed upon scope.
If it is outside the scope and has a timeframe and/or budgetary affect, put it in front of the customer in the form of a change order. If it’s important, the customer will pay for it and if it’s not, they’ll skip it and it won’t affect the project schedule or budget. Either way, you win.
Change orders usually result in increased budget to accommodate the change – thus eliminating the scope change from running your project over budget. Plus, you’re implementing a change that the customer agrees is both out of scope and necessary for the project. Likewise, in a show of good faith, it’s ok to give away some freebees if the budget can handle it….in the end customer satisfaction is what we care most about.
Keep resources engaged
Keeping resources engaged on the project means less project turnover and less loss of productivity. Revolving door resources mean extra costs in ramping up the new resources to get back on track and to handle knowledge transfer. Work with your executive management to minimize the affects of resource transitions – explain your budget concerns and the critical needs of your customer for that particular resource. You won’t win every fight, but make sure you shout about it – the customer will appreciate it and executive management won’t be so quick to blame you if your project goes slightly over budget due to changing resources.
Stay on top of issues and risks
Keeping issues and risks tracked and in front of both project teams throughout the engagement can definitely reduce budget risks on the project. The more aware everyone is of the potential issues and risks the better prepared both teams will be to avoid them or mitigate them should they occur. Preparation and communication will go a long way in helping you manage those issues and risks and greatly lessens the likelihood of a major surprise that you hadn’t counted on that can knock they budgetary wheels right off your project.
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