One of the key obstacles that we come across as Project Managers is delivering projects on time and within budget. This is especially true when project resourcing on a tight budget.
In a Project Manager’s ideal world, budget would be limitless. This is utterly unrealistic, of course, and would mean that the project management triangle wouldn’t exist. In the real world, budget is one of the key constraints in managing any project.
Following the project management triangle’s triple constraint, understanding how budget (cost) affects time and scope is essential to effective project delivery. When you are project resourcing on a tight budget, though, it takes on added importance.
In this blog post we will give an introduction to how project budgets are set, and provide some pointers on how to manage project resources on a budget.
Top-Down or Bottom-Up Budgeting
If you’re creating a budget, there are two approaches that can be taken: –
- Top-down budgeting is when a budget is set for a project as a whole, and then the individual components of the project are costed to fit. This can bring efficiencies in project delivery, but relies heavily on predicted budgets which can be found to be unrealistic.
- Bottom-up budgeting is when the individual components of a project are costed, then combined to give the budget for the project as a whole. This allows for more accurate budgeting, but issues can arise if components are omitted or not anticipated.
Whichever way you set your project budget, as a Project Manager it is your prerogative to meet it. How do you achieve this, especially when the budget is tight?
Four Ways to Manage Budget Effectively
We believe that, if you keep the following four considerations in mind, you will be well placed to deliver your project on time and within budget: –
- Effective Project Definition and Planning. If you set unrealistic targets during the definition and planning phases (as described in our recent blog post on The Five Stages of a Project), you’re setting yourself up to fail. Make sure that you understand the time, scope and costs of your project, and ensure that they align.
- Continually Assess Budget. Throughout the lifecycle of a project, unforeseen factors can be introduced that affect time, scope and costs. This could be scope creep – where the scope of the project changes from that which was originally agreed – or it could be an issue with the time to deliver an individual project component. Make sure to continually assess your budget throughout the lifecycle of the project in order to ensure that it remains on track.
- Keep Stakeholders Informed. It’s important that you stay in control of the project’s budget, and it’s important that the stakeholders are informed too. If an individual or team responsible for a particular component is unaware of a change in available budget, they could make decisions that are detrimental to the delivery of the overall project within budget. For example, if budget has decreased and time has increased to compensate, you don’t want a team to work costly (and unnecessary) weekend overtime because they weren’t aware of this change.
- Keep in Mind the Project Management Triangle. This should go without saying, but it bears repeating: keep in mind the project management triangle’s triple constraint. It applies throughout a project, not just during the definition and planning phases. And remember, if any of the constraints change and the other two do not adjust to compensate, it will not be possible to deliver the project effectively and to a high quality.
Project resourcing on a budget comes with its challenges, and there’s no magic solution to alleviate the compromises that tight budgets can bring. However, through intelligent preparation, regular assessment, effective communication, and thorough understanding of the triple constraint, you can achieve successful project resourcing on a budget.
At TSC Projects we are well versed in delivering projects on often tight budgets, and we make sure to work with businesses to ensure that scopes and timeframes are set realistically and met successfully. Contact us if you’d like to learn more about how we achieve effective project resourcing on a budget.