Budget Creep a Project Manager's Nightmare
From the Project Management in Real Life Blog
by Drake Settsu
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Going over budget within the scope of a project can happen. You think you covered all the possibilities that could occur in the project. You submitted a budget with padding so you can avoid a budget overrun. You are now at the one third milestone in the project and your funds are being depleted faster than anticipated. How did I not see this happening?
Reporting any budget variances on a monthly Project Stop Light Report will expose your budget creep. You will see how your monthly expenditures keep going up for the project. That is your cue to stop the project and revisit the budget. Are the projected estimates accurate or grossly underestimated? The faith of the project is in jeopardy now. Will the project be shutdown or will additional funds be allocated for it? A big decision needs to be made based on an accurate big picture on what the new realistic funding will be to keep the project moving.
Project Managers need to always keep an eye on the budget and raise the red flag when the project funds are depleting ahead of time. Avoid what I call Budget Creep.
(Note - this article was originally written by Drake Settsu and published on DrakeSettsu.BlogSpot.com in September 2016)
Posted on: January 13, 2018 08:03 AM |
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Comments (5)
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There can be numerous reasons of going over budget like inaccurate calculation, missing out some key elements in WBS, poor workmanship (rework), loss of key team member (and you need to hire another resource), changes in scope, environmental factors and so on. And it puts you in an awkward position and PM is faced with one of the major decision: stop the project and recalculate budget, hire resources at lower cost and risk schedule slippage, reduce the scope(features) or ask for more funds. Now that depends on the type of project (importance/ return).
Keeping an eye on the consumption of budget is vital to keep the project on track.
Good information Najam. Thanks for the great feedback.
A good wake up call on budgets.
Rami Kaibni
Community Champion
Senior Projects Manager | Field & Marten Associates
New Westminster, British Columbia, Canada
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