Project Management

Budget Creep a Project Manager's Nightmare

From the Project Management in Real Life Blog
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Sharing my Project Management adventures and some tips. I like to keep my articles brief and to the point. Project Management is an Art, Science, and Discipline. Just keep it simple and have fun!

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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: March 02, 2018 05:17 AM | Permalink

Comments (15)

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Sante Delle-Vergini Senior Project Manager| Infosys Melbourne, Victoria, Australia
Good advice Drake.

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Drake Settsu Project Manager / Blogger Hi, USA
Thanks Sante!

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Kiron Bondale Retired | Mentor| Retired Welland, Ontario, Canada
Good reminders, Drake. One way to reduce the risk of this is to adopt a progressive funding model where commitments are only made based on the extent of a team's confidence with ROM estimates for the remaining work.

Kiron

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Drake Settsu Project Manager / Blogger Hi, USA
Very good recommendation Kiron. Sometimes we cannot commit to a total project price tag upfront. The ROM estimates can secure funding through the course of the project.

Thanks Kiron.

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GIRISH JOGI Dombivli, Maharashtra, India
Thanks Drake

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Julie Ann Jones Lincs, Lincolnshire, United Kingdom
Thank you Drake.

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Anish Abraham Privacy Program Manager| University of Washington Auburn, Wa, USA
It's truly a nightmare, Drake and thanks for sharing.

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Eduin Fernando Valdes Alvarado Project Manager| F y F Fabricamos Futuro Villavicencio, Meta, Colombia
Very interesting, thanks for sharing

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Drake Settsu Project Manager / Blogger Hi, USA
Thanks Girish, Julie, Anish & Eduin.

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Karan Shah Bangalore, Karnataka, India
well pointed out, Drake.

I've always believed in the maxim that, if you take care of the cents, the dollars will take care of themselves.

A stringent and periodic cost review of each control account really helps flag problems early.

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Drake Settsu Project Manager / Blogger Hi, USA
Thanks Karan!

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Sante Delle-Vergini Senior Project Manager| Infosys Melbourne, Victoria, Australia
Budge and Scope creep a dual nightmare.

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Drake Settsu Project Manager / Blogger Hi, USA
It sure is! Thanks Sante.

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Vincent Guerard Coach - Trainer - Speaker - Advisor| Freelance Mont-Royal, Quebec, Canada
All part of good Control

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Drake Settsu Project Manager / Blogger Hi, USA
Thanks Vincent!

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