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: March 02, 2018 05:17 AM |
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Comments (15)
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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
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.
Anish Abraham
Privacy Program Manager| University of Washington
Auburn, Wa, USA
It's truly a nightmare, Drake and thanks for sharing.
Very interesting, thanks for sharing
Thanks Girish, Julie, Anish & Eduin.
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.
Budge and Scope creep a dual nightmare.
It sure is! Thanks Sante.
Vincent Guerard
Coach - Trainer - Speaker - Advisor| Freelance
Mont-Royal, Quebec, Canada
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