3 Project Budget Mistakes [Infographic]
From the The Money Files Blog
by Elizabeth Harrin
A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts.
Written by Elizabeth Harrin from RebelsGuideToPM.com.
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I know this is a topic I have returned to several times, but I feel really strongly that project budgeting shouldn’t be hard, and we should all learn from past experiences. In the infographic below, I share three really common budgeting mistakes that I see happen time and time again, especially with project manager who are managing project budgets for the first time.
I’m sure you can think of other errors that newbie budgeters might face. Why not leave a comment below and share some of your tips about what to look out for when creating a project budget for the first time?
For more on the tax issue, take a look at this article, which discusses common budgeting mistakes and especially the tax thing, in a bit more details.
Posted on: November 05, 2018 03:38 PM |
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Comments (16)
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Pench Batta
Enterprise Lean Agile DevOps Coach /SAFe Program Consultant (SPC6)| Capgemini, Inc.
Bentonville, Ar, United States
Excellent info on Budget! Thanks for sharing, Elizabeth.
Rami Kaibni
Community Champion
Senior Projects Manager | Field & Marten Associates
New Westminster, British Columbia, Canada
Good Points Elizabeth and to your tax point, you should also differentiate between PsT tax and GST tax at least here in Canada as it makes a difference because non-for-profits gets rebate on GST taxes.
RAJESH K L
Project Manager, PMP| Bharat Electronics, Bengaluru, India
Bengaluru, Karnataka, India
Hi Elizabeth, Rightly brought out the points affecting budgetary estimates.
Hi Elizabeth, thanks for sharing this. I would add a note of awareness on point 3 that we need to keep in mind the complexity of the work at that phase - the first couple of months may be "lighter" (ramp up) or "heavier" (up front docs and standards) any may not always be representative of future burn rate. Past projects should hopefully be indicative of the "effort curve" though..
@Michael: definitely. You need to apply some common sense to work out when your run rate is truly that, and when you are ramping up.
@Rami: The whole tax thing is such a challenge for people who are just taking on budget responsibility for projects. And it's different everywhere. I didn't know that about Canadian non-profits!
Hi Elizabeth, thanks for the post. I’d like to add the importance of the historical data for estimation during project initiating, and the good practice to add some time in the agenda of the progress meetings to review the soundness of company database. It might seem a waste of time for some team members but according to my experience it is really helpful and avoids gross mistakes.
The Finance department needs to look across the tax component of the project plan since they are the experts. Thanks Elizabeth.
Mohan Kulkarni
PM Specialist| MBK Consultants
Pune, Maharashtra State. India, India
The bottom line
PM-- Be Prudent, Be Vigilant and Be Deligent --key to be within budget.
Thanks Elizabeth for this key Tenets
Regards
Mohan
I have seen estimators making a lot of "optimizing" efforts at the very early stages of a projects, when definitions of products is still very broad. This sometimes create an ilussion of risk decrease, when even we're really not sure what the products will look like.
I think estimations must be kept consistent with project product level of definition. Then risk contingencies will be decreased as project definition improves.
Mohan Kulkarni
PM Specialist| MBK Consultants
Pune, Maharashtra State. India, India
Bottom line-is PM should have
Prudence, Diligence and Vigilance
Key tenets for successful appropriate budget and successful Delivery
Thanks Jane
Regards
Mohan
Very interesting, thanks for sharing
Thanks so much for this post Elizabeth!
Scheduling at 100% availability seems so obvious, but can be hard to convince upper agency management of this.
Vincent Guerard
Coach - Trainer - Speaker - Advisor| Freelance
Mont-Royal, Quebec, Canada
These a certainly part of the top mistakes when making a budget.
thanks Elizabeth
Jay Goldberg
Management Consultant| SPA Inc
Bethesda, Md, United States
Another good, practical article, Elizabeth. I especially take note of the first point, though I might broaden it a bit. You often get costs added for other things, like shipping or licensing. The added costs can turn out to be a significant percentage of the total costs. Even when I am just purchasing something major for myself, I tell them, "don't give me the advertised price, tell me what I am going to pay!"
Good points - Top mistake, taxes agree!
Paul Boudreau
President| Stonemeadow Consulting
Kanata, Ontario, Canada
Interesting. Tax can be confusing for a lot of people especially where there is a value added tax..
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