10 Things You Should Have Done Last Year on Your Project Budget

 

It’s January: the time that we reflect on past achievements and future goals. So let’s take a moment to look back at how you did at work with your approaches to project cost management.

I know, I know… you followed your team’s methodology to the letter and did All The Things. But really – did you? I know that for me, with all the deadlines to hit and meetings, reports to prep and executives with unrealistic expectations… I didn’t do everything as well as I would have liked.

Let’s be a little bit honest here. Below, I’ve listed 10 things that you should be able to say that you did during 2018 that relate to how you should have handled your project finances. How many of these can you confidently say you did to the best of your ability?

1.I managed my project budget

It might seem odd to include this, but I still hear from project managers on an alarmingly regular basis, who say they don’t have any oversight or influence into the project budget. The financials are handled by other people. They only have to track and manage the project tasks.

This is wrong. So wrong, on so many levels. This attitude by management that implies project managers are not “good enough” to manage financial information undermines what we should be doing with the profession.

You should have access to the financial information relating to your project and you should be the person handling project finances. If you don’t do it personally, that could be because someone else in the project team does it, for example, if you are a project administrator and the project manager does it. Or you are the project manager and you have a project financial admin person on secondment from Finance who handles the tracking for you.

It should be someone on the immediate project team who you can talk to and who will tell you the truth about the numbers.

2.I set a project budget baseline

Did you set a baseline for project costs? A baseline is a snapshot in time that shows you the total of your project financials at a certain point.
You can see what should be included in your project budget in this article. All those items, added together, give you the total project budget. But they change over time. The baseline is a record of what your budget was at a given point.

It’s useful because you can use it to check how close you are to your original plans for spending.

3.I agreed a contingency amount with my sponsor

If you started a new project at some point in 2018, you should have had a conversation about contingency.

This is added to your budget (it’s part of your cost baseline). It’s a little cushion for emergencies, the amount of which you can make up based on your best guess or a standard % measure, or you can work it out more scientifically by looking at risks and calculating amount required to adequately address them.

Read more about the difference between management reserves and contingency reserves.

4.I tracked time

Project management time spent is an overhead for your project. You can work out the amount of time spent doing the managing if you track your time (as well as your team members). It’s tempting to log everything to a bucket task called ‘project management’ and book yourself at 100%. But that wouldn’t be accurate.

Try to track your own time a bit more realistically, splitting it down by work package, project stage, type of activity or something else.

It’s helpful to know how much effort it took to get a project off the ground, especially when you come to review benefits later. You can also include this information in the business case for future projects. It can help you better estimate the amount of management time required.

5.I celebrated success with my team

Hopefully you had something you could celebrate in 2018. And celebrating can be done on the cheap (read more about how to motivate your team with spending anything). But it’s nice to be able to reward your team with something that does cost money, however small.

Perhaps you took them out to lunch and the project paid. Or there was a launch event or something. Putting a small amount of money aside for celebrations is definitely a good thing.

6. I estimated accurately

Did you follow the estimating lifecycle?

While I’ve said in the title here: “I estimated…” I don’t actually mean you personally. I mean that you involved the right subject matter experts to get decent estimates. I mean that you used solid, robust estimating techniques to make good choices about how much your tasks were going to cost.

I hope you got support from your colleagues and created a budget built on estimates you could rely on.

7. I applied good governance

Governance for project budgets means you got approval to make changes, you understood and sought approval for spending management reserves and contingency funds as appropriate and you generally had good housekeeping for your financial records. Any changes that were made would most likely have downstream implications for other project documents, so hopefully you kept those up to date too.

8. I included financial data in project reports

Good governance can also cover proper reporting to your project board or steering committee.

I frequently talk to project managers who don’t put financial information into their project reports. I get it – it’s time consuming to update your financials (at least for me; we are between project management tools and have reverted to spreadsheets for budget management for now). But really, what exec isn’t interested in how much the project has spent to date and is forecasting to spend by completion?

Project financial information really should be in your monthly reports.

9. I worked with suppliers in a positive way

Hopefully, 2018 was not full of supplier disputes for you. Perhaps you formally closed some contracts. Perhaps you worked with your procurement teams to bring on board new suppliers. Perhaps there was a supplier selection exercise that you facilitated on behalf of your project customer.

There are lots of ways to work with suppliers – with any luck you built some positive working relationships that will carry you forward into 2019.

10. I had a risk budget and managed it

Risk budgets are a particular challenge for me. I don’t often have the luxury of time to properly work out what risk management actions should be taken and allocate the funding – at least not before we dive straight into the delivery.

However, if you can, calculating the risk budget is definitely worthwhile.

Can you say you hit all the points? And are you going to hit them again during 2019?

If some of these things weren’t on your personal achievements list, then that could be because they aren’t activities relevant to the role you are in, and that’s fine. However, I’d argue that most project managers should be able to say they did all of these. What else would you add? Let me know in the comments below!

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