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Categories: budget
In my article last month I looked at four common budgeting mistakes: not forecasting holidays, scheduling team members at 100% availability, confusing tolerance and contingency and forgetting tax. Here are three more common budgeting mistakes for you to look out for this year.
1. Not sharing the figures with the team
If you don’t share the budget figures with the project team, what is stopping you? There are some elements of project budgets like salaries, that you can’t (and shouldn’t) share, but there should be very little reason why you can’t share timesheet data and capital costs with the project team members.
That doesn’t mean that you have to give weekly updates on project spending. After all, talking about money isn’t the most exciting of subjects and it can be difficult to relate to. But it is worth project team members knowing what the overall budget is, and at various points in the project how well you are doing about achieving those targets.
It’s also useful to let the team know when the project budget is challenged. In other words, when they should start considering how they can all work together (with you) to come up with some creative ways to do more for less.
2. Not revising based on actuals
Your budget is a work of fiction until you start spending against it. Then you’ll start to know exactly what your run rate is for certain services. This is particularly the case if you are budgeting for cross-charges from other departments or contractor time. You may not know exactly what these are going to be until you start working on the project.
When you have a couple of months of data, you can go back to your budget and revise it based on what your actual spending has been. This will give you a far more accurate picture of the future spending you are likely to incur.
3. Not planning for benefits tracking
Why do we do projects if not to get the benefits at the end? Too often, project teams forget to plan how they are going to manage benefits. You may be lucky enough to have someone in the Project Management Office who can act as Benefits Manager (or they may have another title, like Change Manager, but benefits management is part of their job role). Even if you do have someone available to act in this role, it is very likely that they will need some input from you in order to be able to do their own job and plan the benefits accordingly.
Tracking benefits can be done in a number of ways. For example, if you are expecting financial benefits, you can create a spreadsheet to model the expected benefits after the project (or during it, if you are delivering in phases and expect to see some returns before the whole project finishes). You can then track the actual financial returns against your predictions, and use that to manage the benefits.
Tracking intangible benefits is a lot harder – how do you accurately manage productivity or staff morale? One way is to make sure that you have a benchmark to compare to. If you don’t have a starting point for comparative purposes, you can’t prove that you have made any difference at all – either positive or negative – with your project.
Put some activities in the project plan for early on to record these tasks: you’ll want to work out how to take your benchmarks and then at what point later you will repeat the measuring activity to see if you have delivered any changes.
Have you made any of these mistakes? I hope not, but if you have, let us know your stories in the comments.
About the author: Elizabeth Harrin is Director of The Otobos Group, a project management communications consultancy. Find her on Google+ and Facebook.
Posted on: February 25, 2013 09:19 AM |
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