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Categories: budget
My new book, Shortcuts to Success: Project Management in the Real World (2nd Edition) was published last month. It includes over 30 new case studies about project managers working on projects around the world. The idea was to share the good practices and mistakes that other people make, so that you get the benefit from their experience.
Fully revising the book for this edition meant that I had to drop some chapters and some case studies from the previous edition. It was hard to work out what to cut, and I ended up losing some case studies that I really liked. As a result, I thought I’d share this one about project budgeting with you.
It’s about creating a realistic, comprehensive budget, and it shows that the little things add up.
'Lives up to the 'real world' promise in its title, providing concise, practical advice for leaders of large projects, small projects, and everything between. The interwoven examples from actual projects illustrate clearly why the guidance provided here matters.'
Tom Kendrick, MBA, PMP, Project Management Director, UC Berkeley Extension, California
Brainstorming for a comprehensive project budget
‘I haven’t had much experience handling money, so doing my first project budget was really hard,’ says Emily Jones, a junior project manager in a small public relations consultancy. The project was to revamp a room that had been used for storing spare furniture into a new area for holding workshops. ‘My sponsor left me to it, so I had to work out the money I thought I’d need by myself.’
Jones set up a brainstorming session with her team and asked them to help her identify all the likely costs for the project. ‘We came up with the obvious ones like staff salaries and buying the new office furniture really quickly,’ she says. ‘Then I asked them to be more creative, and someone said “hiring a projector for the staff briefing.” OK, so that might not sound really creative, but as our company projector had just broken, and we were scheduled to do a presentation on the project in three weeks at a briefing for all 45 staff, it was a cost I certainly hadn’t thought of.’
In fact, Jones hadn’t even known the company projector was broken. The replacement was on order but not due to arrive for another five weeks. Jones wanted her presentation at the company briefing to be professional and projector hire was not a great deal of money, so a member of the team was tasked with finding an estimate and the cost was added to the budget. ‘On the subject of hire we also came up with hiring a van to take the old furniture to a charity warehouse. We could have had the council take it away for free, but we decided we’d rather it went to a good cause, so that cost ended up in the budget too.’
Jones split the identified costs into groups. ‘In the end we had a group of charges for manpower for our time and one part-time contractor, a group of charges for putting in a new telephone, the decorating costs and some miscellaneous things. I added a contingency line of 15 per cent of the overall budget as I knew many of the costs were just estimates,’ Jones continues. ‘I explained to my sponsor that this was for risk management and he cut it to 10 per cent. I thought that was reasonable, and he approved the budget on that basis.’
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Shortcuts to Success is now available and if you want to see a sample chapter you can read one online here. You can buy a copy at the BCS website (and BCS members get 20% off), or you can get it on Amazon.co.uk or Amazon.com.
(These are Amazon affiliate links.)
Posted on: June 05, 2013 07:17 AM |
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