4 Ways to increase your project budget
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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Ah, wouldn’t it be great if you could wave a magic wand and get more cash for your project? Think of all the things you could do with a bit more budget – add in some extra features, reward the team, improve the quality, deliver faster! Well, you can increase your project budget but it’s not the easiest of things to do and it does depend on your project. Have a look at these 4 ways to increase your budget and see if you could use any of them on your project.
1. Call in some favours
Yes, top of the list is cashing in those favours that you’ve been banking over the years. This could mean that another manager lends you a resource or some equipment without cross-charging your budget (call it a development opportunity). It could be that you cut travel expenses on your project by getting everyone to call in favours and stay overnight with their friends and family members.
The downside of calling in favours is then you don’t have anything in the ‘bank’ for the future and it isn’t always possible. This isn’t a reliable way to increase your project budget but depending on your project there might be something you could do here.
2. Swap or Barter for services
Again, it depends on your project as to whether swapping services is going to work for you. Swapping a high value software licence for some free pens from the stationery cupboard obviously isn’t appropriate. But talk to your connections and reach out to your network. There could be someone willing to take publicity photos or write you a press release in exchange for sending one of their staff along to a training course you are running. Look at ways to reduce your expenses.
Just a note: you shouldn’t ask people to work for free. They should be getting something of value back in exchange, otherwise it isn’t really a swap or a barter, it’s just you asking for free stuff. That isn’t ethical and you’ll probably hear ‘No’ quite a lot.
3. Reduce the project scope
What can you cut out? Reducing the scope would give you extra cash to improve the areas of scope that remain. You can’t make this decision without input from your project sponsor, but you could put forward a recommendation about postponing some areas of project scope and moving them into a Phase 2.
Look at areas of the project budget that don’t add as much value as other areas and see if you could cut those without compromising quality. Do you really need that all-hands meeting at a posh hotel? Couldn’t you manage with a conference call? Then, with your sponsor’s approval, the money that was going towards those can be legitimately put towards other areas.
4. Don’t take the first deal
Shop around for the best deal. You probably do this anyway using the procurement project management approaches for large items, but could you do it for small items too? Instead of going to your usual meeting venue, is there somewhere cheaper locally? (Or could you ask your favourite venue to match the price of another venue?). Can you get a single resource with the skills to cover several subject areas on the project? That could save you having to fund the salaries and costs of two employees.
Think about all the extra stuff that comes with what you buy – warranties, guarantees, escrow, insurance, maintenance contracts… what do you actually need and would it be cheaper to source it from somewhere else? Could you acquire equipment second hand or refurbished? There are often other ways to carry out procurement, but make sure you check any non-standard approach with your purchasing or finance team first.
What else have you tried to save the pennies on your project budget? Let us know in the comments.
Posted on: November 19, 2013 09:31 AM |
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Comments (4)
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Bernard Gore
Portfolio, Programme & Project Professional| NZ Police
Wellington, New Zealand
Sorry, but I have a real problem with options 1 and 2, seriously un-ethical.
It is not a PMs job to subvert the true cost of the project, and undermines the whole purpose of business cases and cost-benefit assessments. Nothing is ever "free", those favours you call in, the services you trade, all have a cost, you''ve just buried it somewhere else, and in the process damaged the honest appraisal of not only your project, but of wherever these favours or items to trade came from, that has ended up taking this cost.
Bernard, I didn't mean to suggest unethical behaviour. Why couldn't you include these ways to reduce cost in your business case? You don't have to hide what you are doing or subvert the true cost of the project. Many creative industries rely on exchange of services to get things done. You could include these in the project business case to demonstrate the overall cost, even if you do end up paying less or getting them in exchange. The article was aimed at getting people to think creatively about cost-saving, and was not meant to suggest that unethical behaviour is appropriate.
Bernard Gore
Portfolio, Programme & Project Professional| NZ Police
Wellington, New Zealand
Hi Elizabeth. I've no problem with exchanges of services as an efficient way of delivery, however if these are accounted for properly they will not generally reduce the cost much - because your business case needs to cover the cost of the services you are trading away. Every favour, every service you give away has a cost to you, so the services you get in return actually inherit this cost, which may be slightly cheaper than what you get in return, but if truly costed (including cost of lost opportunity, the expected profit you would have made if you'd actually sold those services instead of trading them away), it is unlikely to make a significant difference to business case - unless the trade is unequal, which is a whole new area of concern!
Such trading only significantly lowers the cost if you don't actually account for what you gave away, and this can actually end up wrongly under-costing both parties in such a deal - both get services, and don't pay for them, but the cost of what they've given away gets absorbed elsewhere so someone else picks this cost up.
Thanks for taking the time to explain your points further, Bernard.
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