How To Deliver When Your Project Budget is Cut
Budget cuts… this is something every project manager faces at some time in their career. Your healthy budget of whatever is suddenly subject to scrutiny because your sponsor’s department has been told to find savings of X% and all projects are at risk.
Then you find that your project has generously ‘handed back’ a sizeable amount to the corporate coffers. And yet somehow you’re still expected to carry on.
The good news is that in situations like this your project sponsor will know what has happened and should be broadly sympathetic to the idea that they can’t have everything they wanted after all. If the money isn’t there, they know you’re going to have some limitations on what you can deliver. But where do you start with that conversation?
Start With the Requirements
A closer working relationship is exactly what you should be aiming for when budgets are stretched. The more you can understand what it is your customer wants – in really granular detail – the better it is for everyone as you’ll (hopefully) be able to come up with solutions that achieve the ‘right’ outcomes in a cost-effective way.
Check that there’s nothing extra that has found its way into the scope. Check that you understand what’s expected from the contract so that you aren’t inflating or gold plating anything unnecessarily. What could you lose from scope (with everyone’s agreement) that would still end up with the customer getting broadly what they wanted?
Look at the processes and bureaucracy involved in getting the work done: often closer working relationships can strip time out of these processes and time is money, so there could be savings there.
Basically, think collaboratively about what’s possible. Lean in.
Stagger the Work
Look at what could possibly be removed from the initial scope of your project and pushed to a further delivery phase. Financial years are cyclical – there might be more money available next year to finish a particular element. Consider what parts of scope you could agree to postpone.
Small Changes Make the Difference
It’s rare that you’ll be able to make one sweeping change to your project and have all your financial issues go away. Rather, you’ll be making lots of smaller changes and tweaks across the board with a view to improving the budget position holistically.
Together, small changes really do add up. Unfortunately, identifying the right small changes and doing the planning work to incorporate lots of changes does take time. You might want to slow down progress on your project while you’re doing all this reforecasting work as you don’t want to incur additional (and perhaps unnecessary cost) at this time.
Work with your project sponsor, key suppliers and other people on the team to look at where savings could be made that would contribute to meeting the financial challenges overall.
Projects move on and evolve frequently, and if you hit a problem that is going to affect the budget you should bring that to the attention of the project sponsor straight away. You should do that anyway, but in times of financial pressure and when your budget is challenged, it’s even more important to involve them in the planning and response to issues when money is at stake.
Keeping honest communication channels open is also helpful for building trust, and it ensures that you hear about changes that might affect you. For example, there might be more budget that needs to be reallocated, or you might be lucky and find that some extra cash is flowing your way.
How Much is Too Much?
In an article for PMToday Magazine way back in March 2010, John Judge explained the four stages of budget cuts, which I’ve elaborated on here:
These are useful rules of thumb, but it does beg the question: if we can manage with budget cuts of up to 15%, why don’t we stretch ourselves to deliver under budget by that amount anyway?
Do you think you could cope if you lost 15% of your budget tomorrow? Let us know in the comments section!
In this video I share 5 differences between what it means to do accounting on your project (and manage the financials/budget) and how financial accounting can work. Understanding these differences makes it easier for you to work with your Finance teams and run your project budgeting processes.
So your project is being audited? Lucky you! There’s quite a lot to think about if this is happening to your project, whether the audit is a formal thing or whether you’ve been selected as the project that’s being scrutinised by the PMO this month as part of an informal ongoing review process.
But auditing isn’t that big of a deal if you know what to expect. Every audit process is going to be slightly different but here are some common things that you can prepare for.
Provide The Information
The first step is that you’ll have to provide a whole pile of information to the people doing the audit. Whether that’s your best mate from the PMO or a scary-looking external auditor, they’ll give you a list of the kind of things they want to see. This will include:
The auditor (or audit team) will then take some time to go through all of this. It’s likely to be around two weeks as there’s a lot to digest, and they’ll want to understand it so they might come back to you with follow up questions.
They’re preparing to dig deep into the material and establishing what else they might need to know.
Once the audit team has reviewed your paperwork, they’ll start digging more deeply into the project. At your first meeting (for which there should be an agenda so you can prepare adequately in advance), expect to be taken through a list of points. Consider this the orientation meeting.
It can help if you provide an overview of the project and the objectives as part of the scene setting so be prepared to do that on the spot if asked.
Use the time to really understand what is expected of you and what the process is going forward. For example, what are the reporting expectations during the audit period? If they are asking you for updates, how long will you have to put those together and send them over? In what format?
And if you are expected to make changes to the way you are doing things (which might not be at the request of the auditors but by your manager or the PMO perhaps) then how long will you have for doing that?
Try to establish what the outcome of the audit process will be – they should be able to tell you, and should be able to explain what input you will have to the format and content of the final report. There should be a process by which you can comment on a draft and put your points across before anything is published to senior management.
Find out what your management team or project sponsor intends to use the audit output for, so you can better prepare for any action that is coming your way at the end of the audit.
Following the first meeting you should expect lots of emails! The auditors may want to speak to people in your team or subject matter experts, so make the right people available. If you are submitting follow up or additional documentation you may need to upload this to a secure online repository (if they are external) or provide it over email. There are lots of documents whizzing around in a formal audit situation so try to keep track of what you’ve sent to whom and when.
You might find that after a flurry of activity it all goes quiet for a while. This is the time when the report is being written up. Try to find out when the draft will be coming to you for review so you can block out some time to look at it and add your comments. Be honest in your commentary back but be prepared to challenge anything that you don’t think is accurately representative of your project or the processes being used to manage it.
All that sounds quite daunting but taking part in a project audit shouldn’t be scary – it’s just time consuming and a drain on your team’s resources while you are also trying to get work done. Make sure that your stakeholders and project sponsor know what is going on so that they can give you a bit of grace when it comes to short deadlines and the like during the audit period.
Audits like this won’t take more than about 8 weeks start to end as a maximum, from finalising commercial terms and the engagement letter that kicks off the audit process with an external group to the submission of the final report. However, that time can drag when you are trying to hit project milestones and keep all the plates spinning as well!
Remember that audits are supposed to be highly useful, informative exercises, whether that’s a formal external review or an informal assessment by your PMO peers. The outputs are going to help you manage the project more effectively and get better results for the business, so don’t take the recommendations personally and work together with your team to put the advice into action. Not everyone is lucky enough to go through an audit and what you learn can be invaluable to helping you manage future projects more effectively.
In this instalment of my irregular column chatting to expert project managers, I caught up with Chris Cook. Chris is the author of a new book, The Entrepreneurial Project Manager. It talks about how you can improve your skills to take a cutting-edge approach to project management, as an entrepreneur does in their own business.
How does that work? We’ll get on to that. First, I asked Chris to share his background and how he got into project management.
Chris, tell me about your career path.
Out of high school, I started working for my stepfather’s road construction company. I started as a general labourer eventually becoming a surveyor (of sorts).
I was attending college studying building construction management. After graduation, I enrolled in the graduate project management program at the same university. I was working and going to school. The field and classroom knowledge blended well.
Did you always know you’d write a book?
Five years ago, I was laboring for my stepfather’s company while studying project management in graduate school. I was coming home with dirt head to toe, tired like a dog from the weather and long hours, and I had no idea what the next move was going to be.
Would I stay working for him and maybe take over one day? Would I leave and spread my wings with a larger company to put my studies to use?
While working as an assistant project manager for a different company, a professor from graduate school offered me the opportunity to write a book for a publisher she has worked for. I jumped at the opportunity. Over the past year, I have been focusing on writing the best book possible, learning about the book writing process, and pursuing more knowledge of the project management profession.
Now, I am 1500 miles from home in Colorado having written a book, completed graduate school, and became a PMP®. Only one of those goals was on my mind at the time.
I’m guessing it wasn’t the book! What was the writing process like for you?
I segmented the process into three parts: research, writing, and editing.
The research phase took the longest. Writing notes, picking materials to use, watching hours of webinars and videos, and then placing those notes into designated chapters. I wanted to use materials not only within project management but also outside the project management world.
I tend to look at project managers as leaders and coaches, so I reference sports quite a bit throughout to make the comparison more concrete.
The writing phase was transcribing those notes through a project management filter (in my head) relating coaching and leadership to a project manager.
My goal was to write on a subject then set the computer down. A piece of advice I took to heart was if you still have something to write about, stop writing. Pick that thought up the next day to keep the momentum going.
Editing was the last phase and most excruciating for me because I had to then read what I wrote and become critical. I had amazing people who read my work and gave excellent feedback along the way which drastically improves my writing.
You did a lot of research for the book. What in particular did you do on the subject of entrepreneurship?
Entrepreneurship and outside-of-the-box thinking are often linked. I tried this same approach in my research. Instead of going to best-selling entrepreneurship books that most people read, I attempted to look for outside sources that can be linked similarly.
For instance, I read many coaching and leadership books because a project manager holds a similar position on his or her team. Hall of Fame coaches Bill Walsh and Bob Knight are two of the sources I went to for more information on taking teams to a championship level.
I also applied Stoic and Taoist philosophies because it is important for people who are leaders to understand their personal stances and why they do what they do, or believe what they believe. Making individuals perform for the sake of performance does not inspire or lead to betterment.
However, if you give reasons and data as to why these tasks are essential, the group is more likely to respond positively. “Because that is how it is done” or “this is how we do things” is not a substantial enough answer.
People might think that intrapreneurship is more relevant to project managers working in a big organization. What are your thoughts on that?
Intrapreneurship is a great concept that gives employees the opportunities to use company resources with expansive thinking and testing to innovate.
The first time I came across intrapreneurship was the PMXPO 2016 when Robbie Bach gave a presentation regarding his time with Microsoft and developing the Xbox gaming system. The only knowns Bach had were competing with Sony for the living rooms of consumers and a deadline. Other than that, the project was open ended. Each person became a firefighter coming into work not knowing what fire they would have to put out that day. Even with a $4-6 billion overrun, Bill Gates and Steve Ballmer still considered the lessons learned worth it. Bach implemented his 3P framework: Purpose (Pursue the Northstar), Principles (Ground Rules), and Priorities (The Art of Leaving Things Undone).
Watch the video of Robbie Bach’s presentation here: PMXPO 2016: The Xbox Story: Lessons in Leadership, Strategy, and Team Management
Most of the time, people get caught up in the bureaucracy, hierarchy, and rules of an organization that creativity and innovation get lost. A lot of time is spent performing defined tasks and schedules, and before you know it, the day is done, and the train keeps on moving.
I like the idea of finding time to brainstorm, revert to a child’s mind, and be playful with idea creation. Not all ideas are good, but that should not deter someone from shouting them out just in case.
The Entrepreneurial Project Manager by Chris Cook is published by CRC Press
Book Review: Writing Proposals: A Handbook of What Makes Your Project Right for Funding
I’ve been catching up on some reading over the summer, and Edoardo Binda Zane’s book, Writing Proposals: A Handbook of What Makes Your Project Right for Funding, has come to the top of the pile.
It’s a book about how to write a compelling argument for getting cash to do your project. Aimed predominantly at people trying to secure public funds for their initiatives, I think there’s plenty in here that would be helpful for project managers writing business cases or proposals outside of the public sector too.
The book is split into 3 sections:
A Practical Step-Through Guide
What surprised me about this book – and I don’t know why, because it’s clearly marketed as a book to make proposal writing easy – is that it’s literally a guide to what to put in what section. It’s almost like cheating.
Binda Zane tells you how to write it and what to say. There’s even a downloadable proposal template and budget sheet in case you need them. It’s a step-by-step guide to getting your proposal accepted. Just do what he says in the order he says and – while it won’t guarantee you funding for your project – you’ll certainly have a far better chance of hearing ‘yes’.
The largest part of the book focuses on how to write the technical proposal. It’s about putting together a work breakdown structure, describing what you are planning on doing and creating a realistic budget.
There are lots of tips in here, and while the author only hints at his past experiences early on in the book, it’s clear this is hard-won advice. You can tell he’s earned his stripes!
Tips for Clear Communication
My favourite tips were around using visual planning to get the message across, and thinking about how your proposal actually looks.
For example, he suggests taking out some of the extra stuff like staff profiles and putting them in an appendix. It saves the document from looking too bulky (and your word count, if you’re limited) while still providing the information required.
Binda Zane also encourages you to use Gantt charts and diagrams to explain the project and your methodology. Don’t worry if you are an Agile team. If Scrum is more your thing, there’s a section on how to create a timeline for your proposal without having to use a waterfall-style Gantt chart.
Sometimes it’s hard to visualise what your finished proposal should look like, so the author has included worked examples, especially around calculating hourly rates and working out your budget. There are also examples of clear writing: it’s a lot easier to tell the difference between poor sentence construction and good sentence construction when it’s right there on the page in front of you.
It’s a short book. I read it at the soft play while my children romped on the giant slide and sat inside a submarine. That points to how easy it is to get through: if I could concentrate on the book, a latte and the kids then it’s definitely an accessible read. I can think of three or four project management books where I wouldn’t have been able to get past the first page due to the density of the writing.
Writing Proposals: A Handbook of What Makes Your Project Right for Funding by Edoardo Binda Zane is available here.