The Money Files

These days project budgets don’t stretch to nice things like bonuses for all team members for when the project completes on time. If the team members don’t work for you then you probably can’t give them a pay rise either. You might not even get enough in the budget left over for a party at the end of the project. Even if you do, you might be hampered by local tax laws that specify how much you can give gifts in lieu of financial amounts, and you could make it harder for people to complete their tax returns by giving any sort of bonus at all.

Common practice on projects is to take people out for a meal or even to a bar for drinks, but if your budget is tight you might have to resort to getting people to pay for themselves, or for you to pay for the first round of drinks, for example. There are other ways to motivate your team without it looking like you are being too stingy.

So, if you can’t motivate people to do a good job with financial incentives, what can you do to ensure they perform well (or to reward people who did perform well)? Here are some ideas.

Grant time off

You might have to check with their line manager, but granting someone time off in lieu of extra hours worked can be a great way to reward project team members who have put in extra hours during a push on a project, or a go live weekend. It’s also worth checking with HR about the policy for this, as you could be setting a precedent, but it is definitely worth considering.

Training courses

Being ‘allowed’ to go on a training course might not seem like much of a reward. After all, surely this is part of your normal contract of employment with your boss – they should be providing training anyway. But in times like these where extra cash for training is hard to come by, operations managers might not have a training budget. You, on the other hand, could offer developmental activities as part of the project, and then encourage people to try out their new skills. There’s even a process for this in thePMBOK® Guide – Develop Project Team.

Time off for study

If someone is taking a professional credential like PMP or working towards an MBA, could you give them time off to study? Many companies have study leave policies but managers don’t always know about what their employees are studying for outside of the office. If you can find out, you can apply the policy terms and make sure that those employees feel supported during their learning.

Thanks!

This is probably the fastest, cheapest way to build good will in the team. Saying thank you is completely free and people appreciate it a lot more than you think. Say it often, and every so often do it in writing so that they can keep your email for their end of year review, or to show it to their manager.

Remember to say it in a timely manner – it’s no good thanking someone for a job well done when that was last month as they might not even remember what they did that was so deserving!

References for contractors

Most contractors will expect a reference at the end of a contract, but knowing that you are prepared to give a positive one can be a motivating factor. People appreciate that they are appreciated, and are prepared to put the work in if it means they get something out of it at the end.

Talk to your contractors about their expectations for a reference or recommendation and see what you can jointly do to ensure that their skills are recognised elsewhere in the organisation where they may be able to get their next contract.

Bring your own picnic

OK, it’s not as glam as going to a restaurant, but you could organise a pot luck picnic with everyone bringing their own food. If your office has a garden or outside space, or even a park within walking distance, you can camp out there. Otherwise, book a meeting room and get all the food on the table. This can also be a good team building exercise – after all, you don’t want everyone turning up with a bowl of green salad!

What other ways have you motivated your employees without hard cash? Let us know in the comments.

OK, so we all know budgets change from time to time (normally being reduced unless you’ve got a great reason for your sponsor to give you more, like a change). But aside from office politics and the change control process, there are other things that can affect your project budget. Here are 4 risks to consider when both putting your risk log together and your budget.

1. Gold plating

Gold plating is where the project team adds stuff into the project scope without the customers asking for it. It often happens on software design projects, where the developers know they can add extra functionality to improve the product, so they do. Even if the customer didn’t want it, and didn’t know they could ask for it, the team do it.

You’d be forgiven for thinking that gold plating is a good thing. After all, what project customer isn’t going to want more for their money? It’s the bells and whistles that set your project team aside from any other project team.

However, if your team is working on tasks that are not on the project schedule, that costs you money. It takes time to do extra work, so whether they realise or not, they are helping the project go over budget through their enthusiasm. Talk to the team about the proper change control process and make sure that they are only working on what is approved.

2. Scope creep

Scope creep is something that all project managers have come across at some time in their career. You start off with a narrow, well-defined scope and by the end of the project it’s become a rambling monster of requirements. This is different from gold plating – the team are working on things that are approved, it’s just that the approved work stretches the scope way beyond what was originally agreed.

Scope creep takes many forms, and can be through a poor change control process. If everything gets approved, then you know that your change process is not rigorous enough! While many changes put forward will be good, useful suggestions, some will take the project outside of its original goals and objectives. Should they really be included in this project or would it be better to manage those requirements in another way?

Scope creep adds time to your project, and therefore cost.

3. Failed QA systems

Quality Assurance (QA) makes sure that your deliverables are fit for purpose. Whether your QA system is peer reviewing lines of code or stress testing bricks off a production line, you should have some method of checking your work before you give it to the client.

Poor QA means that deliverables will make it through to the customer only to be rejected. The customer will not sign off on poor quality work, so it is far more beneficial for you to catch mistakes early on. This will reduce the amount of testing required and also give you more of a chance of your deliverables being approved by your client.

Deliverables that are rejected will have to be done again, and by the time the work has got into the client’s hands for approval, it is likely to be costly to make changes and complete rework. It is far better to catch poor quality early so that you can rectify it while it’s still cheap enough to do so.

4. Currency fluctuation

Not all projects will suffer from currency fluctuation, but if you are working with an international team, this could happen to your project. The problem comes when you budget at a certain exchange rate but of course are charged the exchange rate of the day when the invoices come in. In some cases the discrepancy between what you had planned to pay and what you actually pay can be hundreds of dollars (or euro, or yen etc).

It’s hard to plan for this, but you can make your budget a bit more robust by including a percentage contingency to cope with currency fluctuations. Only you will know what seems appropriate given the overall spend of your project and the amount to be spent in foreign currency. Talk to your accounting department as they may be able to advise on how best to manage this.

You can probably think of many more risks to your budget, but these 4 make a good starting point for budget risk planning with your team. What else do you normally include on your risk register when it comes to money?

Project budgets – don’t you just love them? Your sponsor gives you a complicated project to manage with a relatively low available budget, and you’ve got to take it from there. When you start a project, here are 4 important questions to ask about your budget so that you are completely prepared for the project.

How much have I got?

This is important to know! While it’s great to think that you will have the luxury of working out the full scope, detailing the project schedule and resource plan, then costing it out and submitting that number, plus tolerance, to your project sponsor for approval, the reality is very different. By the time the business case and Project Charter have been approved, there is already a good idea of how much money is available for your project. That’s your budget, whether you like it or not.

So, it’s important to know what that figure is so that you can track expenditure towards it. If you do find then that you can’t achieve the project objectives within the amount that you have been given, that’s the time to put forward a change request to get the budget increased.

What’s my authorisation limit?

Can you sign off invoices and purchase orders? And if so, up to what value? There is normally a sliding scale of sign off authorisation limits in a company depending on the level of management. You may find that you have complete authority to sign off anything related to the project but it would be more normal to find that you have a capped ceiling on what you can authorise.

For example, you may be able to authorise expenditure up to $50k, but anything over that needs to be approved by your manager. Anything over $500k may need to be approved by a director, and anything over $1m by the board.

Establishing your authorisation limit now will save a lot of time later and avoid purchase orders being bounced around waiting for someone to approve them.

What’s acceptable tolerance?

Talk to your project sponsor about what levels of tolerance they are prepared to accept. For example, if you forecast that a particular cost will be $100 with a +/- tolerance of 10%, you can spend $90 or $110 without having to let the sponsor know about it. They may be happy with this, or say there is no tolerance, or set another percentage.

Knowing the tolerance levels gives you a little bit more flexibility with managing the numbers and ensures that you aren’t always asking them to approve a tiny bit more. You can have tolerances per budget area or for the overall project, so agree with your sponsor how they want you to manage tolerance on the project tasks.

How do I access the contingency fund?