Here’s Why Your Projects Are Going Over Budget

Here’s Why Your Projects Are Going Over Budget

A project going over budget or over time is pretty much the norm, it seems. Enterprises and teams of various sizes and experience levels, go over budget more often than we like to think they do. A 2011 Harvard Business Review study showed that one in six analyzed projects are going over budget, and overrun an astonishing 200% on average. Now, do not let this scare you, because as common as it may seem, there are preparations you can make in order to avoid such loses.

 

Let’s dive in into 5 main reasons your projects are overrunning, money-wise and time-wise, and see what you can do about it before it’s too late.

 

#1 You’re not tracking the budget

 

First and foremost, the simplest question since the birth of project management: “Do we have enough funds to fully sustain this project?”. Usually, the matter of total budget a project gets is settled before the project even starts, and it is rarely flexible. Before you even begin with task assignments, use a project management tool, and make sure you have everything (funds, logistics, extra activities and goals) and everyone (team leaders, team members) accounted for in your system. This way you can manage contacts (internal and external), set milestones, track calendars, and issue orders and tasks, without having to memorize every detail.

 

Now that you have all the info and all the estimates laid out in front of you, it is time to assign your team members and the budget they are going to need in order to get to the end goal. The best option is to use some type of resource management software. Using these tools, you can make projections and see what kind of path awaits ahead.

 

Lastly, to really track the budget (along with manpower), even live, you will need resource scheduling tools that allow you to follow every piece of expandable resource to the fullest. Track, assign and reassign according to current circumstances, because let’s be real, every project gets derailed to some degree.

 

#2 Your scope isn’t clearly defined

 

We all want the benefits of working with the clearest and the most concisely defined end goal. Lack of clarity in crucial moments, or at crucial milestones, often underpins those extra costs and thinning budgets. To get the clearest vision possible, you have to put in the work. You cannot expect results from simply piling tasks on a Trello board (or a Trello alternative tool). You need a clearly defined scope that includes everything from high level strategic business goals down to the execution details, resource availability, etc.

 

On the other hand, teams that use a more agile set of principles to execute their ideas and projects may need a slightly different set of agile tools to help them. For agile teams, the exact set of features that they’re going to build isn’t rigidly defined, and this is why it’s so important for the development team to be using tools that help record and track changes made along the way, especially when a lot of documentation and media sharing is involved.

 

#3 You’re going for “nice-to-have” instead of “must-have” on a whim

 

Having the right tools in order to see the project done from the first estimations to the very end is crucial. Likewise, building all the right features to deliver a best-in-class solution is a high priority. However, a lot of us make the mistake of going with popular choices, basing our decisions on toll popularity only. Having cutting-edge software is great, yes, but is the cost of integrating those shiny new plug-ins and apps too high? Sometimes choosing a cutting edge tool or method that doesn’t really fit our case our team makeup isn’t cost-effective at all.

 

#4 You’re not involving the client throughout the process

 

We live in a world of globally available communication. Having the technology, and everyday access to clients, there is no reason not to exploit the chance to make things easier via communication. Believe it or not, a lot of unpredicted budget spending comes from lack of communication with the client, and it surely happened to you once or twice. We all know the pain of retracing the steps and doing tasks all over again, all because the client wasn’t satisfied, or wasn’t properly notified.

 

To keep your team members, clients, and team managers informed of every change, milestone, and status update, consider using some form of a collaboration tool. Not only will you have a PA system for your team, but you can easily contact your clients and provide them with the right project data to keep them feeling informed. By communicating the right way, we save time and money—and we avoid those late-night headaches.

 

#5 QA takes way longer than you expected

 

This is a common issue, especially in the IT sector. QA often takes longer, because analysts and testers often need to predict the unpredictable. However, you can speed the process up by gathering as much info as you can get your hands on—and get the QA analysis team to review it before deciding on your budget.

 

Make an estimate of the development process based on complexity, and prepare a contingency accordingly. As you do, consider how you might save time and enhance your QA process by integrating automated testing. Getting to know the ups and downs of automated testing is a great way to allow your project to grow faster, while covering more potential problems beforehand.

 

How to stay within the budget?

 

So, there we have it: 5 common, budget-impacting mistakes that we all make from time time—as well as suggestions for how to gain the upper hand over them:

 
  1. Track your budget—task by task, hour by hour, and do not allow slip-ups that could be easily prevented by automated tracking.
  2. Define your goal, and the way to reach it. Do not overflow your team with data, and do them a favor by organizing it properly!
  3. Prioritize what your team actually needs—not what’s simply nice to have or popular. Prepare the set of tools you will need before starting, and avoid changing tools mid-project at all costs.
  4. Keep your clients “in the know” as much as possible. This way you will minimize the rate of backtracking and it can cut down on your need for those costly, unforeseen meetings where you have to meet and clear the confusion.
  5. Get involved in the QA process. Pre-define the possible issues based on experience and complexity of the problem. Integrate automated testing to save time on QA.
   

About the Author

   

Ben AstonStefan Simonovic is a part of The Digital Project Manager team, providing useful project management tips. His project management advice? Learn how to time-travel, because most of your deadlines were yesterday. When Stefan stays in the present, enjoys the part he plays in remote working culture, along with a good listen to The Rolling Stones.

   

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