Never blow an IT project budget again
Most of my friends, colleagues and clients are forecasting that IT budgets will increase during 2017 but according to a recent survey, many CIOs say that managing and implementing those budgets is getting tougher. Which, I suppose, stands to reason. With greater budgets comes greater responsibility and every organisation wants the best possible return on their investment.
In the survey, by Apptio, 67% of CIOs and other senior IT executives expected their budget to either increase or stay the same over the next year but more than half said that they found managing these bigger budgets a challenge.
Ask anyone who has had their budgets cut and they'll tell you that increased allocation for spend should be a reason to cheer not fear!
With this in mind, I thought I'd share 7 strategies that could help you never blow another IT Project budget again.
1 - Prepare A Separate Budget For Change
This simple strategy creates a reserve of funding for any changes that are approved. Many Projects suffer because each time a change is approved the PM has to prepare a budget forecast for it and get approval. This way funding is pre-approved.
To create a Budget For Change you need to estimate change requests during the life of your project based on your experience and awareness of the project and resources. Once it is approved it is normally down to the Project Manager to apportion funding. However, be careful to only use your Budget For Change to fund approved changes. Some projects fall into the trap of confusing their Budget For Change with a contingency fund and find that it soon runs out.
As with all aspects of the project, communication is key. Any spending from your Budget For Change should be communicated with your client, if it's an external project or with your stakeholders if it's internal. That way, at the end of the project everyone will know what's been spent and what's left in the pot.
2 - Regularly Check In With Your Budget
IT Project budgets are a little like diets. Keep a regular check on how you're doing or you will soon start to fail.
My Project Manager friend is the ultimate expert at breaking Projects down into bite size chunks and it's from her that I took the diet analogy. She approaches weight loss with an "eat healthily and exercise more just for today" mentality that she learned in IT Project Management. All those "just for today's" soon add up and she recently dropped three dress sizes for her sister's wedding.
She also uses this approach when it comes to monitoring the budget. She breaks down resource allocation and budget in relation to those bite size chunks and by checking in at least weekly she has carried budget over to the next chunk on more occasions than not. The ultimate return being that she is regularly delivering IT Projects under budget.
Does she find it easy?
She says, "It's as easy as losing weight. Which for me is really hard! But when you create habits that are in line with your goals, whether it is packing a salad and taking the stairs or making a diary note to check spend against forecast every week, it soon becomes second nature.”
3 - Align Your Project With Business Strategy
I'd say 90% of the Projects that I see run into fatal budget issues are not properly aligned with the business mission of the organisation. Conversely, probably 99% of projects that I see delivered within or well under budget are well aligned.
I'd love to see some actual research on this but my gut feeling will probably be backed up by most Project Manager's experience.
When a Project shares the business mission trajectory of your firm it's harder to overspend. Maybe it's because you all have a common sense of direction of travel and appreciate the value of keeping travel costs down, perhaps it's because well thought out strategy begets well thought out strategy, it could be there's a perception of increased governance and accountability when you have a higher power to answer to ... I don't know for sure!
BUT I do know that IT Projects without a business case are the likeliest to wander off into the wilderness of overspending because there is nothing strategic against which to measure them.
4 - Get Some Help
I think it's great that more than half said that they found managing bigger IT budgets a challenge. At least, I think it's great that they have acknowledged the challenge. That's 80% towards solving the problem in my book.
There's no shame in admitting that any part of the Project Management job description is not your strongest suit. As long as having worked out your weakness you do nothing to address it!
Last year a Project Manager in the UK public sector bravely acknowledged that increased budgets and Project portfolio were going to overstretch his (already fairly stretched) budgeting capabilities so he used the extra workload to request they hire some new talent to the team. The person who got the gig, surprise, surprise, was a budgeting maestro. I know this because the Project Manager they hired is a friend of a friend and a .. well ... a budgeting maestro.
The point is, you can bring in talent to complement any weakness that you have and increased budgets is a great time to push for such a review.
Alternatively, if you can't increase headcount, the Project Management as a Service market has solutions from people to end to end Project Management that can help with managing budgets. Furthermore, a PMO assessment, where a fresh pair of eyes takes a look at your operation might find a simple fix to any issues that are the root cause of your budget dilemmas.
5 - Forecast Resource Needs And Availability Throughout Your Project's Lifecycle
I recall years ago hearing the legendary football manager Brian Clough talking about the strategies that had won his Nottingham Forest side two consecutive European Cups. Among them was an embedded knowledge of where each player was meant to be for each phase of play.
It is a wonderfully simple technique that in IT Project Management budget planning can reap huge wins. If you have gone to the trouble of chunking your project into bite size pieces allocating resource to each phase and checking that the resource your need is available is a reasonably simple next step. As well as giving you peace of mind that all your bases are covered it gives an early warning of gaps that can be filled by re-prioritisation the rest of your portfolio or through the Project Management as a Service market.
6 - Manage Scope
You know it, I know it. If you don't manage your project's scope then you most likely struggle to manage your budget. Despite us all knowing this, scope creep is still one of the greatest project killers. Unfortunately, as the size of the project and budget increase so do the risks of scope creep.
You don't need a tutorial here about how to define, control and manage scope but one of the most dangerous and invisible forms of scope creep that I'm seeing a lot of is worth a special mention.
It's a form of self-inflicted scope creep. You and your team are working in your project day to day and you notice that there may be better ways to do things or enhanced deliverables could be achieved by making a simple tweak. It's all done with the best of intention but someone needs to keep an eye on these because they all add up quickly!
Make sure that budget, resources and schedule grow in line with the project's scope and if they don't robustly challenge any creep that may affect your budget.
7 - Establish Who Is Responsible For Budget - Guess what - It's Everyone!
A quick one to end with!
One of the best ways that CIOs and Project Leader's can manage budgets better is by sharing budget responsibility with individuals on the team. You don't abdicate responsibility - it's still your name above the door - but by communicating what the business strategy is and how your project will help deliver it you'll get a greater collective mission buy in.
If you get this right you'll find that team members police their own spend in line with organisational budget expectations. When you keep your project team thoroughly informed of the project's budget forecast you'll find that they take greater ownership of the project and when you keep them updated on the current status of the budget you will find that they take more care of the costs associated with their project area.
As with any aspect of Project Management, good budget management comes down to good governance, a great strategy and best practice. Try these ideas, develop your own or get support from the Project Management services community. In 2017, do whatever it takes because greater budgets are something to be celebrated not a cause for sleepless nights.Find out more about Project Management as a Service from Stoneseed
Source: Apptio Survey