Project management consulting professionals are very attuned to budget obligations—nearly everything they do is with an eye toward meeting budget objectives while adding value at every opportunity. But with all of the other tasks under the umbrella of the Project Team, there are some common practices that often wreak havoc with project budgets.
1 – Assuming you can get additional dollars approved. This usually guarantees an uncomfortable conversation with an executive who may not have any more money available (and who will surely wonder why your projections were off base in the first place).
2 – Not appointing a budget monitor. If your team doesn’t have a specific person keeping an eye on the amount spent and dollars still available across the entire project, budget issues can quickly build up and spiral out of control.
3 – Focusing only on high-dollar items for aggressive cost negotiations. Don’t underestimate the amount of money your Project Team can save by value engineering small budget items, which often greatly outnumber the big ticket expenditures.
4– Waiting until late in the project to add up actual expenditures. This habit has nightmare written all over it, as you likely won’t recognize problems until it’s far too late to properly resolve them.
5 – Expecting to address cost overruns by “borrowing” money from other projects. Even if you resolve your current problem, you’ve now created a new crisis that will need to be tackled later.
6 – Monitoring all costs equally. Most projects have high-risk areas that should get additional scrutiny (either checking expenditures more frequently or examining them at a higher level of granularity).
7 – Relying on another group for real time cost tracking. Many departments have their own methodology for accruing and recording project costs, and their approach may not provide your Project Team with the information it needs to stay on track.