Technology initiatives often bring significant complexity in both planning and execution. Not only do these high-visibility, high-risk projects involve sophisticated software, they also:
- Affect workflows across numerous functional areas and stakeholder groups
- Require support and contributions from a wide range of internal teams
- Combine multiple business priorities at different levels of the organization
- Have tight time tolerances for disruptive work
- Revolve around adherence to rigid milestone and completion dates
- Rely heavily on external partners and collaborators
- Hold a strategic place in the organization’s competitive position
And while technology projects are typically expensive to execute, many carry the additional risk of being even more costly should they fail.
Budgeting for these efforts can be difficult, and our project management consultants have helped rescue numerous technology projects that ran into serious trouble. Teams may have the experience to estimate many common expenditures, but additional costs often lurk behind the scenes that are easy to miss unless your organization uses a proven project management methodology to root them out, assess them, and assign a realistic dollar figure to them. Simply understanding all the different expenditures related to software implementations and upgrades is sometimes a challenge in projects with so many moving parts and so little opportunity to recover from mistakes.
If you’re worried your technology project’s budget doesn’t reflect the true cost of execution, consider some ways you can uncover and more accurately forecast common “hidden” costs.
Compliance with legal or regulatory mandates. It’s true that project teams operating under external oversight may have less flexibility when it comes to setting parameters or executing certain activities. However, that doesn’t mean that compliance-related project costs are an impenetrable black box. Accurate budget forecasting requires an understanding of the relevant mandates and a thorough assessment of how your project team will meet them. To build a comprehensive view of regulatory-related costs, look for experts and other partners who have executed similar projects in the past. They can offer guidance on where unexpected costs are most likely to crop up and how emerging compliance legislation may affect your budget.
Software customizations. Groups frequently struggle to estimate how extensively their technology may need to be fine-tuned to meet their operational requirements. This becomes more challenging as systems increasingly integrate with other platforms in the organization. Costs to cover customizations in the new technology solution are just the beginning—there may also be changes necessary in existing systems, too. Your technology implementation partners and internal IT group are valuable resources that can help gather and assess customization requests, then interpret how the planned changes will influence final costs.
Off-hours labor. Few companies are willing or able to take core systems offline during regular business hours. The result is an elevated cost structure due to a significantly increased need to schedule contractors for off-hours work than is typically present in other types of projects. But unless your team has experience with technology initiatives, it may not be obvious when vendors can and cannot execute tasks during normal hours. Gathering detailed quotes from your labor partners is key to uncovering accurate price data.
Rising costs due to project duration. Some technology projects extend over a long time span, particularly when multiple systems are involved or when extensive custom development work is needed. Prices for materials and labor may increase as the project goes on. If your team members—or the vendors providing quotes—don’t accurately forecast the rise in future costs, then your budget will deteriorate over time. Inflationary increases be difficult to accurate calculate in a volatile economy, so pay close attention to the structure of any fixed-pricing agreements.