Project Teams Still Overlook These Sneaky Budget Killers

Achieving project success means not only ensuring that expected results are delivered on time, but also that expenses stay in line with the approved budget. It takes careful planning and strict project controls to maintain budget adherence, but it can sometimes still be a challenge if collaborators and others aren’t equally diligent. If your project has gone over budget unexpectedly, see if these budget killers are the cause.

Hand with money

Regulatory fees. Mandated expenses can throw a budget out of whack if they appear without warning somewhere in the middle of a project. These required fees come with the additional downside that the project team rarely has any control over how much the expenditures will be and when they’ll be due. There’s a broad variety in the types of licensing, permitting, and related expenses PMP®s must consider, which compounds the problem—just when the team thinks it has the prices figured out, the next project comes along with slightly different requirements and the fee estimating process must start all over again. Regulatory fees are also commonly missed because sometimes it isn’t clear if a license or permit is actually required, let alone how much the transaction will end up costing.

Solution: One good strategy to stay ahead of potential regulatory fees is to network with other professionals locally and within your industry. They can offer current insight about permitting requirements and fee structures. Regulators are another good source of information and may even be able to alert the project team about upcoming fee increases.

Other departments. It’s common for PMP®s to solicit support from other departments within the organization. The partnerships vary widely and may include groups from purchasing to human resources, marketing to facilities. Unfortunately, the project team is often surprised when they discover these internal partners are disconnected from the project’s budget. An HR team that’s under pressure to bring in additional expertise quickly, for example, may enlist an outside headhunter without considering the cost, which is eventually passed along to the Project Team. Similarly, the purchasing group might not realize that something as seemingly inconsequential as a 5 percent price increase over the expected cost for materials could actually be a huge hit to a relatively small project budget.

Solution: Involving internal partners early in the project planning phase and again as the project moves through its lifecycle can be instrumental in avoiding these types of unpleasant budget surprises. It’s also a good idea to actively encourage other departments to share questions or information about anticipated expenditures that may deviate from the approved budget.

Executives and sponsors. Ironically, the groups typically most interested in keeping project expenses in check are frequently responsible for significant cost overruns. There are many reasons for this phenomenon, including sponsors who fail to treat a pet project with the appropriate level of objectivity and executives who are so focused on chasing the next competitive advantage that they forget about the project’s original parameters. It’s also not unheard of for the organization’s leadership team to simply lose track of where a project’s budget numbers are falling. As they search for ways to tackle emerging market challenges they don’t realize that existing budgets can’t support their new initiatives.

Solution: Make budget reviews a recurring agenda item during project meetings and add them to status update communications. This helps curtail mid-stream additions by the executive team and ensures sponsors are aware of budget limitations. As each line item approaches its maximum, it may also be helpful to highlight those issues so there’s no question what level of funding remains available and where the approved budgets have been exhausted.

Project Experience

Portfolio Management
Successful portfolio management calls for exceptional data management skills and diligent oversight across multiple efforts.
Demanding, time sensitive, and finely tuned, manufacturing projects require close attention and experienced oversight.
IT Projects
Organizations must be able to successfully execute challenging and highly visible technology projects to maximize revenue.
Power Plants
Power Plants must be able to keep these vital infrastructure assets current, efficient, and economically positive.
High-profile hurdles and expensive risks of failure make these projects critical to manage properly from the very beginning.
Presents complexities at nearly every stage, from allocating resources to controlling schedule variances, or clearing regulatory & safety hurdles.
Ensuring team members are able to move outside the silos of their department or discipline is the key to achieving success.
Product Dev
Design and other early-stage activities must be carefully orchestrated while maintaining visibility on future impacts and resource needs.
Mergers & Acquisitions
Among the riskiest and most strategically important initiatives a company can undertake, and their outcomes can make or break the business.
Finance & Insurance
Technology implementations call for the right level of planning detail and diligent oversight.
An ERP implementation can be among the most disruptive and strategically important initiative an organization can undertake.