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Optimizing the Budget for Your Project the Smart Way

Management TipsProject Management

If you have tried planning a project, you have probably discovered that managing a budget for one is not an easy task. The unfortunate truth that every person who works with projects discovers in the middle of it all is that they do have the tendency to run over the planned budget. Do not worry, this is a normal thing and happens to nearly every project manager out there.

Why Does the Project Run Over Budget?

  • Unplanned costs
  • Unexpected changes
  • Unconsidered factors in planning

When planning a budget, one has to plan ahead for the unexpected expenses or those that cannot be anticipated just yet. A single breaking of a budget does not only jeopardize a project, but can also harm the entire business. Every project is different, but there are some common strategies that apply to nearly every project being planned.

If you want your project to be successful you should follow the six steps below:

Contingency Plan

Every project needs a contingency plan. It does not really matter if you have experience in leading projects, contingency planning is a crucial part of a project to succeed. Make sure that you plan ahead and be ready for when things go a bit haywire. Being ready does not only mean that you should be aware that things can stray from the plan, but that you need to have a contingency budget to cover up the unexpected costs.

Inform Yourself

This may be your first or your tenth project, but it does not matter. The need for input is present in every project planning and you must be prepared to ask for help from experienced team members or mentors for your plan to work. Additionally, you may use the input from the estimates of others or gather some information from past projects that are similar to the one you are working on.

Calculate the Core Costs

When starting the calculation of project costs, one must begin with the absolute must-haves for the project to start functioning. What are these? These costs include those of the team members, the project management software being used, travel expenses, equipment etc. If your budget cannot support these costs, you may want to reconsider the scale of the project or request a budget expansion.

Be Ready for Changes in Budget Estimates

As we previously mentioned, you may encounter many unexpected surprises on the way to finishing the project and you must be ready for them when they come. This is why managing a project budget continually while the project is up and running is a crucial part of succeeding. What you must do is compare the budget at the specific moment to the one you had at the beginning of the project and the one you are planning to spend by the time completion comes. In this way, you will be able to fix the work plan and bring the expenses in line with the budget.

Monitor Your Resources

The most important element of every project is the team members. If your team members are not working on the highest priorities or simply cut working hours, you are using a big component of the budget – the salaries; and get insufficient results in return. As a project manager, you must monitor every activity in the project and lead the team members in the right direction.

Communicate

Being a project manager does not mean that you are a director of an activity. If you want the team members to feel important and valued, you have to show them that. This can only be done by communication. Try to keep everyone informed on the budget forecast and make sure that they understand how important this is for the project to be completed. You may be surprised by how much people can help you by paying more attention to hours and costs.

If you are in doubt about your methods, make sure you follow the above-mentioned steps in order to finish the project successfully. You may be surprised by how much these simple guidelines can help you in being a successful project manager!

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