It is a well known fact that having a budget overrun in a project is a test for its success or failure. All companies however large, have limited budgets, therefore generally and naturally of course – the first thing project stakeholders look to in determining whether their project was a success or not is the cost indicator. This is probably one of the most important factors for the PM to monitor.
Here are some ideas regarding this topic :
1. We must make sure you do understand each stakeholder’s true needs : Make sure to spend as much time as needed to for really, really, really ( I mean really ) understanding of what your stakeholders expect since ultimately everything is defined by stakeholder expectations: the deliverables and other requirements.
2. When estimating the costs, PM must be realistic in his “guessimations”. We have to be sure to get input from every possible stakeholder. Also a PM should make some some sort of security chest – this is needed since PM must factor in things outside of his control, from weather conditions! to people in the project leaving for work or sometimes from life ( it sadly happens). These all impact pricing of supplies, resources and etc. A PM must plan for all kinds of nasty surprises and keep some sort of buffer.
3. Also , a PM must revisit, review, re-forecast his costs regularly and frequently – as said in the XPM model by DeCarlo It is fairly certain that a project running without a budget management and re-adjusting of the forecasts on a periodic basis is doomed. A PM must not let project budgets from spinnning out of control. Chances of keeping a project on track with frequent budget review are obviously much more than a once only version.
Also last but not the least, we must not forget to control the costs another issues PM needs to track project’s resource usage. Project managers should review the number of people currently working on a project and the project’s future resource needs on a weekly basis. Doing so will ensure that you’re fully utilizing the resources you have and that you have the right resources ready for the rest of the project.
Finally, PM must keep everyone informed and accountable. This is important since in order to stay on budget is to make sure all team members are aware of the current budget status as well. PM must keep the project team informed of the project budget forecast through regular communication. As DeCarlo put it – an informed team is an empowered team and one that takes ownership of its projects.