5 Reasons Your Project Budget Is Never Enough To Cover Project Costs And What You Can Do About It

<h1>5 Reasons Your Project Budget Is Never Enough To Cover Project Costs And What You Can Do About It</h1>Author: <a title="Susan de Sousa" href="http://www.articlesbase.com/authors/susan-de-sousa/140378.htm">Susan de Sousa</a> In the good old days of the dot com boom, the project budget was something which Organisations were rarely concerned with. All that mattered was getting the product launched and moving onto the next deliverable. If there were any problems with getting the product delivered these were easily resolved by throwing money to sort it out. Triple overtime anyone? But times change, and have done so drastically. The project costs are under intense scrutiny,and every dollar asked for has to be justified in infinite detail. It is for this reason that having a good understanding of budgeting and financial accounting is becoming a more highly sought after skill in project management. So what are the 5 common mistakes made with a project budget? 1. Being Over-Optimistic. This might seem like a good idea when you are drawing up your costs , but do you really want to put yourself in a straitjacket before you have even got going? 2. Not Properly Understanding the Scope There is no point in saying you're not a technical PM. If you don't clearly understand the detail of your deliverables, how can you devise an accurate estimate for it? 3. Overlooking Key Resources Sure you've accounted for the development and test resources you will need. You've even remembered the hardware you will need to purchase, but what about the other myriad of resources you will need on top of these to get to the finish line? And you ignore these at your peril because they really add up and will dramatically increase your costs. 4. Forgetting about Contingency After you have made an initial estimate of how much the project will cost, you will usually then be put under intense pressure to get both the budget and the timeframes down. Now there are ways of doing this to keep your boss  / client happy, and also ensure you retain some contingency without anyone knowing. However too many PM’s just start slashing costs to get the overall cost down and really pay for it later. 5.  Detailing a Budget with no Approved Requirements Too many PM’s forget that until at least the Business Requirements Specification is approved, scope can and usually does change dramatically.  Therefore trying to determine costs without a clear scope is just asking for trouble later on. Of course it doesn't have to be like this. There are numerous tips and techniques you can utilise to ensure, that  at least where budget is concerned, your project is never without. However if you don’t know what these are, both you and your team will really suffer the consequences later on in your delivery.About the Author: Susan de Sousa from my-project-management-expert.details all the infomation you must know regarding how the professionals go about 
<a href="http://www.my-project-management-expert.com/estimating-project-costs.html">estimating project costs</a> and implementing <a href="http://www.my-project-management-expert.com/project-cost-controls.html">project cost controls</a> to ensure their projects run smoothly and never run out of money.
Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/management-articles/5-reasons-your-project-budget-is-never-enough-to-cover-project-costs-and-what-you-can-do-about-it-1051488.html" title="5 Reasons Your Project Budget Is Never Enough To Cover Project Costs And What You Can Do About It">5 Reasons Your Project Budget Is Never Enough To Cover Project Costs And What You Can Do About It</a>

In the good old days of the dot com boom, the project budget was something which Organisations were rarely concerned with. All that mattered was getting the product launched and moving onto the next deliverable. If there were any problems with getting the product delivered these were easily resolved by throwing money to sort it out. Triple overtime anyone?

But times change, and have done so drastically. The project costs are under intense scrutiny,and every dollar asked for has to be justified in infinite detail. It is for this reason that having a good understanding of budgeting and financial accounting is becoming a more highly sought after skill in project management.

So what are the 5 common mistakes made with a project budget?

1. Being Over-Optimistic.

This might seem like a good idea when you are drawing up your costs , but do you really want to put yourself in a straitjacket before you have even got going?

2. Not Properly Understanding the Scope

There is no point in saying you're not a technical PM. If you don't clearly understand the detail of your deliverables, how can you devise an accurate estimate for it?

3. Overlooking Key Resources

Sure you've accounted for the development and test resources you will need. You've even remembered the hardware you will need to purchase, but what about the other myriad of resources you will need on top of these to get to the finish line? And you ignore these at your peril because they really add up and will dramatically increase your costs.

4. Forgetting about Contingency

After you have made an initial estimate of how much the project will cost, you will usually then be put under intense pressure to get both the budget and the timeframes down. Now there are ways of doing this to keep your boss / client happy, and also ensure you retain some contingency without anyone knowing. However too many PM’s just start slashing costs to get the overall cost down and really pay for it later.

5. Detailing a Budget with no Approved Requirements

Too many PM’s forget that until at least the Business Requirements Specification is approved, scope can and usually does change dramatically. Therefore trying to determine costs without a clear scope is just asking for trouble later on.

Of course it doesn't have to be like this. There are numerous tips and techniques you can utilise to ensure, that at least where budget is concerned, your project is never without. However if you don’t know what these are, both you and your team will really suffer the consequences later on in your delivery.

Susan de Sousa from my-project-management-expert.details all the infomation you must know regarding how the professionals go about estimating project costs and implementing project cost controls to ensure their projects run smoothly and never run out of money.

Rate this Article:

0 / 5 stars - 0 vote(s)

Re-Publish

Article Source: http://www.articlesbase.com/management-articles/5-reasons-your-project-budget-is-never-enough-to-cover-project-costs-and-what-you-can-do-about-it-1051488.html

Article Tags: Project Manager, Project Management, Project, Project Budget, Project Budgets, Pm, Project Costs, Project Budgeting

Related Videos
Related Articles
Ask / Related Q&A

Play

Moviemaking Tips by Erik Beck

Play

How to Buy School Supplies

Play

Learn Business English Vocabulary for Project Management

Play

Learn Business English Vocabulary for Project Management

Play

How to Choose a Rear Projection TV

Latest Management Articles
More from Susan de Sousa

Middleman System New Review December 31st

By: Clare Clements | 31/12/2009
Aymen and his team at former Arbitrage Conspiracy have released Middleman System on December 17th, through a Special Webcast ,with Guesr Brian Tracy what is to be the Biggest Launch in the Internet marketing History.

Why Virtual CFOs Have to Be Better, Faster and Smarter

By: Scott A. McPherson, CPA, CFG, CVA | 31/12/2009
There’s no doubt that the realm of the CFO has shifted dramatically. And by some economic and marketplace indicators, dynamic virtual CFOs, especially those who specialize in partnering with small and mid-sized businesses, could become the next generation of chief financial officer professionals. That is, as long as those virtual CFOs stay better, faster and smarter.

ERP Software: Increase the Efficiency of Your Engineering Department

By: S. Daggle | 31/12/2009
Manufacturing companies rely on their engineering department in order to secure a profit. While the sales department initiates leads, the engineering department is in charge of creating products and filling orders which ultimately results in the sale and revenue. This means that the efficiency of your engineering department directly affects...

How Do I Earn Extra Incomes - Extra Incomes With Style

By: Rok Pisek | 31/12/2009
Do you need extra income and are you willing to have it? We are talking about extra income to develop your lifestyle level or even to give a chance to quit your current work and start to work on internet which can make your life easier. Of course there exists many...

What makes a toddler an entrepreneur?

By: Kim Roddy | 31/12/2009
There are numerous fables of people who have risen from to being a downtrodden person to an entrepreneur. These are the people who were once an employee and after conquering a series hardships and adversities of life they attain the position where they generate employment for others and become a source of inspiration for the society and for who strive to be successful

Global Warehouse Management Systems (WMS) Market in Retail Industry

By: Bharat Book Bureau | 31/12/2009
Bharatbook.com added a new report on "Global Warehouse Management Systems (WMS) Market in Retail Industry 2008-2012" into its market report catalogue for reselling.

When Employee Conflict Gets Ugly

By: Imelda Bickham | 31/12/2009
Employee conflict can be healthy when it aims at resolving differences and finding a common ground. Conflict becomes harmful when it aims at winning, and proving that one is right and the other person is wrong.

Various Tips To Avoid Common Errors In Real Estate Investing

By: Sabrina Jose | 30/12/2009
Real estate investing is generally thought of to be a method of getting rich quickly. So, people feel that they can definitely make a lot of money by investing in real estate. This can lead to a lot of errors being made. If you are aware of the errors it will be easy to avoid them.

Why Project Stakeholders Are Key in Making and Breaking Project Managers

By: Susan de Sousa | 01/10/2009 | Management
Project stakeholders are a key element of any delivery. They determine direction, refine the scope and basically ensure it gets delivered. In theory that sounds wonderful. In practice it translates into something else altogether. You see the reality is that these key individuals can either make or break a delivery unless the PM has developed the necessary soft skills to successfully work with them.

5 Reasons Your Project Budget Is Never Enough To Cover Project Costs And What You Can Do About It

By: Susan de Sousa | 19/07/2009 | Management
In the good old days of the dot com boom, the project budget was something which Organisations were rarely concerned with. All that mattered was getting the product launched and moving onto the next deliverable. But times change, and have done so drastically. It is for this reason that having a good understanding of budgeting and financial accounting is becoming a more highly sought after skill in project management.

Project Management - The Top 3 Reasons Why Smart Project Managers Devote Time to Contingency Planning

By: Susan de Sousa | 29/06/2009 | Project Management
Contingency planning can seem like a total waste of time in the big picture of delivering a project. After all why bother to plan contingency for risks which might never happen? Surely a better idea would be to ensure the risks raised don't occur, and concentrate on getting the project launched.

Is Too Much Time Spent Worrying About Project Risk, Than Dealing With Actual Project Reality?

By: Susan de Sousa | 21/06/2009 | Management
You will often hear about the Project Risk Log and how important it is to the successful delivery of a project. Apparently this one document contains all the risks surrounding the project and enables them to be mitigated to ensure they don’t impact the delivery should they occur. Well that’s the theory anyway. The practice is of course very different.

Is Successful Project Management Ever Possible in IT When Humans are Involved?

By: Susan de Sousa | 10/06/2009 | Management
All too many people think that simply having a long detailed project plan, an adequate budget and enough resources somehow will automatically equate to a successful delivery. If only that were the case? In fact it is estimated that over 95% of IT projects fail to deliver to either time, budget, scope or quality; a truly sobering statistic. But this begs the question, why is successful project management so difficult to achieve and deliver?

Does a Project Charter or Project Initiation Document Lead to a More Manageable Project Delivery?

By: Susan de Sousa | 08/06/2009 | Project Management
Initiating a project usually involves writing one of two documents; a Project Charter or a Project Initiation Document (PID). Now a great many things happen during initiation. High level scope is determined, deliverables set and budgets estimated.If these aren’t investigated and documented effectively it can adversely impact the entire successful delivery. But which document is better for ensuring this?

Are Project Management Reports Simply A Way for Project Manager’s to Hide Bad News?

By: Susan de Sousa | 02/06/2009 | Project Management
A Project Manager holds a position of great trust. Often the futures of Organisations are entrusted to them, together with large budgets which can be ill afforded. In return, transparent project reporting through Project Management Reports are expected, to emable Business Stakeholders to accurately track progress. But do Organisations always get the real picture?