Join Bob McGannon for an in-depth discussion in this video Addressing budgeting issues, part of Project Management Foundations: Budgets.
When you stop to think about it, the fact that projects actually are delivered successfully, could be a small miracle. There are people in communications that can vary from person to person. Risks abound. Decision-making can be erratic, and project requirements could be missing or misinterpreted. And all this does not include budget issues. I have shared a number of large potential budget issues with you. You definitely have to watch for those. However, most projects are plagued with a number of other smaller issues, that can quietly cause chaos in your budget management.
Let's take a look at a few of the common little budget process issues, you should check up on. First, check the time periods on all of your cost data. If you don't get the information in a timely manner, you may not be reporting a true picture of your budget situation. And when your budget status is out of whack, you can't make informed management decisions, or take corrective actions if they're required. In addition, check to ensure all of the cost data that you receive is for the same time period.
Calendar months and accounting months, in many companies, can vary by a few days. Resolving data that's been collected for a calendar month, against data provided for an accounting month. Can you drive you crazy, because they will never match. Make sure everyone is reporting for the same time periods. The second little big thing you may want to check are the cost codes that are assigned to your project in your company's accounting system. You don't want charges assigned to your project that belong elsewhere.
Because it can make things appear like you are over budget, when you aren't. Potentially worse however, is when your project costs are assigned to codes outside of your project. This can lead you into thinking that you are at or below budget. However, when the owner of the incorrectly burdened cost code makes the discovery and works to correct it, you can potentially get a heap of charges hitting your books all at once. If this was not expected, you could have a major issue on your hands.
So, here are a few quick checks you can do to ensure all of your charges are hitting your books properly. Check to see that all of your vendors costs are hitting your books. Check to see that each of your technical teams' costs are hitting your books as well. Typically, you don't have to check each individual team member. Looking at this at the team level, by checking one team member from each team will probably cover you. If you are going to be charged for overhead items such as telephones or management time, check to see they're in your reports properly.
You should also note the frequency of when these charges are allocated. It might be weekly or monthly. And in some cases, I've seen quarterly as well. Ensure you know when these charges are coming. The third item for confirming budget integrity, is to check all purchases against your budget. Like forgetting the electricity for baking a cake, I shared earlier. Sometimes items are overlooked in the estimates you receive, but will show up in an invoice that is posted to your cost account. This is especially true in matrix organizations where you don't approve every purchase that may effect your account.
Little things, but ones that can make a difference. These administrative checks of your budget and spending can save you lots of heartache and late nights, trying to make sense of spending information. Better to take the time earlier and verify items than regret it later. When you may need to go through pages and pages of reports, to find these silent items that can create budget chaos.
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- Discovering costing standards
- Examining capital and operating costs
- Assigning costs to resources
- Communicating your budget
- Recovering a bloated budget
- Addressing budgeting issues<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.