This video examines the possibilities and pitfalls of collecting budget actual information to allow you to track your actual budget expenditure to your planned budget values.
- Picture this: you're heading down the highway, there isn't a lot of traffic, and it's a beautiful day. You have the cruise control on and you aren't exceeding the speed limit. Suddenly as you come over the crest of the hill, you see a police car parked on the shoulder of the road ahead of you. What do you do? Even though you aren't the least bit guilty, you tap the brakes and slow down. The police officer reminds you of the measurements that control your driving.
Measurements have power in our lives. The same is true with project measurements. Track costly items carefully, and you and your management team will react proactively to potential cost changes. One of the most substantial costs on most projects is people. To manage this well, pay attention to the collection of the time your resources use on project tasks. Here are my recommendations for collecting this vital data. First, determine how management wants the cost of resources to be allocated.
Let's talk about some common approaches. Some organizations capture labor intervals. They might do this in 15 minute increments by the hour, the day, the week, or the month. However, other organizations want you to allocate people's time against particular budget line items. Still others might want you to allocate resource cost as a capital expense or an operational expense. Ask your finance group how they want you to categorize each resource type.
The second item to determine is timing for the collection and processing of resource costs. Your resource usage data will need to come in at the right time to help you complete your reporting against your deadlines. For example, let's say you have to report to your steering committee by the first of each month. To get an accurate update, you need information on how the resources in your project are being used and at what cost. In this instance, you shouldn't ask your project team to have the resource usage actuals on your desk by the 30th of the month.
You'll need it a couple of days earlier to allow you to produce accurate reports. Third, consider the scheduling of vendor invoice payments. Some vendors will charge you at the end of the month. Others will charge you as soon as they've delivered their product or service. Knowing how vendors invoice will help you more accurately allocate funds for a particular period. Lastly, don't underestimate the time it'll take to collate the necessary resource cost information.
Nothing is free. Allocate project administration time to get this job done accurately, which should include coaching your team members and verifying their input until you're confident they have good time recording habits. Collecting resource usage information on a regular basis can help you control your project. Increases or decreases in resource usage are typically early indicators of a change of overall project status.
So tracking resource usage information will not only help you maintain a sound budget position, but it could help you proactively address project issues as well.
Note: This course follows the latest guidance from Project Management Institute, Inc., as outlined the PMBOK® 6 Guide.
- Recall best practices for project budgeting and estimation.
- Distinguish common estimation approaches used to build project budgets, and understand when to use them.
- Identify best practices for budget expectation management, while utilizing sound budget refinement techniques.
- Describe and explore agile project budgeting techniques.
- Review various approaches for correcting project budget overruns.
- Review sound budget reporting approaches, including how they can be used to report project status.
- Recognize the issues and changes that can put a project budget in jeopardy.