Budget and resources play a huge role in whatever type of project there is. Budget, or the lack thereof, can either bring failure or success to the project. It’s quite unfortunate that only a small percent of companies has unlimited budget and resources. The rest of the market would have to deal with whatever budget was presented to them.
But does it mean that you just have to throw your hands up and give up when your resources are limited? It takes creativity and tons of hard work for the project manager and its team to bring success to projects that are under-budgeted.
Here’s how you can make the most out of your resources and turn your project into a successful one despite having the limited budget:
Have a clear understanding of the stakeholders needs and wants
Sometimes project fails despite a massive budget because the expectation and wants of the stakeholders are not met. He may want one thing but you deliver another thing. This does not only cause a waste of money but also of time and effort.
Before you plan the budget needed for the certain project, the first step that you need to do is to have a clear understanding of what your stakeholder wants and needs.
What outcome does he want to achieve?
When you truly understand the purpose and outcome of the project, everything else will go smoothly. You won’t have to waste time and resources in delivering things that don’t meet the want of your stakeholder.
Make a realistic budget plan
While it’s necessary that you create a realistic budget based on the outcome of the project agreed, you should never forget to include surprises or unexpected expenses on your budget plan.
Building in contingency is an effective budget planning strategy. Remember that there are things that are out of your control – such as external environmental considerations that may impact pricing of resources, supplies, financing, labor, currency exchanges, product/service shortages and so on.
You won’t get blindsided and out of track if you have planned for surprises.
Establish relevant KPIs
Establishing key performance indicators (KPIs) is important in effectively managing a project budget. Without it, you may be slamming your head on a hard-stone wall.
What does KPI do?
It helps you determine how much have you spent on a project, the extent to the actual spending compared to what was originally planned and so on. Below are some of the commonly used KPIs that are effective in project budget management:
- Actual cost (AC), also known as actual cost of work performed (ACWP) determines the total amount of money spent on a project to date.
- Cost variance (CV) indicates if the estimated project cost is above or below the set baseline.
- Earned value (EV), also known as budgeted cost of work performed (BCWP), shows the amount of budget approved for performed project activities to date.
- Planned value (PV), also known as budgeted cost of work scheduled (BCWS), is the estimated amount for project activities planned/scheduled to date.
- Return on investment (ROI) shows the profitability of the project.
Revisit, review, re-forecast
Your budget planning does not just end at the beginning stage of the project. Keep track of your budget and review regularly to make sure that you don’t get off track. Your bound to failure if you let your project to run without budget planning and reforecasting. To keep your budget from getting way out of hand, doing frequent budget oversight is necessary.
Having a 15% budget overrun is so much easier to correct than a 65% budget overrun. If you don’t revisit and review your budget, you’d be surprised that you already have almost 80% budget overrun.
Just as revisiting your budget is important, reviewing your workforce is as important. As you go along, do you still need the same amount of resources and employees? Revisiting your resources regularly ensures that you’re fully utilizing them. Labor cost can add weight on your project budget and you don’t want to pay that much if you don’t need the same number of hands anymore.
Make everyone accountable
You should always involve everyone in your team when it comes to project budget. Always be transparent and make them aware of where you are currently standing budget wise. When they are in the loop, especially in terms of financial aspect, they’d feel more valued as a team member.
Always be honest, especially if you fall short of budget. Make your team accountable by enforcing productivity and use of resources at its maximum. You can also incorporate technology to your workforce to create better production. Automation tools are not just a great aid to deliver better performance as a team, it’s also cost-efficient and helps you save money. For example, if your sales department is ready to explode because of how busy it is, consider using sales tracking software. This eliminates all of the possible human errors and will give the team more time making sales.
Working on a project that has limited budget and resources may be challenging, but success is not impossible. At the end, you’d feel more accomplished when you bring success to the project despite having limited resources.
