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If anything draws more negative attention to a project than a missed deadline, it’s a missed budget. As common as they are in today’s business environment (a recent PMI study reported that companies waste more than 120 million dollars for every billon in project spending), blown budgets are viewed just as harshly as ever. A project that goes over budget, whether by a couple hundred dollars or a few thousand, can have a lasting effect on the reputation and career of the project manager and other leaders who were supposed to be steering the ship.

Some projects exceed their budgets because the budgets were unrealistic in the first place, often due to shortcomings in the sales or procurement process. Other projects take a budgetary hit due to surprises that pop up once the work is underway. With a little advance planning and attention to detail, project managers can prevent many of these surprises in the first place, and can minimize the budgetary damage from those that can’t be avoided.

Changes in Requirements

PM Budget Surprizes 2Few projects make it from beginning to end without at least a few changes to their scope or requirements. Changes may be needed because the requirements were not adequately described at the beginning of the project, or because a customer’s business needs change after the project has begun. In either case, the project manager can protect the project budget by following the established process for change orders, ensuring that additional funds will be available to address the additional requirements.

Schedule Changes

Another common challenge to project budget management comes in the form of a request to move the deadline for certain tasks or for the project as a whole. Shortened timelines can require a project manager to bring in additional employees (or external contractors, an even more expensive option), which can blow the budget in remarkable fashion. Pushing deliverables into the future can also create a budget hit, especially if it means that the project must keep resources allocated for a longer time than originally planned.

Lack of Resources

Within larger organizations, project teams grow and shrink constantly, as employees or contractors roll on and off projects to complete specific tasks. Project plans are built with the expectation that certain resources will be available at certain points in each project, and if a critical employee or team is unavailable, the result can be disastrous. In these situations, the only alternatives are to bring in external help or to postpone other project activities, either of which can blow the project management budget.

External Events

Budget-busting surprises don’t always originate within the project itself. Changes to a customer’s leadership team, company-wide events like mergers or acquisitions, and even environmental factors like blizzards or hurricanes can throw a project off schedule and off budget.

Lack of Visibility into Projects and Portfolios

The quick-paced and constantly changing world of project management can make it difficult for PMs to gain visibility into project and portfolio health. If there’s no effective way to ensure projects are healthy and on track, teams within the organization can waste time working on the wrong things, doubling up on the same task, or receiving poor reporting and guidance from executives. When combined, the above can quickly turn a project from being on track to success into a complete budgetary failure.

Even when a significant change comes out of the blue, however, it doesn’t have to wreak havoc on your budget. Successful organizations (and successful project managers) prepare contingency plans ahead of time that outline the steps a project team should take to minimize the impact of unavoidable disruptions. Fortunately, Clarizen’s project management solutions can help organizations in a wide range of industries manage their projects and their budgets with ease. View a product tour today!

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Preview: Gartner Market Guide for Adaptive Project Management & Reporting

Pick a PPM solution with the best capabilities to match your unique needs

In the Gartner Market Guide for Adaptive Project Management & Reporting guide, Gartner, Inc. provides recommendations and evaluation criteria for executives and PMO leaders assessing Project and Portfolio Management (PPM) solutions. This guide outlines the adaptive project management and reporting process flow as well as a market review of current providers in the following categories:

  • - Existing pure-play PPM providers
  • - Collaborative work management (CWM) providers
  • - Enterprise agile planning (EAP) providers
  • - Technology Platform providers from other markets

The guide provides insight into how well a product or service fulfills certain functional capabilities – with a forward-looking market direction and analysis provided.

In the report, Gartner, Inc. mentions/states that “by 2024, 50% of all program and portfolio management (PPM) leaders will integrate complementary technologies to enable portfolio decision making and adaptive work management for digital business evolution.”

Clarizen offers a complete solution that connects work across the enterprise, turning ideas into strategies, plans, and action. With Clarizen, organizations can work the way they want to work and have real time visibility across all workstreams in their portfolio. This keeps teams focused on the things that matter, provides the real-time information needed to make more accurate and timely decisions, and delivers results faster to meet and even exceed company goals and customers’ expectations.

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Buyer’s guide to project management software