Why Budgeting Is Essential In Project Management

Since projects are always moving and changing, most of the elements that comprise a project can be moved or changed flexibly to suit the deadlines and milestones it contains. There's one element of a project, however, that could scupper the entire project as a whole: the budget.

Think about it. You can make changes to production (the workforce), the timescale (asking for a deadline extension) or even the goal of the project itself, but if you go over budget, the project can't continue. You can't pay your staff to do their bit, nor can you afford the resources essential to its completion.

Prevention is the only cure

In Project managing your budget: start as you mean to go on. It's no good looking at your budget halfway through the project or even one or two days in: you need to know how much things are going to cost before you actually physically spend the money. The 'spend first, account for it later' attitude plagues many projects and causes them, literally, to go bust.

If you're a project management who hates figures and paperwork, there's no harm in delegating or working with someone more accustomed to accounting. In fact, this could be an advantage in the planning stages as they are far more likely, from experience, to know how much things cost and if you've budgeted the correct amount for the work you'd like done.

How to spot a derailing budget

Let's say that you started out with the best intentions and something has come up - while the project is in progress - to cause you to go over budget. This needn't be a crisis if you know how to manage it properly. For example, if a key expert goes off sick, you lose precious man-hours and have to pay someone else to come in, while also spending on sick pay for the absentee.

Having a buffer for this kind of scenario at the start of the project is best, of course, but you can get things back on track quicker than you'd believe if you plan for it. In this example, why not have an existing member of staff on standby who is willing to step in for a pay rise? A rise would be cheaper than a whole new recruit, and it also improves the skill set of your team as a whole into the bargain.

If it's happened to you - learn from it

Sometimes external factors conspire against you and a project ends up going over budget no matter how wonderfully you managed it. Instead of beating yourself up, look at any mistakes or oversights you made and look to improve these in the future. Nobody can project manage perfectly every time, and the best managers look for feedback and constructive criticism in order to better manage their budget next time.

Budgets can be the life or death scenario in a project, so above all else, remember to give your budget the importance it deserves. In today's economic climate, those who come in under budget will always be sought for project management opportunities!