Congratulations! You have just been delegated to manage a really massive project budget.
If everything goes well, the experience will bolster your resume, bring accolades, fame (well, maybe at least within your organization…), and possible promotion.
But…what if things don’t go well? I think we know what can happen of the project doesn’t go well, or the budget is way off target. We don’t want that to happen!
The goal of this article is to share some budgeting insights and tips you can use today. Right now. No lengthy discussion of theory, charts, graphs, and methodologies. Just down home, field-tested budgeting.
Building an accurate enterprise program budget starts with a new way of thinking. The classic definition of project management success was: “Project completed on time, and within budget (or within agreed budget variance).” My recent article Don’t Throw Away the Wrapper covered the “on time” side of the success equation. Now let’s talk a bit about the “budget” side of the equation.
“What does “on budget” really mean? In the old days (well….even today), it simply means that some arbitrary budget, established way back at the beginning of the project must be maintained; any work done within the IAM Program must stay “within” that budget.
With such a definition, is it any wonder so many projects fail! (For a deeper dive on current failure rates, check out this excellent article: by Calleam Consulting Ltd.)
Before we grapple with building a successful budget, let’s review a few common factors driving many of today’s projects:
* Priority pressures . “Our current national widget marketing campaign cost more than usual. Certainly your “big IT program” can do everything it intended to do with two million less?”
* Political or threat pressures. “We’ll give you 75% of what you asked for, and you’ll have to cope with it. Or else, you will be pulled off of the project, or sacked.”
* Incomplete and/or inaccurate information. When program inputs are incorrect – intentionally or otherwise ‐‐ it’s impossible to create an accurate budget.
* Time or budget usage pressures. “Hurry up and get that budget out tonight. We have three orders pending with our technology vendor, and need to you have all program costs figured out ASAP so we can spend our budget before losing it.”
* Program or project manager budgeting error. In this scenario, the project manager may have accurate information and support, but is – for whatever reason – unsuited to the task of preparing a complex budget.
* Lack of experience and/or expertise in a particular solution. Big enterprise projects often require equally big and complex software and systems. Missing expertise in those systems impact accurate budgeting.
* Lack of flexibility. Do you ever wonder why we apply all these fancy ‘rapid’ models to development and agile process, but try to shoehorn static budgets?
* Over-reliance on formal project management “quadrants, methodologies, policies, processes and the like. Don’t get me wrong — successful project budgeting is an exercise in process. But, many organizations and managers confuse rigid process and some third-party “PM Methodologies” with real life. Real-world business. Today’s speed of business is far too fast for antiquated tomes or dogmatic project management doctrines.
* Insert any number of other factors here… And don’t forget one of the most important of all: “the economy“.
Why, in late 2013, do these things continue? After all, didn’t the past few decades of IT projects, show us what should work?
They continue for a variety of reasons, not the least of which is the old standby reason “because that’s the way we’ve always done it”. In reality, projects, vendors, and resources are just too dynamic. Today, even more so. Plus, most enterprise projects require months or even years to complete. How much changes in your personal life, just in a few months? Yep, mine too. And how much more so in a dynamic multinational corporation? Priorities shift, employees and contractors constantly shuffle between projects, management and company visions change, “the economy” comes along, technologies change, vendors change, competing projects sabotage each other, employees resist, requirements change, etc., etc., etc.
And there is a simple truth that many organizations miss: it is inaccurate to assume you have all inputs and requirements known before the project starts. Things will be missed, and that’s the nature of the game. It’s not about trying to hit 100% requirements before starting. It’s about how well you deal with the ongoing reality of change. Savvy budgeters will have contingency plans “B, C, D, etc.” ready and waiting.
“Ok, Corbin — we got it already. Now what can we do about it?”
Let’s take a new view of the budgeting process. In my decades of doing big projects for companies like Disney, Microsoft, UBS Paine Webber, and PwC (to name just a few,) I’ve lived first hand what works well, and not so well. Here are a few things I’ve picked up along the way:
Some organizations apply a flat burdened rate, and others have rate charts based on pay grade. To have a real shot at creating a valid budget, you need this rate number. Getting accurate numbers may take a bit of research, and you may have to spend time talking to your PMO or HR contacts. And frankly, some organizations just do not want to provide this information. But it’s crucial — so discover it as soon as possible. Once you have the figure, check and double-check it against other projects. You’re after accuracy, even if you have to (gently..) ruffle a few feathers in the process.
May these tips, along with your own strategies, experience and intuition bring massive success to your next program or project!
In this article, I’ve shared a few thoughts on how to reach success in the project budgeting game.
Your turn. What tools or strategies have helped you create workable budgets? Leave a comment below, or share your story via the contact form.
When opportunity comes knocking (how to answer the door!)
15 Actionable BIG Business Lessons From a Restaurant – CLS012
High Performance Elixir Recipes
Don’t hate on the ‘selling’ — embrace it! Here’s how…
Can’t-Miss Job and Client Interview Strategies – Your Definitive Guide
Knowing Where You Are + Doing What Works + BIG Announcement