Question 5: Have you defined a detailed project budget?
21 Ways to Excel at Project Management
Good Practice: Define all costs in-the-form-of a project budget. This should be signed off by the Steering Committee or other authority to make sure enough funds are made available. Your budget should include all external costs such as licences, third party services, consultants, consumables, etc.
A few basic rules will help make sure an accurate and realistic budget is produced:
- Assume that people will only be productive for 80% of their time.
- People working on multiple projects take longer to complete tasks because of time lost switching between them.
- People are optimistic and often underestimate how long tasks will take.
- Make use of other people's experiences and your own when creating your budget.
- Get an expert view.
- Include management time in any estimate.
- Always build in contingency for problem solving, meetings and other unexpected events.
- Cost each task in a Work Breakdown Structure to arrive at a total, rather than trying to cost the whole project.
- Agree on a tolerance with your customer for extra work that is not yet defined.
- Communicate any assumptions, exclusions or constraints you have to your customer.
- Provide regular budget statements to your customer, copying your team, so they are always aware of the current position.
- Lack of budget ownership.
- Providing funds on an ad-hoc basis.
- Major costs not clearly identified early on; this can result in the project being cancelled later because of lack of funds.
- No control or monitoring of actual spend against planned spend.