One of the nightmares that many project managers face is budget overruns. To complete a project according to plan, it’s important to have a budget in place that you stick to. The alternative is experiencing a cash flow problem during the middle of the project. To help you gain more control, here are some budget management strategies that should help.
1. Understand Your Stakeholders’ Needs
When engaging with stakeholders before a project takes place, you may find that what they want or need in a project may not be as simple as it seems; this can result in unidentified objectives and goals on both sides of the spectrum. As a project manager, if you don’t have a solid understanding of what your stakeholder wants, it’s highly likely you won’t fulfil their requirements for the project. To make sure that the project runs smoothly, it’s crucial that you have direct and continuous communication with stakeholders, and also develop a detailed project plan that will help you stay on track and work within budget.
2. Budget for Surprises
When estimating costs for a project, it’s crucial that you are as realistic as possible. Before the project takes place, it’s important that you seek input from stakeholders, as well as build in contingencies. There are various things that can happen which may be out of your control, including external environmental considerations which may have an impact on the pricing of resources, financing, labor, and supplies. As a project manager, the last thing you want is to be caught off guard, so having a budget for surprises is key.
3. Develop Relevant KPI’s
You won’t be able to manage a project’s budget effectively without identifying KPIs (key performance indicators). KPIs are there to help you pinpoint how much money has been spent on a project, as well as how the actual budget differs from the original plan. Some KPIs that you should include in your project include AC (actual cost), CV (cost variance), and PV (planned value).
4. Keep Everyone Informed
One crucial aspect of managing project finances is ensuring that everyone working on the project is kept aware of the current budget status. Keeping your project team and stakeholders informed throughout is crucial. The project budget must be something that you review on a regular basis with your team and stakeholders too. In addition, good time management skills are key to ensure the project is completed by the set deadline.
5. Use the Right Tools
As a project manager, it’s only natural that you will want to have the best software and tools behind you to ensure the project is completed as promised. Having the right PM software at your disposal can help you with budget tracking, setting employee tasks, and analyzing reports.
Understanding what your stakeholder wants and needs, having a budget in place for any nasty surprises along the way, keeping everyone in the know throughout a project, as well as using the right specialist project management tools are just a few of the tasks involved in managing your project finances.