How can you ensure that your product managers are effective at budget management?

Depends on the size of the organization. Work with the PMO or PjM to define the budget to fund the value streams. (no, value streams aren't SAFe but Lean), I other terms, fund what you need, not the entire project without any idea of the scope.

In my experience, when product managers are aligned with SMART goals, they're better equipped to make informed budgeting decisions. For example, in one of our projects, we prioritized features that directly impacted customer satisfaction and retention. This focus allowed the product managers to allocate resources more effectively, avoiding spending on less critical aspects. It's essential for product managers to understand the strategic vision and how their decisions impact both the product's success and the company's financial health. Clarity in goals leads to precision in budgeting, ensuring that every dollar spent is an investment towards achieving key objectives.

In addition to guiding the team, PMs ought to be responsible for guarding the mission and outcome of the project. It is their responsibility to ensure they do this by minimizing external impact to the project team, especially from different stakeholders who will come in with different change requests intermittently and who will shoot for the moon if allowed to. On the flip side, PMs ought to also maximise on the teams internal potential by making sure deliverables are on time, any discrepancies are raised on time, the right person is doing the right job to make sure the team is building the thing right and also making sure the team is also building "the right thing" for the client as this will go a long way regarding effective budget use

- Get clear estimates of the expected expenditure to build and ship features for the specified time frame. - Allocate budget to the specified projects, with a clear roadmap specifying the time frame for using it - Ex: 25% in Q1, 40% in Q2 and so on. - Set milestones for evaluating efficiency of budget management. Ex: iOS app release by end of Q1, aligning with the 25% expenditure timeline. -Course correct if the estimated expenditure overshoots allocated budget -Report and track continuously to evaluate and optimize progress -

Follow the 80/20 rule! Ensure that your product managers have good visibility or a forecast into 80% of the allocated budget while keeping 20% of the allocated budget for contingencies. When costs go above forecast this buffer serves to fill that gap while still meeting your KPIs.

Effective budget management in product management is like being a savvy backpacker - pack what you need, plus a little extra for the unexpected. Involve your product managers in setting a realistic baseline, using their on-the-ground insights. Back their estimates with data and expert validation for a solid foundation. And don't forget a contingency buffer – it's your emergency kit for those just-in-case moments! ?????? #BudgetManagement #ProductLeadership #ContingencyPlanning

In a previous engagement, one of my product managers was working on an automation tool for downloading firmwares into various gaming devices. To support her, I synced with her in calculating the anticipated cost savings post-automation implementation. We initiated budget discussions by ensuring that the project's resources could yield ROI within the next three years. Essentially, we worked backward from the projected cost savings, allocated the budget for the product, and established a contingency budget to address any potential risks. This approach not only enabled us to deliver the automated product on time but also empowered her to independently make decisions regarding new risks or additional resource allocation to the project.

Product Managers (PMs) sometime need to be Project Mangers as well. It is crucial to involve PMsin establishing a realistic baseline and contingency. This entails a collaborative estimation process where product managers leverage their insights into project scope, complexity, and dependencies. Encouraging the use of data, benchmarks, and historical information supports accurate estimates, further validated through consultations with experts and stakeholders. Additionally, a budget should always include a contingency buffer, acknowledging potential risks, uncertainties, or changes that may surface during the project. This approach enhances budget accuracy and empowers PMs to proactively address challenges and deliver successful outcomes.

Most of the tracking tools like Jira, AzureDevOps have budget management features along with Agile workflows. They provide metrics so you can build your own KPIs to align with other PMs. Streamline the workflows between PM. Find the anti-patterns so you know what to watch, these are the guardrails and empower them doing what they think is right. If needed, create a community of practice to foster continuous improvement.

Identify the anti-patterns and create the guardrails so you can empower them safely so they build up their confidence. If needed, create a community of practice to foster continuous improvement.

Not every product enhancement should come out of your company's budget. Very often the product has dependencies on open-source projects. By motivating the open-source community to make the enhancements that would benefit your product, you gain efficiency without requiring extra budget.

Very often though, budget management is outside the purview of a "product manager's" scope of work - it's a "program manager's" scope of work. That said, product managers (responsible or consulted) should have insight into cost and budget KPIs and should assist program managers (accountable) in managing it.

Product Managers (individual contributors) may get separated from the budget conversations - it is important to empower them to have access to such information, to give them a seat at the table where the budget is being discussed.