Metrics for Budget Management
The metrics you use to manage your budget should alert you to the inevitable project twists and turns that affect costs. You’ll likely vary from your planned budget, but that may be ok. The key is to understand why! Here are some tips for understanding variances.
First, collect the costs of your project team. To know if you are on track, you need to plan for the people you'll have working on your project. Plan for the number of hours or percentage of their time they intend to work on your project. As the project progresses, track the actual time they work on your project. You should understand any variances between your plan and what occurred so you can ensure you’re on track. Oh, by the way, be sure you count yourself as the project manager…unless you are planning on working for free!
Second, track your completed tasks. Measure them against the tasks you planned to finish at any given time. Do this weekly. While this is a good way to manage your schedule, it’s also important for budget management. If you find yourself behind schedule, you may need to increase your labor costs to make up for that. Understanding that in advance is an important part of budget management.?
Third, note the timing of payments when you purchase equipment or supplies. If a payment varies from when you planned to spend that money, you can appear to be over or under budget. Being able to explain that to stakeholders is critical. I had a situation where I purposely bought something earlier than planned.? But I did so because it was less expensive. For a short period of time, the project appeared to be way over budget, but I’d saved my company money! So, track those purchases!!
Finally, apply change control to your budget. As fundamental as that may sound, I often see questions surface because approved changes weren’t reflected in the project budget. Distribute a revised budget as soon as possible upon approval of a change, and be sure to update the timing of your payments as well.
_____________________________________________________________
Check out Bob's latest Live session.
LinkedIn Live Common and Uncommon Risk Management
This Office Hours discussion will examine the usual and not-as-usual approaches to risk management that all project managers should be embracing. Despite being a vital part of project management, risk rarely gets the attention it deserves. Join me and my fellow grizzled PM veteran Ian Sharpe as we talk about how risk management saves us, fails us, and how, sometimes, we misunderstand the concept!
领英推荐
_____________________________________________________________
Additional thoughts can be found in my project management and outsourcing classes on LinkedIn Learning, including:
_____________________________________________________________
This article is part of Bob’s Reflections newsletter series, which discusses project management, outsourcing, and “intelligent disobedience”, a leadership approach. If you want more of this content, you can subscribe to receive notifications when a new article is posted.
Want to learn more about the topics I talk about in these newsletters? Watch my courses in the LinkedIn Learning Library or check out https://intelligentdisobedience.com/
_____________________________________________________________