6 Tips for Managing Your Next Project Budget

Chances are high that your company does not have an unlimited budget. Project managers often determine whether their project is a success or a failure by how the budget was used and if there was a budget overrun.

The litmus test for a successful project has to do with how much was spent and if it was done in an effective manner. Effective budget management is an essential skill for anyone responsible monitoring expenditures.

One can not take a reactive approach to a project or a budget. You’ll end up with a project that is tardy, over budget, and unfocused.

We’ve done the research and have compiled six tips to help you manage your next project:

1. Communication

Great communication is absolutely essential to stay within a project budget. We don’t mean endless texts, phone calls, and e-mail chains, we mean effective communication.

Everyone on your team must be aware of exactly what is expected of them. People also need to know what their responsibilities are and how much they can spend in an area or on a portion of the project. Without communication, your team won’t know exactly what they need to produce.

Communication in a respectful, friendly, and approachable manner will leave an open highway for understanding. It will also make your team feel comfortable about approaching you with concerns, or even mistakes they’ve made. Always positively reinforce, and use mistakes as a way to teach your team.

2. Set Cost Monitors

Create cost controls that monitor different types of expenditures and responsibilities. Designate a team member to approve and sign off on things like materials, project software, and time sheets to keep your project budget on track.

If you aren’t aware of where every dime is going and why you’ll end up over budget and frustrated. Cost monitoring is an essential part of your project as you oversee the costs associated with your budget. With an eagle’s eye on the money, you may find better or more cost effective solutions as people bring you their quotes and ideas.

While you need to be on top of the numbers, it’s also important to remember there is no way for you to control every detail of your project.

3. Let It Go

As a project manager, it can be near impossible to let go of the reigns and trust that your team is doing their job and using the budget wisely. It’s important to remind yourself that you picked your team for their skill set and expertise.

Allow your team to do what they do best. It doesn’t mean they will be perfect, but with a little freedom, they will be more apt to excel. It is important to hold people accountable for their project budget spending and responsibilities, but micromanaging will create a negative and secretive workspace.

Respect is a two-way street. There is no need to be an aggressive manager. If you are constantly trying to be everything to every project you take on, it may cause damage to your health and the success of your project.

4. Create a Project Budget That Allows Surprises

As your business grows and you take more on projects, make sure you stay profitable at every stage.  You have to be realistic when planning your project and the costs required. Stakeholders will have a lot to offer in terms of monetary information.

You may be planning perfectly for your project, but it is key to factor in an allowance for things that are outside of your control. Often external environment elements will impact various pricing points on what you need. Perhaps there will be a currency exchange issue or a service shortage.

Allow a little extra cash for these surprises. Survey all of your stakeholders and vetting suppliers so you can set up a realistic budget. Ideally, your suppliers will be consistent with their quoted plans, but be prepared if something changes on the quote. Worst case scenario is that you use all the money you allotted for, best case: you come in under budget, making your boss extremely happy.

Always plan for surprises by having a small backup budget.

5. Have a Back-Up Plan

Even if you’re a perfectionist who plans in detail and with execution, things still might go awry. Conditions and variables are constantly changing, and it is your job to adapt and change with them.

Be proactive about making the changes to your project that perhaps you didn’t see coming. Make back up plans for every aspect of your project. If you’re prepared with other options, when something doesn’t come through how you planned, you can easily pull out your plan B and blaze ahead.

Having a backup plan can save you and your team some major headache. To eliminate headaches, make sure to collaborate.

6. Collaborate and Consolidate

E-mail chains can become overwhelming and time-consuming. Endless emails are also not always the most effective way of communicating with your team. When it comes to big projects, the sheer amount of daily emails during a busy time can become a major inbox clog.

Consider a management tool that will serve your entire team through centralized communication. This will allow you to collaborate as often you need to with your team about budget costs and share information. Using apps to share the most recent quotes, documents, and expenditures, and tasks will help your entire team stay under budget.

When it comes to the staying on track for the perfect project budget, it will help to have everyone on the same page, literally. With an easily accessible source for all of your project information, no overspending will be done.

Go For Gold

Project management can be a big task. With some communication, collaboration and a few backup plans, you will be sure to lead your team to success. Setting a realistic project budget that won’t leave anyone disappointed is important.

With new budgeting software capabilities, businesses can stay better informed about where their money is being spent. Hire the best of the best to help you monitor, visualize, and keep your data organized.

When you are ready for the best project estimation and tracking tools, get in touch with us!