Staying within a budget is a tall task for technology projects. Here are some ways to manage your project budget to ensure success.
By Marcia Jedd
Managing a technology budget isn't easy. Despite all of the project management tools available today, many companies exceed their budgets. In fact, some authorities estimate failure rates of technology-related projects are more than 70 percent, with cost overruns often contributing to failure.
Poor upfront planning is a key catalyst for cost overruns, says Douglas Schultz, principal with Access Sciences Corp., an information management consultancy based in Houston. "Before you set your budget, make sure you have a clear understanding of the project goals." This means having project sponsors (higher-up executives who support the project), business owners (operational side) and the project team (project managers, programmers, developers, etc.) onboard by agreeing on project timelines, milestones and deliverables.
"One big cause of projects going over budget is that people go through the planning phase with incomplete information," says Bob Tarne, managing consultant with PM Solutions management consultants in Haverton, Penn. "Once they get into the build phase, they realize there's more work [than] planned, causing the schedule and budget to slip."
Agile Project Management
New methods can help ease budget woes. Tarne says agile project management techniques, which involve development of the product in small iterations, are gaining acceptance in technology circles. "When you start the project, you set the budget and completion date, a technique referred to as timeboxing," Tarne says. "Then you have the business owner prioritize the features they want in the product."
Next, work is broken up into small iterations and development begins. "At the end of each iteration, you review the product with the business owner and ask them to again prioritize the remaining work," he says. "One common scenario is the owner sees the partially built product and decides they want something different." If that's the case, remaining work is reprioritized.
It's important to closely track progress. He says: "When the work is broken down into small pieces, it's easier to track the progress, cost and identify problems. If the actual time and cost for each work package isn't lining up with the planning values, you have a problem," Tarne says.
Managing Scope Creep
Scope creep is often the root of budget problems. Manage scope creep by meeting regularly with project sponsors and the project team, Schultz says. Make change orders a requirement. "Any large project needs to have a formal change process to document and have agreement on changing deliverables," she says. "You need to formally document those changes."
Tarne offers another approach with the agile method: Document changes in the change log, but keep moving forward, only allowing critical changes. "At the end of the project, these changes are reviewed again, and there is a decision on whether to move to a second release of the product after the initial release is in production and being used," she says.
"Stick to the completion date," Tarne says, noting the product might not contain every desired feature, only the important ones. "You'll stick to your budget then. Studies have shown it's much more important to reach your launch date then to have all the features you think you need."Visit Technology Resources & Tools