Key Governance For Controlling Project Budgets

Laying the Foundations

The definition of delivering a successful project can be any one of a number of things, however having financial control over a project is always a top priority. Regardless of the other metrics that the a project may be measured against it is unlikely to be deemed a success if it has gone wildly over budget.

At Fifth Step, we use a consistent approach that helps ensure a standard set of guidelines are in place

, this will help the Project Manager, as well as the project stakeholders identify a potential financial pain point(s) and ensure that all parties assist in the the mitigation.

When to Budget

The budget for a given project should be completed during the initiation phase, this is the most important part of controlling project costs; requiring the Project Manager to work out how much money is needed for each element of the project (where vendors are involved ensure they have a clear brief to ensure they provide an accurate quote). The final stage is to work out how much time the project will take based on the same information.

A complete budget should consider everything needed to deliver the project, resource, software, hardware, supplies, travel, and not forgetting tax, once you have your budget you should also apply the appropriate budget for time and resources in your risk management, at Fifth Step we will also allocate time/cost within the budget to risk management.

Tips and Tricks

Here are some of the things that we at Fifth Step recommend you have to do to ensure you can maintain good financial governance and help ensure your project stays within budget:

A well stated business case for the project, understand why the project is being undertaken
Senior Stakeholder approval
Business representative with authority to approve expenditure
Internal resource pool costs
Preferred/recommended suppliers
Agreed tolerance for time, cost and quality
Cost monitoring documentation detailing the budget, actual spend and the difference outstanding
Forecasting spend periods, regular agreed forecasting
Change control against scope, change orders authorise additional funding to cover the cost of any extra expenditure required, keeping your original budget on track
Understand common budget challenges within your organisation
Consistent reporting such as traffic light approach
Golden rule, continually reforecast and keep your stakeholders informed.

Your Next Steps

If you want to start improving your project delivery, then feel free to ask a question of Fifth Step’s Project Management Team, and don’t forget to ask them about our Project Management Office that can help support your Project Managers and Project delivery team. Alternatively visit www.fifthstep.com to learn more about how we can work together.