We blew the budget. Now what do I do?

Dear Up Budget Creek without a Paddle

First things first. Take a breath or two. You would be surprised how many times this kind of budget issue arises in a project, usually solvable with calm, rational re-planning and a change of communication.

It seems quite clear the project was under-scoped, underbudgeted and under-prepared when it received approval.

Blame is unhelpful in any project, yet it is safe to assume more analysis should have taken place to recognise the actual areas of cost and risk.

I must accept your update that you have been reporting the risks. This makes it challenging as perhaps your learning here is assertion: sometimes as PMs we must raise alarm bells loud and clear until they are hard and acknowledged.

I will also take the opportunity to remind regular readers of one of my most frequent lessons – when you take responsibility for a project, your very first task should be to answer the question, “Do I have everything I need to deliver a successful outcome on this project?“. And, as we know, along with sufficient resource, and sufficient time, sufficient budget is one of the key factors that are vital to a successful outcome.  I know hindsight is a wonderful thing, but please use this as a lesson for the future. When you take on a project, your first weeks are the ideal time to flag any issues. After those weeks have passed, you are seen as ‘owning the project as is’, and it is harder for you to escape blame-y behaviours when you later report issues that were there all along. So, in factual terms for any new project, you must review what is intended to be achieved, and do your best to establish if you have enough time, resource and money to deliver on those expectations.

So, returning to your current project, you cannot make the your data preparation company or software suppliers deliver for less money, but what you can and must do is make this a shared decision – when increases appear on the horizon, they must be raised appropriately with the Senior Management Team, and signed-off as a change control. This helps protect you from blame.

This word ‘control’ is the key to resolving the challenges on your project..

You need to assemble the information from your supplier, the project’s detailed specifications and the budget estimates. If additional requirements have crept in, or supplier costs seem inflated, work on these two areas right away.

Then you need to work on three things:

1. You need to go to the Team and Business Area Leads and review once again what is critical to deliver first, rather than any secondary requirements, and work out costs for that, including some costed options for areas of the project that are ‘maybes’.
2. You define a realistic budget for the project, with some continency for further overruns.
3. Finally, you need to make sure governance and decision-making is in place and agreed so that there are the minimum of future surprises, and problems are flagged in advance wherever possible.

Then you need to present this information to your Project Sponsor and Project Board so that there is clarity on options for the way forward, and shared responsibility.

Thereafter, you, you Sponsor and Board plus your supplier have very difficult conversations ahead. By any means necessary, you need to work closer than ever before to know the new project budget and stick to it.

A suggestion would be to put a dedicated member of the Finance team on monthly invoicing and to highlight to everyone now that Change Requests will be approved only by-exception now. There is simple no wriggle room for extra requests unless these are vital to the safety and success of your project.

People who are not experienced with projects often do not understand that a pause or full stop to the project is a worst-case option as it usually means the money spent to date will be wasted. At the very least a great deal of expensive re-work will be required to resume the project after any lengthy pause, especially when team members have been moved onto other tasks. In my experience responsible re-scoping and re-budgeting without actually stopping the project will usually solve the problem.

I hope it works out for you and do not be too hard on yourself. Project budget management is everyone’s duty not just yours. Just remain aware that you have responsibility to provide transparency in this area and this issue should not recur.

Good luck!