CIO.com has an excellent, to-the-point article on Project Management: 4 Ways to Manage Your Budget. The article suggests 4 key areas of focus w.r.t budget:
1) Budget Forecast
2) Resource Forecast
3) Keep the team informed
4) Manage scope
Most of the PM’s I know do (1), (2) and (4) very well but rarely do we keep team informed, esp. budget info (I am also the culprit here!). If the budget metrics like Planned Value (PV), Earned Value(EV), and Actual Cost(AC), are clearly communicated to all team members on regularly basis, I am sure team members would look at each other and wonder as to why they are charging more/less for their respective tasks. This is certain to ignite some discussion in a positive way, which could lead to better resource utilization and thereby better control.
Few things –
1) Most organizations have procedures on how to report periodic budget performance. If not, work with your stakeholders and determine the metrics before the start of project.
2) In addition to EVM chart depicting PV, EV, AC upto date, report the following as well:
- Estimate at Completion (EAC) = AC + ((BAC-EV)/CPI). A forecast of total costs that will be accrued by project completion based on past cost performance trends
- Variance at Completion (VAC) = EAC – BAC. The difference between the new Estimate at Completion and the original Budget at Completion
3) Create a project budget template either in Excel/MS project, which can then easily be fed to Status report, during each reporting period
Majority of stakeholders are worried about Budget overruns – so, ensure that they clearly understand the numbers above, and help them decide on next project steps.