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Pressure to Reduce Your Project Budget | Video

Pressure to Reduce Your Project Budget | Video

Are you facing pressure to reduce your project budget?

Then let me tell you the options you have, to respond.

PMI Talent Triangle - Technical Project Management

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This is learning, so, sit back and enjoy

Everyone is feeling the rising cost of doing business.

I’m seeing it in my own business and I am sure you’re seeing it in yours.

Why?

  • Exchange rates
  • Fuel prices
  • Levies
  • The cost of labor
  • IT costs

Project Budgets

And all this will inevitably put pressure on your project budget. Resources will diminish, and scrutiny will increase. The penalties for over-runs, from attention to blame, will rise.

What does all this mean for you?

As soon as I hear the word cost, three others come into my mind:

  • time
  • quality
  • scope

If you need to manage cost more tightly, your levers are in the other three.

You have a choice.

To reduce your project budget, you can:

  1. Reduce the time pressure.
    With an extended deadline, you have more time to find cost-effective solutions.
  2. Reduce the quality specification.
    Working to lower standards can readily reduce the cost. The risk with this is the reputational risk of reducing quality.
    Our video on Value Engineering
  3. Reduce the scope of your ambition.
    This is sometimes the easiest way to cut costs. Do less and deliver less functionality.
    Our Video on the Pareto Principle
    Our Video on MOSCOW Analysis

So, when your client or your boss asks you to cut the cost of your project, what should you say?

A belligerent ‘no’ will mark you as inflexible, unsure of yourself, or lacking imagination. Instead, take a two-step approach. Offer choices for how to reduce your budget.

  • Step 1: Point out that they can trade contingency for risk.
    Identify where there is a budget contingency in your plan. For each area, highlight how much you could save, and what the risks are that go with it.
  • Step 2: Explain the mutual constraints of cost, time, quality, and scope. Discuss the choices they each offer.

Remember, for a good project manager, ‘we can’t…’ is anathema.

You will always want to replace it with ‘we can, if…’

More on Project Budget and Cost Management

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About the Author Mike Clayton

Dr Mike Clayton is one of the most successful and in-demand project management trainers in the UK. He is author of 14 best-selling books, including four about project management. He is also a prolific blogger and contributor to ProjectManager.com and Project, the journal of the Association for Project Management. Between 1990 and 2002, Mike was a successful project manager, leading large project teams and delivering complex projects. In 2016, Mike launched OnlinePMCourses.

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