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.

This video is safe for viewing in the workplace.

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

Videos

• How to Estimate Project Costs
• How to Deliver Effective Project Cost Management
• Project Financial Management – 5 Tips for Good Project Cost Control

Articles

• Project Cost Management – The Essential Things to Know and Do
• 3 Ways to Produce Your Next Project Budget

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