"Here's how to keep hold of the budget reins on that IT project.
Managing the budget for an information technology project can be a bit like herding cattle - especially if the project starts to go over budget.
At a time when agencies must provide Exhibit 300s annually to the Office of Management and Budget to justify and assure funding for their IT projects, it's more important than ever to deploy hands-on management techniques to make sure tasks run smoothly and minimize cost variances. The real trick is to eliminate budget overruns before they cause major problems.
Fortunately, project managers can create metrics to track budgets against missions, strategies and goals. Feds on the front lines and management experts point to numerous prescriptive actions - setting baseline requirements tied to end-user needs, using earned value management, working closely with staff members and monitoring costs at regular intervals - that managers can use to keep a tight rein on projects and avoid budget-busting consequences.
Ultimately, budget management is a balancing act. Keeping projects on budget and on track is important, but it's equally important that the project provides value to the end user. "When program managers mainly focus on keeping IT budgets on track, they risk losing sight of the value-generating reasons why projects and programs were chartered," says Randy Englund, a project management executive consultant and author. "This happens when people skip over or assume there is consensus on discussions aimed at achieving clarity about objectives and value drivers."
If an IT project starts to go over budget, he adds, "check to ensure that the values are still present to justify continuing. Needs for the project may have changed, and so it should, too." A thorough understanding throughout the process of the intended accomplishments can help prevent cost overruns and revisions later on.
Although earned value management — a method for tracking a project's milestones against changes and costs — can help keep tabs on the elements of large projects, Thompson says, it is important to build room for adjustment into a schedule early on. "If one goes through a frank discussion of what can go wrong and what might be encountered, and look at those risks, and look at what those might mean in terms of costs, you can get funded in a way that allows you to deal with those contingencies," he says.
EVM can give a project manager insight into trends and the status of a particular project, but ultimately it's a combination of strategies — including regular meetings and updates, putting the product in front of the end user from early in the development process and keeping track of project values and goals — that will determine whether an IT project comes in on time and at the right cost. "