In this series of articles we’re discussing a simple approach for managing projects – the ten D’s of project management. So far we’ve covered Definition, Detail, Dependencies, Duties, Dates, Dangers, Documents, and Deals. Now it’s time to discuss project Dollars – how much money do we need, and how do we avoid spending too much.
Project Dollars
In the Definition post we discussed the need to ask key questions before diving into detailed planning, and we used an everyday example of planning a meal/party. In the Details post we created a hierarchy of work to be done, and in the Dependencies post we sequenced the work using a network diagram (flowchart). Duties was about assigning people to tasks we’d identified in the Details step, Dates calculated an estimated schedule for the project, Dangers addressed things might might go wrong, and Deals established what/how we needed to buy.
When Chris had originally asked us to plan the party, she had also said she expected to pay no more than $1000 for everything – she said we had a $1000 project budget. This $1000 funding number is obviously important, and will influence planning, but we should not yet think of it as the budget. The budget will be set at the end of the planning process, once we have a more complete picture of the likely costs – maybe we won’t even need the whole $1000!
To establish a realistic project budget we first need to refer to our Details and Deals, draw up a list of all the things we expect will cost money during the entire project, and estimate how much we think each one is going to cost. If we’re not sure, we may have to research online, get quotes from vendors etc. One item on our list should be a contingency allowance. Remember the list of potential problems we identified in our Dangers discussion? All these problems are unlikely to happen, but even if just one happens, where will the money come from to fix the problem? (Answer: contingency allowance.)
Once we have our detailed cost estimates, we’ll add them all up to give us our initial project budget. If this number is higher than the $1000 funding available, we may need to tweak some of our plans and assumptions – maybe we will have to make the decorations rather than ordering them online. At some point we may need to go back to Chris with our thoughts/plans and explain that her vision for the party isn’t possible for the funds available, and offer her some options. What we shouldn’t do, is start working on the party knowing that the $1000 is not likely to be enough.
As the preparations get underway and we spend money, we should obviously track what we’re spending against what we thought we would spend. If we start to spend too much, we may need to change our plans, and we’ll certainly need to carefully manage stakeholder expectations, to keep them in line with the realities of the project. This takes us to the tenth, and final D after project Definition, Detail, Dependencies, Duties, Dates, Dangers, Documents, Deals, and Dollars, and that’s Disruption.