In a creative agency, few problems can spoil your day like a blown budget. Exceeding your project’s budget erodes your client’s trust and your agency’s profitability. Like many kinds of trouble, budget problems are easier to create than to solve; you must keep your project within budget if you want to be successful. Here are eight simple hacks to prevent project budget overrun.
1. Review similar projects
Start with a solid plan by building a budget template based on a similar project that you completed previously. Be sure to cover all of your expenses, including less obvious costs like postage. You can then modify your template based on your most recent project so that future projects can be even more precisely budgeted.
2. Estimate accurately
Even with a budget template, you will have to make assumptions and estimates specifically for your current project. Prepare an accurate estimate by including all of the resources that you will need to finish the project, assuming that they will only be productive 80 percent of the time. Account for exclusions and constraints relevant to the project as well.
3. Factor in tax
Always include tax in your project budget. You may find that your client does not have to pay for the withholding tax, but planning your budget as if the client does pay this tax, will help you to avoid any discrepancy between budgeted and actual revenue. This will also provide you with some cushion in your budget in the event that the client doesn’t have to pay, because you will have factored in the extra expense.
4. Plan your work
Separating your project into tasks with a work breakdown structure will help you accurately assess the costs associated with each step. You can also create a reasonable schedule and manage individual responsibilities for meeting deadlines.
5. Manage scope
Budgets inevitably balloon when you do more work than planned. Document your project’s initial scope and record every subsequent deviation that the client requests. If the client continuously changes deliverables or asks for completely new work, you will then have a paper trail to support your request for a change order. Tell your client that you will need additional funds to cover the unanticipated work or that you will have to scale back the project to fit within the original scope.
6. Continuously forecast
Update your budget frequently so that you know actuals versus estimates. Tell your team members where you are relative to projections and discuss upcoming expenditures with them so that you can prevent budget overrun together.
7. Reassign resources
Experienced team members obviously are more expensive, but you might benefit from having them work on your project. Depending on how much time you would save, they could cost you less if they can complete the work more quickly than inexperienced colleagues.
8. Leverage technology
Again, the best way to get out of trouble is not to get into it. Creative project management software can help you meet your budget targets by allowing you to track progress in real time and to receive notifications of possible problems so that you can address them proactively.
With deadlines, employees, and clients to manage already, you don’t need a blown budget to make your day even more stressful. Try these eight simple hacks to prevent project budget overrun.
Share your tips for preventing project budget overrun.