7 Practical Project Management Tips to Help You Stay on Budget

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Project managers have a lot on their plates.

They often have to juggle multiple projects and clients at once, and they're always running up against deadlines.

On top of everything else, they must also keep a budget.

Staying within a budget can be an exhausting task for project managers, but there are ways to improve the efficiency of your team and get projects done on time and on budget.

Sometimes there are unforeseeable events that come up out of nowhere, throwing a great plan and budget out the window.

Those who consistently take a reactive approach when managing project outcomes are often the ones who struggle the most with adhering to their budgetary guidelines.

Whether you’re an established project manager, a freelancer, or a new business owner, it’s important to prioritize efficient project management.

Let’s explore some best practices to help you increase your effectiveness while staying within a budget.

1. Budgeting for project management

Although there are a lot of similarities, budgeting for a project differs from an operating or financial budget in several key ways.

First of all, an operating budget is usually concerned with ongoing long and short-term operating costs and other expenses that keep a business running.

Many business owners use a zero-based budgeting (ZBB) model that starts from the beginning of each fiscal year.

In contrast, setting a budget for projects is a short-term proposition with the goal of covering the cost of materials, labor, marketing, and other necessities to complete the project on time.

These budgets are usually client-based projections, and they serve as a baseline measure that helps control costs and direct how the project will proceed.

For any project, having the right accounting tools is critical when it comes to managing your budget.

Make sure your accounting software comes with crucial security and automation features to make budget management as smooth as possible.

Automated accounting tools in particular are a huge timesaver in tracking your finances.

2. Project management tips

Much like business budgets, projects should be planned strategically, with milestones and objectives set.

Only then can you deploy the tactics — and allocate the funds — to reach your objectives without wasting time or money.

Before you launch your next project, consider incorporating these practical project management tips to help you stay within your budget.

Succeed when you launch a project

2.1. Begin at the end

Few people get far on any journey unless they know where they're headed.

In order to maintain focus and keep your project on track, keep the desired outcome in mind at all times.

This will help avoid missteps and distractions that can sidetrack your project, resulting in unnecessary delays and cost overruns.

Include team members and others who will be involved with the project about your goals so that everyone else has the end goal in mind as well.

2.2. Learn from history

When starting a new project, you'll gain a pretty good idea of the structure, costs, and requirements by studying the budgets of similar projects.

After each project concludes, debrief with your team and discuss what should be done differently next time.

Be sure to keep thorough, organized notes so that when an issue occurs down the line, finding and implementing previously explored solutions is less time-consuming.

This is a good budgeting tactic as it helps you identify areas of waste or lack.

There are many ways to grow your business on a budget, and looking at what past projects cost is a good way to improve your project management strategies in the future.

That way, you'll learn from the successes or missteps of others and help avoid overspending on supplies, contractors, and other essentials.

2.3. Make data-driven decisions

Budgets aren’t always set in stone.

They're an estimation of what a project will cost at various points until completion.

However, accurate estimates are essential in order to contain costs and maximize a positive outcome.

There are several ways that can be used to estimate your budget.

One common method is to take a three-point estimation, which takes an average of a worst-case, best-case, and most likely scenario.

This method isn't as accurate as some, but it does have the benefit of reducing the risk of going over budget.

Another option, a parametric estimation, uses specific historic data points from previous projects and employs them as the basis for a current estimation.

Because it uses more than one data set, this method tends to be more accurate than others.

2.4. Don't try to do too much

Are you one of those people who think that multitasking helps you complete projects faster?

Although it's possible that you're that rare bird, studies show that most people actually lose up to 40% of their productivity when multitasking.

You'll also add to your stress and run a higher risk of overlooking important details.

This isn’t to say that multitasking isn’t sometimes necessary, but it’s better to learn to delegate whenever possible.

This became particularly clear during the pandemic when a lot of leaders had to consider how to handle virtual team management without missing any deadlines.

Trust your team to do their parts, and focus on managing the overall project trajectory rather than micromanaging every little piece.

2.5. Stay flexible

You can set all the budgets, goals, and project schedules you want, but you can't control everything.

Plan for the best, but have contingencies in place that will allow you to pivot when things like supply chain disruptions, illnesses, and natural disasters occur.

Consider saving some of your budget allowance for when unforeseeable problems occur.

That way, you still have the means to complete the job even if you're caught off guard by a major project disruption.

Sometimes, it’s tough to stay on track even if everything is going smoothly.

As a project manager, you may have to resist the urge to try and make everything perfect all the time.

Take this opportunity to check and double-check your work, but don’t go overboard, and save your time and money for future projects.

There will always be shortcomings and constraints, but this is how you learn for next time.

2.6. Use the right tools

Technology makes conducting business more efficient, accurate, and transparent, and project management is no exception.

There are tools that track time and cost, help coordinate multiple teams or sites, and help with budgeting.

What's more, you can receive information in real-time to help you make data-driven decisions and head off potential problems.

Harnessing technology is particularly important if you're migrating project management operations onto a new software or platform.

Specifically, look for cloud-based platforms that allow for collaboration in your project management lifecycle.

According to industry expert Alex Williams of Hosting Data, collaborative capacity is one of the most critical features of cloud-based platforms.

“The biggest and best advantage of the cloud is that you can access your files online, from anywhere in the world,” Williams says. “You can edit a document in your office using Google Docs, and then carry on working when you get home without having to move anything physically.

On top of that, you can collaborate with people all around the world simultaneously, and in real-time.”

This type of consistent and streamlined access is critical for efficiently managing projects online.

Using the right tools for a project to succeed

2.7. Practice proactive risk management

From software incompatibilities to lost shipments, where there's a plan, there's a risk that something will happen to derail it.

That’s why being proactive and anticipating risk is key to staying flexible in project management.

You can't control the unforeseen, but you can identify areas where risk is likely to occur.

These include scheduling overlaps, technologies, and issues with time or scale.

Break areas of potential risk down into categories, and meet with relevant team members and stakeholders to devise ways to mitigate possible issues.

Automation can be a significant benefit here.

Harnessing automation for marketing, security, and much more is necessary for any business in 2023, and keeping automated practices running in the background can be a good risk management tactic.

Be sure to stop at key points throughout the project to reassess and retool, but know that any processes that can provide backup in the event of an incident are better than having risking human error.

3. Conclusion

As a project manager, your job is to get results without wasting time or money.

Launching a project without a well-thought-out budget is like driving into unfamiliar territory without adequate tools.

By learning from past projects, staying flexible, and using the right tools to streamline operations, your project management team will see better results over time.

Taking a proactive approach is the key to managing both long and short-term projects, as well as allowing room for those unplanned tasks that will inevitably pop up without making waves in your workflow.

By following the above guidelines, successfully staying within your budget without skimping on essentials will become second nature in no time.

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