Ensure your project budgets are based on reliable projections

Over the last week or so our blog series has identified the importance of three core skills that your teams need when managing projects, programmes and portfolios. In this blog, we’re going to look at the impact that ineffective budget management may have.

Why do your public sector teams need good budget management skills?

Budget management is a core part of doing more with less. It includes estimating,  allocating and tracking costs throughout the project lifecycle. Which helps teams to stay on top of project expenses, avoid cost overruns and make informed decisions about where to allocate resources.

As well as the issue of wasting public money and then needing to secure additional funding, going over budget has other negative effects, such as:

• Compromising quality
• Being unable to mitigate risks
• Increasing budget deficits and debt
• Violating legal and regulatory requirements
• Making it harder to hold stakeholders to account

How does efficient budget management skills benefit teams?

When you’re working with constrained financial resources, it is critical to not run out halfway through the project, programme or portfolio that you are managing. Which is why budget management is key, as it enables you to create accurate budgets based on reliable projections, and monitor expenses to avoid cost overrun.

Budget management will also ensure that you allocate financial resources appropriately, help you identify potential cost savings, and plan for unforeseen challenges or issues that could arise, such as increasing supplier costs – all of which can help your budget stretch further.

Finally, it is the key to enhancing stakeholder confidence and trust. If you can prove the benefits, value, and potential ROI of their investment, they’re more likely to release their limited funds and resources to your project.

Some signs that your teams need to improve their budget management skills

Here are some potential signs to look out for:

• Overspending: Projects frequently exceed allocated budgets due to a lack of control and oversight
• Poor financial visibility: You lack visibility of financial reports, project expenses and the financial implications of key decisions
• Inaccurate cost estimation: You frequently overestimate or underestimate project expenses, resulting in overstretched budgets or unused funds
• Lack of stakeholder buy-in: Stakeholders sometimes feel uncomfortable or reluctant to agree to fund projects

How can ILX help?

Our Learning Hub is a complete digital learning solution for all your project, programme, and portfolio management training needs. Watch our webinar ‘Maximising Efficiency Key project management skills to help you do more with less’ to learn more about the importance of time management, and how the ILX Learning Hub can support you and your team.