Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the Entrepreneur’s Playbook page of the PKF Texas website.
IT departments routinely perform many tasks well. Sadly, setting accurate project budgets is not one of them.
“It is something that historically they have never been very good at,” says IT Governance Institute. According to Institute, cost overruns from 20 percent to as much as 100 percent are practically standard.
Fortunately, organizations can increase the accuracy of their project budgets by using a variety of proven, simple, and mostly free techniques.
One of the most common mistakes IT organizations make is not allocating adequate time for budgeting.
IT often forgets to account for important expenses on projects.
Of course, every project has unexpected expenses, which become easier to anticipate over time. Veteran managers learn to increase their budget projections if they are working with unfamiliar technologies or an inexperienced project team.
After work on a project has begun, managers should revisit their initial budget regularly. At a minimum, project managers should revise the budget if stakeholders impose new requirements.
Finally be aware of the law of estimated fact. Which is when giving an estimated range, people tend to always remember the lower end of the range not the range.