Budget Busters
Budgets go off course for various reasons. Don't tuck away the budget and say, “We'll look at it when we're done and see how well we did.” To avoid blowing your budget, you need to pay careful attention to all the details. Among the leading causes of such monetary mishaps are the following:
Inadequate budget estimations (underestimating costs)
Lack of properly researching pay rates and resource costs
Basing costs on old price structures
Failure to include all significant details
Poor communications with team members about their responsibility to stay within the budget
Failure to properly document expenditures
Not properly addressing emergencies and other changes as they occur throughout the project and impact your budget
Falling behind on your schedule and needing to spend more to meet last-minute deadlines
These budget busters can be avoided, but others cannot. For example, technical glitches can turn into nightmares that can wreak havoc with your budget, or materials you ordered may be delayed. Consultants and experts may also need to put in more hours on the project to overcome potential pitfalls. Whatever the reason, many well-intentioned projects have been scrapped or run into the ground because of budgeting disasters. Look at New York City's long-anticipated Second Avenue subway. Every city has its share of projects that simply didn't have the budget to either get started or get completed. Many companies and new businesses run into similar problems trying to introduce new products or ideas. Sometimes the project is delayed, and sometimes it comes to an abrupt halt.
There's nothing wrong with letting the budget do what it's intended to do — set boundaries. If funds were unlimited, you'd love new uniforms or a fancy restaurant reception, but they're not. Let the budget say no for you:“I'd love to have custom-made uniforms, but it's just not in the budget.” “I think the cocktail reception would be great at a restaurant, but the budget limits us to the hospitality suite here at the hotel … my hands are tied.”
Even personal projects may be scrapped because the money is no longer there. For example, you may have planned and budgeted to make home repairs as your fall project, only to find you needed to spend the money to repair the car after an accident.
Remember, the budget needs to be carefully planned, reviewed, and monitored throughout any project. Expect that there will be changes. Make sure you work with a system that you are comfortable using. Don't work on a software program that you don't know, and if you prefer to use a notebook or any other manner of maintaining the budget, that's fine, too. You want to avoid making errors on your budget simply because you couldn't figure out the calculations on the program or on the page. Spreadsheets, software or actual, are just that — places where you can spread numbers out. Do it.
Also, keep a separate budget for the project. If you incorporate it into another budget or use the budget for other things, you will only confuse yourself and jeopardize the project. You can always set up a separate project account for your personal or small business projects.
