From the course: Project Management Foundations: Budgets

Baseline budget performance

From the course: Project Management Foundations: Budgets

Baseline budget performance

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- When what you spend varies from your budget plan, that's variance, typically called varying from your baseline. Understanding any variances from your baseline is fundamental when managing your budget. Here are the keys to managing baseline budget performance. My first recommendation is to get into the right mindset, because estimates will only sometimes be accurate and technical issues can occur. Team members will be called to address other work activities, get sick, or have personality clashes. Try to get comfortable with the uncomfortable. Projects are a long-term exercise, so keep calm and adjust. After you're in the right mindset, seek to understand how team member effort is spent. Tasks will take longer than estimated and others will go more quickly. Team members may be juggling many responsibilities and might need to complete tasks promptly. Track progress and recognize when you're getting more or fewer work hours than planned. Talk to your team members and understand the reasons for the variance. Ask for extra staff time if needed. Review the risks you've logged for your project and understand the costs associated with your risk response actions. Apply those response actions and associated costs promptly, but do so only when necessary with management concurrence. Track the status of your risk contingency reserve against the actual funds spent. If risks have passed without happening, look to reallocate those funds to address another issue. Next, there may be other opportunities to reallocate funds within your project. For instance, some lower priority requirements may be optional. Redistributing the funds to address more vital requirements is an excellent way to manage baseline budget performance. Talk with your sponsor about how to authorize this redistribution. And last, be prepared to address the unexpected. A critical resource may leave your business creating unanticipated technical problems. Your budget may be cut to handle other pressing business issues. Material shipments might be delayed by supply chain problems. When issues surface, take a deep breath. Look at your project's triple constraints, time, scope, and cost. Find alternatives for what you can manipulate to keep your budget reasonable. Review these alternatives with your sponsor, then be decisive and keep the project moving if it's still feasible. As the phrase goes, it isn't what happens to you, it's what happens within you that matters. The same is true with projects. How you react and what happens within your control is key. That will affect your baseline budget performance and how you're perceived as a project manager.

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