January 7, 2015 / Melissa Faudree

Are customers asking you why their project is over budget? Do you notice any trends for why your projects are going over? What is going on?

It is not uncommon for projects to go over budget. In fact, many projects tend to go over budget a little every time. So don’t be so hard on yourself. But what are some of the more common areas that result in projects going over budget? Let’s take a look at some of those reasons.

1. Unclear Communication: As with anything, communication is always key. This is no different when dealing with a client on a project. It is important for the team leader on the project to create an organized, clear and detailed plan for the client and additional team members from the start. Does everyone understand the plan? Are all the details on the table? How will everyone communicate throughout the project? Does everyone understand their tasks?

Communicating a clear and thorough project plan in the beginning will also help prevent any scope creep. However, misinterpretations and changes can occur which is why your budget could go over. Should any problems or misunderstandings arise during the project, the team leader should be responsible for communicating and solving the situation. These misunderstandings can take time to correct. This is why it is so important to communicate during the planning stages. The overall goal is to act as a team to complete your projects smoothly and successfully.

2. Human error: We aren’t all perfect and therefore we are going to make mistakes at some point. We can even make errors when giving a client an estimate on a project. We might accidentally miss tasks or other labor costs. Perhaps we mistyped the cost of something. For this reason, it is always good to have other team members review a budget plan before handing it over to the client. This will help reduce any errors.

3. Underestimating: Estimates for a client can be tricky. I know this is especially true for designers and developers. Sometimes we don’t know how long it will take to develop software or an app. How can you give better estimates? You can look at similar projects from the past. By reviewing your history on past projects, you can better gauge how long it will take you on your current project. This should help increase your accuracy on estimates.


Photo Source: TaxCredits.net

4. Meager Time Tracking: It is important to keep track of the hours spent on a project for a client because all projects have a defined number of hours that are required. Lack of time tracking or even inaccuracy of tracking can affect budget. Be sure you devote enough time to every project. But also remember to allocate time to tracking your projects because this is just as important! There are services available that can help track your time. Here at Simplexity, we use Freshbooks to track our projects.

5. Lack of Progress: How often are team members and the client checking in on your projects? If you are not checking the progress throughout your project it can affect your budget. You should create checkpoints throughout your project to review the status and receive feedback. Are tasks getting completed? What problems, if any have come up? It is better to give attention to any issues or concerns right away rather than waiting until the project is completed. It will save you time and money in the long run. Additionally, it is important that tasks be completed well and not just finished to get the work done in time.

Of course there are additional reasons why projects can go over budget. However, these are some of the more common issues. Hopefully these will help prevent you from making these mistakes, so you do not have to learn the hard way.

What has your company done to prevent going over budget?

Posted In: Blog, Business