6 Steps to Turning Around a Financially Failing Project – Part 2
By Brad Egeland | minute read
Projects fail for many reasons, but I believe that the hardest one to handle and to dig out from is the one that is heading for financial ruin. As a project manager, you can gain time—sometimes just because your customer is slow to respond with approvals and so on, which happens all the time—but it's challenging to gain dollars. In part 1 of 6 Steps to Turning Around a Financially Failing Project, I covered the first three of six steps. Here in part two of the article, I will examine the final three steps. As always, I welcome your own thoughts, strategies and experiences with trying to right size the project budget that has gone out of control.
4. Pay Closer Attention to Scope Creep
As a project manager, you must constantly pay close attention to the scope of work on the project. It's very easy to start gold-plating work—even without realising it—just to increase customer satisfaction. You should also watch what you say "yes" to, what your team is telling you in status meetings because they are sometimes working closer to the project client than you are, and what your project client is requesting. You don't want to be that project manager who is constantly saying "no" or who is always yelling "that's out of scope!"—although you do need to watch scope carefully. Never perform work you aren't getting paid for, and never propose customer request change orders that are clearly out of scope. Controlling scope will go a long way in helping your project stay, or get back on, its financial track.
5. Move Phases Around
This one is more likely to help with timeframe issues than budget issues. However, it may allow you to use less expensive resources or a discounted third party contractor strategically while not upsetting the client if certain phases of a multi-phase project can be moved around without disrupting the final outcome or schedule. Moving phases around may not help a financially failing project, but it may be worth looking into.
6. Review Resource Forecast for Over Extending Effort
Finally, look at the revenue forecast. Can you decrease estimated hours on a few tasks here and there and get the same work done in less time? There may not be much financial gain on your forecast, but it may help by several thousand dollars—and every little bit helps unless the situation is already completely hopeless. Play with different scenarios and definitely discuss this with your team before you make any project schedule or financial/resource forecast changes official as they are the ones whose effort you would be adjusting. You don't want to plan your financial success on anything that is actually impossible.
These are my top six steps or actions. There's no guarantee that these six actions will work for every project, but they will help on most. Any action is better than no action, of course. Now, I'd really like to hear from our readers. What actions have you taken to help a 20% budget overrun return to alignment with the original financial plan? What strategies can you share and discuss here as possible ways to fix the project revenue or profit margin issues?