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"The problems experienced by budgets closely parallel the problems with timelines. Determining a budget for a project is an inexact science, to say the least. Identifying all the elements to be included in the budget - for example, employees, benefits, consultants, development tools, testing tools, production tools, software licenses, maintenance costs, facilities, telecommunications charges, miscellaneous costs, office supplies, and so on - can require a lot of time, which itself cuts into a rigid deadline. This list is far from complete."

"What makes the situation even more challenging is that some costs will be based on decisions or findings that are not available until much later in the project cycle. For example, slow application performance may require more memory cards to resolve. But how many? This will not be known until the system testing.

Common Problems

"The table below identifies some of the common problems within the budgets category, key considerations, and some suggested questions that can be included in your assessment questionnaire."
Problem Description
Suggested Questions
Lack of allocation
A budget may have been provided to the project, but it may not have been allocated. This can cause delays in the project.
Who is providing the budget? When is it going to be available? Have there been any problems paying the bills in a timely and accurate fashion in the past.
A budget may have been assigned to the project without any justification or basis in reality.
How was the budget determined? What items are included in the project budget?
Cut during the project
Other events may have caused executive management to trim or even cut the budget during the project. Executive management may argue that the original budget had too much contingency built into it, thus putting the problem back on the project manager's shoulders. Reduced budget should trigger a change control process that will likewise result in a smaller set of deliverables. The rescue manager must react to a reduced budget; otherwise tacit agreement will be viewed by executive management as a signal that the original budget may have been too high.
Was the project budget ever cut after it started? Who accepted the budget cut? Were any reasons given? What was changed in the project to reflect the reduced budget?
The budget may be running out due to earlier problems in the project. There just may not be enough money in the budget to complete the project.
What if we need a larger budget?
Missing items
The original budget may have missed key items. Testing activities reveal items that were not budgeted for.
What is included in the budget?
New events
Despite best planning efforts, new events do arise that can affect the budget. Consider providing budget ranges for uncertain items.
What happens if we didn't budget for an important item? Are there any discretionary funds available to the project?

The above is an excerpt from a book written by Sanjiv Purba and Joseph Zucchero, published by McGraw-Hill/Osborne, 2100 Powell Street, 10th Floor, Emeryville, California 94608 U.S.A. Sanjiv has over 20 years of experience managing large projects and many years engaged in rescuing ailing projects.