Over the top
Breaking the Bank
Two historic projects with outsized budget overruns.
CANADIAN FIREARMS REGISTRY, Canada Over Budget: 36,917%
What started out in 1995 as a database to trace guns turned into a project riddled with management problems. The culprit? Constantly changing project scope. The project was abandoned in 2011.
SYDNEY OPERA HOUSE, AUSTRALIA ▲
Over Budget: 1,357%
Delivered 10 years late, this UNESCO World Heritage site came in at a cool AU$102 million—which was AU$95 million over budget.
Sources: Chartered Institute of Management Accountants; National Geographic
At one point or another, every project manager faces the budget overrun. Whether due to a change in scope, a design flaw or inadequate procurement, project costs can increase—or even skyrocket. We asked practitioners:
Gather the Group
“I would first gather my project team together to draw up possible solutions and the pros and cons for each. Next, I would present to the sponsor, incorporate any feedback and have the sponsor meet with the stakeholders for the key decision on which solution to undertake.”
—Matt Tremmel, PMP, senior manager, program and portfolio management, financial services technology firm BondDesk Group LLC, Rochester, Michigan, USA
Look for Backup
“It helps to have a remediation plan before the project starts. If you have a stakeholder registry, you already know the expectations of the most influential stakeholders.
If you go over budget, gather your earned value analysis and baseline cost estimating, and ask for a one-on-one with your project sponsor. Anticipate questions and prepare sound explanations.
Present the project sponsor and project owner, if they're different people, with alternatives based on those expectations. In the end, what to do is their decision, but it's your responsibility to advise them well.”
—Efrain A. Flores, PMP, project manager, Office of Courts Administration, Puerto Rico Government, San Juan, Puerto Rico
“When you're already over budget, that's money spent and gone. Hiding or pointing fingers is not good for the project's health. Start by informing the project sponsor. The team strategy should now be to look forward and determine if and how the overrun will impact project completion.
Ask yourself: What new risks have developed due to the overrun? With the help of the team, review the remaining part of the project and think of ways it can be completed with the new scope, cost and schedule. Gather the facts (like where the overrun originated), update the plan with the new budget and present it to the change control board or the entity in charge of approving project changes. Once you've agreed with the project sponsor on the new project baseline, regroup the team.”
—Israr Shaikh, PMI-RMP, PMP, project director, Middle East and Africa, shared services center Re:Sources Middle East and Africa, Dubai, United Arab Emirates
Open Up Communication
“It is a core responsibility of the project manager to convey the true situation, not what the client wants to hear. The project manager needs to realize that if the as-is situation is not communicated, it could have dire consequences for downstream projects, systems and functions. I am straightforward with clients. Faced with budget overruns, I honestly outline the options of either increasing the budget or shifting certain aspects of the scope to the next phase.”
—Uday Gupta, PMP, SAP BI head/IBS Asia Pacific BI manager, KPMG Global Services, a division of PMI Global Executive Council member KPMG International, Gurgaon, India
Do the Shuffle
“Quickly identify what tasks or parts of your project you can suppress or delay to a later stage. Then, validate the scope change with stakeholders and update your project documents.”
—Sylvain Costy, PMP, CIO, digital printing enterprise Electrogeloz, Paris, France
PM NETWORK OCTOBER 2013 WWW.PMI.ORG