Five things you can do to avoid project cost overruns
Cost overruns are all too common when managing client projects. Here are my top five tips to keep cost overruns on the low, while keeping your client and team happy:
1. Set clear expectations from the start
Ensure that your client understands that a project is a shared undertaking, and that you are mutually responsible for the outcome. Be clear on:
- how the project will be run, structured, and reported on.
- what’s included and excluded in the hours you quoted and how you will deal with overruns, overtime, and scope changes.
- how issues and risks will be managed.
- rates and project billing.
- what you are expecting of the client (availability, communication, input into discussions, etc.) and what they can expect from you.
2. Communicate, communicate and then communicate again
Maintain an open and honest relationship with your client at all times. Check in regularly by phone, email and face-to-face and let them know how things are going. Share not only your successes, but also any issues and risks you‘ve come up against and what you are doing to mitigate them. Send regular updates on how your team is tracking against the estimated hours, budget, and milestones. And, if you spot even the slightest indication of a possible overrun, make sure to let your client know. It is a lot easier to justify and get paid for overruns when the client is aware of what is going on than to sort after the fact.
3. Be careful with fixed-price projects
Unless there are few unknowns, or you have done similar projects in the past, steer away from fixed-price projects. Fixed-price projects infer that you will assume all risks and take full responsibility for all costs and resulting profit and loss.
4. Minimize waste and errors by giving your team support and training
Make sure your team has all that they need to successfully complete their work and grow in their field. Create a work environment where people are encouraged to ask for help, raise and discuss issues, and support each other. Limit the work in progress for your employees so they don’t need to context switch between projects, and be clear on how much time they have to complete an assignment so they can raise issues with you early.
5. Put the right people on the right job
When it comes to resourcing your project, make sure you choose people who have the right skills and the appropriate level of experience to get the job done.
Runn translates scheduled work into billing. Create accurate billing forecasts and understand the implications of winning and delivering work.