Thursday, May 24, 2007/
Formulating the budget for a project is an art in itself, and here the usual rules definitely do not apply.
Special projects, special strategies
In an earlier blog I provided an overview of the normal budget process, which if managed correctly will allow you to work untroubled by cost or performance targets.
In summary, one asks for vastly more money than is required, looks astonished at the suggestion that spending cuts are required, and then accepts the spending cuts on the proviso that the performance targets are scrapped.
Since then I have been involved in some special projects, and it has occurred to me that my advice – appropriate as it may be to the normal budget process – is horribly inappropriate in the context of a project. Hence this note.
The objective when managing a general budget is to end up with enough money to do what you were always going to do anyway, sans performance measures.
The objective when managing a project budget is to end up with clearly insufficient resources to achieve the project outcomes. This removes all pressure to achieve the project outcomes, and quite possibly may result in the scapegoating of those responsible for the budgets cuts, quite handy for those whose ambition has not yet been ground out of them.
The starting point is to formulate a budget that provides the barest minimum in resourcing. Be vigorous in hunting down any feather-bedding, contingency, and allowances (you may find this poacher-turned-gamekeeper moment quite refreshing, certainly it will disorient your staff and colleagues, which has its own advantages).
Once you have a real bare-bones budget, take 40% from each figure, then add a new item labelled “Contingency”, which represents total of the adjustments, so the overall total remains the same.
Now, take the usual care with assumptions. Clearly state that you are seeking to significantly reduce the scope of the project, in which case you will be over-resourced, and that the contingency represents the resources required if the scope is not reduced. Make sure that the assumptions are carefully placed where they won’t be read (underneath the mission statement, perhaps?).
Once your request to change the scope is refused, the real works begins. You need the Finance chaps to become aware of the existence of the large contingency. You know the things: loud jovial comments in the lift about how the Finance fellows “have left us alone, for once”, comments in the pub about research trips to the south of France, etc etc.
Soon the bloodhounds will be on your trail, and if you’ve used a font that is large enough, they will discover the large contingency.
From here on it should be plain sailing: loud but poorly argued protests. Well written and concise explanations hidden behind page 113 where no one will find them. Five-hour “stakeholder meetings” scheduled to coincide with state-of-origin games/ the Melbourne Cup/ the Boxing Day test (you have a calendar: use it).
With any luck, you’ll end up with absolutely no chance of delivering the project on time, if at all. Now, if you mess that up, don’t worry, there’s always scope creep, but that will have to wait for another occasion.
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