Unformatted text preview: processes Contingency plans/funds Foreseen and unforeseen costs
If you have well-qualified people on the team, they may be able to work
smarter – and faster – than if you have less-qualified people on board. If you know of an upcoming project, creating a project document and draft budget is vital because it
explains clearly what you believe your resource needs are. If it is approved, then you have the
commitment that the requested resources will be provided. It also offers management the opportunity to
deny the resources you’ve requested and ask that you ‘scale back’ the project. By knowing what your
constraints are, you can describe the trade-offs it would require in time or quality of outcome to do so.
You can then adjust the budget accordingly.
8.4.2 Performance Criteria
As described in the last section, performance criteria affect the resources that you need. The higher the
criteria that you are expected to meet, the higher the cost will be to complete the project. When you are
developing your project budget, you might want to consider proposing different levels of performance
outcomes and their associated potential costs.
Remember, though, that there are indirect costs of reducing performance criteria. If you are rolling out a
new product and you decide that you will limit end-to-end testing in order to reduce the cost of the project,
you may very well end up with higher costs after the launch because of a system failure or mass customer
complaints. So, educating the decision makers in the organization about the possible indirect costs of
adjusting your performance criteria is important when creating a project budget. Download free ebooks at bookboon.com
50 Budgeting Your Project(s) Managing Budgets 8.4.3 Time
Looking back at our earlier discussion and formulas, we know that time also affects the cost of our project,
and time constraints may also impact the availability of necessary resources. There is one point to make
about time that we haven’t made yet. It is that the quality of the resource, or pe...
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This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.
- Fall '13