Five (5) financial steps to ensure project management success for small business owners
Planning can become a very strenuous task without the right knowledge and budgeting skills. Ensuring that every project becomes a success greatly depends on experience and knowledge of budgeting beforehand. Below are five (5) ways to ensure that projects are successful without exceeding the budget assigned.
1. Create a budget that includes all possible financial risks.
Before creating a budget for the project a risk analysis and evaluation should be conducted. This process identifies all the ‘what can go wrong’ possibilities of the project. Upon identifying all risks they should be classified into categories determining which has a higher chance of occurring to which has the lowest chance. It should also be in groups identifying which will have the greatest effect on the project and which will have the least. After conducting this evaluation, a decision should be made concerning which risks can be avoided, eliminated altogether or accepted in order for the project to be completed. A neat trick that can be used to ensure that risks do not affect your assigned budget is to accommodate finance in the budget for the two (2) risks that you have determined are most likely to occur. This ensures that if they were to occur that the effects will not cause an issue financially and if they do not occur the money can then be reassigned as necessary.
2. Always keep a reserved amount set aside.
This is a trick that works from everyday personal life budgeting straight to the corporate office financial planning boardroom. When planning a project all prices and costs associated should be obtained through estimates and quotations provided directly by the company. After calculating all costs, a reserved amount should be set aside for the project. This amount will accommodate for sudden changes such as an increase in the prices for the products or services needed. It can also be used for cases where there has to be a change in a product due to insufficient inventory available or adding a new supplier or product to the project.
3. Always budget for the highest option.
It is always necessary when planning a project to have a back up option. This means that when planning, an alternative plan should be available to ensure timely completion of the project even if the first plan does not go as expected. When considering this in the budget it is best to budget for both option 1 and option 2. The trick would be to ensure that the option that is higher in cost be the main option financially budgeted for even if it is not the preferred choice. For example, if you are going with option 1 however, option 2 costs more, you should budget the project for the cost of option 2 to ensure that if option 1 fails a re-evaluation of the budget does not have to be conducted to reassign funds. This saves time and stress and ensures that the project is completed as scheduled. If option 1 is successful then the extra finances can be reassigned.
4. Ensure that every step in the budgeting process is properly financially accounted for.
This allows for all steps in the budget to be accurately accounted for to ensure the budget is true and accurate to the project. This should include obtaining information accurately from direct sources such as calling suppliers directly or requesting invoices, quotations and estimates. Avoid using prices from websites as these may not be updated regularly and also avoid estimating prices based on the average industrial trading price of the product or service. Suppliers should be asked to update the project manager when there are changes in the prices of the products or services offered and more than one supplier should be sourced for a second option.
5. Provide incentives for workers to motivate them in the planning process.
For sure, planning can be a great deal of work. Providing incentives to workers to ensure that they put in the extra effort is a trick that can be considered. Incentives encourages employees to perform at their best and to effectively get the work done. This trick should be used especially for long, tedious projects where it is easy for staff to get bored and lose momentum. Incentives can include bonuses for early completion of designated tasks or extra days off that can be taken whenever the employee chooses.