For every project to be successfully completed, it needs the backing of adequate resources from the concerned organization. As a professional project manager, you may have carefully considered every task in your project and come up with a budget reflecting the same. Like in any other project, the budget is one of the factors that are reviewed at the highest level. However, sometimes, your project’s senior executives may want your budget costs to be cut down to an extent that you think it may compromise the successful completion of the project. When you find your project’s budget under serious scrutiny and jeopardy, you need to arm yourself with the right skills for defending it. Below are four ways to defend your project budget to senior executives.
1. Clearly explain what is included in your budget
The different factors that are included in your project’s scope are not always obvious and clear to those who are outside your main team. When defending your budget, it is therefore important to first elaborate the different entities in your budget and how they will help accomplish your project goals in different time frames. These include short term and long term goals that the project will accomplish, be it in a few months or many years. This will help you to demonstrate the real value of every dollar allotted to the project.
2. Highlight the costs that have already been cut
It is important to show the senior executives that you are concerned about your project costs and have already taken steps to cut down on some costs. Therefore, if you can, clearly highlight the costs that you and your project team have wisely cut, such as premium materials and products, or skillfully avoided, such as expedited shipping. This will increase the chances of your budget withstanding serious scrutiny.
Also, showcase the areas in your budget that you have successfully bargained for lower costs. These may include costs of materials that are lower than that in the market or reduced labor costs. Highlighting these savings will show that the project budget has already gone through adequate value engineering.
3. Use bench-marking data from a third party
It may be helpful to offer your senior executives budget comparisons for previous internal projects in your organization. On the other hand, it will be even more powerful if you offer third-party comparison data due to the objectivity it provides. This information is usually available by region, project type, company size and industry.
4. Explain the effects of extra cuts
Clearly explain to the senior executives the consequences of cutting down the budget further. Highlight how the cut down costs will negatively impact the end users, how it will affect cost savings in the future, and how it may bring losses to the market position of the organization. The effects that the cost reductions will have to your project, be it in the headcount, energy consumption, materials, manufacturing expenses or any other expenditure, need to be clearly understood by all stakeholders. The current financial impact will appear more prudent and sensible when it is compared with reduced expenses in the future.