Chris Croft
Tips of the Month Archive


Project Management Tip 11



       
Home

Blow your own trumpet

Be assertive at the start

What is a Gantt Chart?

Avoiding people problems

Listing all the tasks

Internal projects

How to discover the key project driver

Three methods of project costing

Why I love Gantt charts

Three ways to handle uncertainty

Overspend or underspend?

Why PM is difficult

My instant guide

Why review?

Some eccentric PM abbreviations

What exactly is a PID?

Its never too late to plan

Why PM is good

Good questions to ask a project manager

Overspend / underspend.

If you're underspent on you project so far, how are you doing?
Probably not very well. You are probably running late.
There's a small chance that you're genuinely under spent, but how often does this happen?

If you're overspent on you project so far, how are you doing?
Probably not very well. You are probably over budget and heading for an overspend.
There's a small chance that you're ahead of schedule, but how often does this happen?

In fact, if you diverge in either direction from your planned rate of spend you are probably going to end up over budget. This is because you are either
a) over spent = money gone, can never get it back.
b) running late due to problems = will end up overspent.
c) running late = need to crash things to catch up = will end up spending more than plan.

How can I tell if I am in fact ahead rather than over spent?
How can I tell if I am in fact under budget rather than late?
The answer is to compare the cost information with progress on your Gantt chart. (You colour in what you've completed and see if you are keeping up with the "Today" line). This will tell you whether you're ahead or behind - if you're ahead then the overspend may be OK, and if you're under budget and progress is OK then that's great. Conversely if you're a little under budget but seriously late then you are probably actually heading for an over spend!

Conclusion - check your Gantt chart to get the other half of the story, and make the cost information come alive.

One thing to remember from all this: Underspend is probably not OK!

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