Many organisations still consider budget overruns in both time and money as the major threats to the success of their business software projects or digital transformation initiatives. An interesting and valuable question is how you can prevent these overruns. In this article, we analyse the reasons that can lead to financial budget overruns. And of course, what you can do to prevent this.
Let’s start facing reality. Most organisations are inexperienced when it comes to budgeting for project success. And that makes, of course, sense, simply because they only modernise or replace solutions every 8 to 10 years. This observation makes it even more important to prepare your budget planning very well.
Here are five crucial causes for budget overruns.
1. Incomplete budgets
This is probably the simplest cause you can control by ensuring that the budget is complete and contains enough bandwidth to succeed. Categories that are often underestimated these days are found in the domain of end-user training and organisational change management. It’s tough to over-spend on change management!
2. A poor preparation phase
The most important part of your preparation must take place before the consultants of your favourite implementation partner enter the building. For effective budget management, you must know what you want to achieve and how you want to do that before the meter starts running. Starting with the proper internal preparation on time is crucial to control your financial budgets.
3. Underestimating the complexity
Many organisations underestimate the complexity of implementing new business software. They still believe that it’s a technical project while ignoring a new solution forces the team to work, think, and act entirely differently.
4. Underestimating the amount of work
The same counts for work. At the time of negotiations, all focus is on the new project. Everybody is highly involved and super enthusiastic. Unfortunately, as soon as the project starts – other priorities appear on the radar. Winning that one big new customer. An unplanned reorganisation. Key staff getting ill or leaving the company. Without the proper focus, you will eventually be forced to outsource a more significant part of the work to your implementation partner. Exceeding the financial budget is then a logical consequence.
5. Stop adding complexity!
A last important cause of budget overrun is adding complexity during the implementation process. Many organisations lack the discipline to stick to the agreed functionality and the amount of change defined before starting. Of course, it’s tempting to give in to the extra wishes from the organisation. But it will ruin your financials budgets, your time budgets, and the motivation of your teams! So, it’s always better to avoid (extra) complexity. Add all good ideas to the so-called ‘optimisation list’ and use that document to define step 2 of the implementation process once step 1 is done. This is a great way to manage and control complexity and stick to your financial budget.
If you want to know more about how the team here at Sci-Net can help you to manage your project successfully have a look at our Implementation Methodology or drop us an email on email@example.com or call us on 01869 349949