Goal: Optimize the project plan to meet the budget

After you build your project plan, review the planned costs. If the planned costs do not meet your budget, you can optimize the plan to stay within your budget. As you change the budget, remember that you are likely to change the finish date or scope of your project. This relationship between time, scope, and budget is often referred to as the project triangle.

Tip: This article is part of a series of articles within the Project Map that describe a broad set of project management activities. We call these activities "goals" because they are organized around the project management life cycle: Build a plan, track and manage a project, and close a project.

Previous goal  |  Next goal

See all goals on the Project Map

Optimize the project plan to meet the budget

number 1 View the project costs     You can view the totals, the costs over time, or the costs in a chart. Doing this can help you to see whether you are meeting your targeted budget and whether you need to adjust your costs.

Number 2 Optimize the plan to decrease the costs     If you determine that the planned costs do not meet your targeted budget, you can use several strategies to cut costs.

  •  Adjust the resources and costs to meet the budget

    Click all of the following that apply:

    • Enter costs for resources to adjust the regular and overtime rates, per-use costs, fixed costs, or cost resources.

    • Remove or replace a resource assignment to cut costs by replacing a more expensive resource (a person, equipment, material, or cost) with a less expensive one, or to reduce the number of comparable resources on a single task. Sometimes, using less expensive resources results in corresponding trade-offs of decreased scope, longer schedule, or lower quality. Still, this is one of the most realistic strategies for optimizing the costs. If you remove a more expensive resource from the assignment, this resource is free to work on other tasks or projects that are more cost-effective.

    • Reassign the remaining work on a task to control which of several resources does what portion of the remaining work, or to specify exactly when the remaining work will be done.

  •  Reduce the project scope to meet the budget

    Do all of the following that apply:

    •  Determine whether to change the deliverable or the scope

      You might need to reduce the scope to meet the finish date or the budget. Or, after building your project plan, you might find that you have more time or money than you expected. In either case, you can change the scope of the project. You can choose between changing the deliverables of the product or changing the scope of the project.

      • Cut the product deliverables     If you reduce the scope by cutting product deliverables, you are actually providing less to the customers or stakeholders than you planned. For example, suppose you are working on a project to develop a new product. To meet the finish date or budget, you decide to cut product features that were originally planned and approved by the customers. In this case, you probably need to obtain customer approval, and you may need to adjust the contract, if applicable.

      • Cut the project scope     You may be able to provide the same product deliverables by changing the way that you produce them.

        For example, on the project to develop a new product, you decide to remove a market research task, and you also reduce the duration of the product testing in order to meet the finish date or budget. In this case, the end product and deliverables don't change. However, you changed the method for providing this end product by reducing the scope of the project.

      • Use the available time or budget     If you find that you have more time or money than you expected, you can add deliverables. Or you can increase the scope of the project itself, which often results in a higher-quality product.

      • Consider the impact of the scope on quality     You might need to reduce the scope to meet the finish date or the budget. Or, after building your project plan, you might find that you have more time or money than you expected. In either case, you can change the scope of the project. Consider that quality and scope are closely related. If you cut the scope, you might have to accept a reduced level of quality. If you increase the scope, you probably will increase the quality of the project and the resulting product.

    • Change a duration to reduce the amount of time that is planned for tasks. Make sure that the reduced duration still allows the work to be completed. Also be sure to adjust the corresponding amount of work that is assigned to the resources.

    • Remove a task if it is not absolutely necessary. But be aware that removing tasks can decrease the quality of the overall project implementation. Tasks that must be done should still be reflected in the plan, and only those tasks that are considered optional should be removed.

    • Replace a resource assignment by replacing a more expensive resource (a person, equipment, or materials) with a less expensive one. Sometimes, using less expensive resources results in corresponding trade-offs of decreased scope, longer schedule, or decreased quality. Still, this is one of the most realistic strategies for optimizing costs.

Number 3 Adjust the plan to take advantage of additional budget     After you build your plan, you might find that you have more budget available. You can choose to bring the project in under budget. Or you can increase the scope and the quality goals for the project.

 More . . .

After you build your plan and Microsoft Office Project 2007 calculates the schedule and cost for the project, you might find that you have more time or an increased budget available. You can choose to end the project ahead of schedule or under budget. Or you can increase the scope and add quality to the project.

  • Check with the customer      Ask the customer or stakeholders of the project how they prefer to use the time or budget. They might prefer to leave the plan as is and have the project come in ahead of schedule or under budget.

  • Check your contract     Check for contractual incentives (or in some cases, even penalties) for coming in ahead of schedule or under budget. The type of contract (fixed price, cost reimbursable, or unit price) may determine how you should take advantage of the available time or budget.

  • Add scope     You can add the tasks or phases that you wanted but thought you wouldn't have enough time or money for. You can increase the duration of existing tasks, so that the resources have more time to complete the tasks. Be aware that adding scope is likely to add both time and cost to your plan. Changing the scope and deliverables may have contractual implications, so be sure to check the contract and obtain client approval when necessary.

  • Raise the standard of quality     You can use surplus time or budget to add tasks or phases that add or check for quality. You can increase the duration of existing tasks, so that the resources have more time to do higher-quality work. Another way to raise the quality is to add more highly skilled staff, more efficient equipment, or higher-grade materials. These types of resources can be more expensive, but they can also be a good use of surplus budget.

Number 4 Enter a note about the cost changes     Log information about the changes that you made to meet the budget. Such notes can be helpful when you are tracking actual progress, closing the project, or collecting data for the next project.

Number 5 Evaluate the results of cost optimization     Verify that you did indeed lower the costs, and that the finish date, workload, and other projects are not adversely affected by these changes.

Click all of the following that apply:

  • View project costs to see whether you lowered the costs and how close you are to meeting your targeted budget.

  • Show the critical path to see how the changes that you made to optimize the costs affected the critical path. You might see different dates, different tasks, and different resources associated with the critical path.

  • Review resource workloads to see whether any assigned resources are now overloaded or underutilized as a result of your cost-optimization efforts.

  • Check impact on other projects to ensure that any changes are updated in other project files that are linked to or consolidated in your project.

Number 6 Communicate the assignment changes to the resources     If you assigned new tasks to the resources or changed or removed any existing assignments, you need to publish these changes for the affected resources.

Previous goal  |  Next goal

See all goals on the Project Map

Share Facebook Facebook Twitter Twitter Email Email

Was this information helpful?

Great! Any other feedback?

How can we improve it?

Thank you for your feedback!

×