The Project Budget Shark Tank
For many of us it is that time of the year again, where we need to submit budgets for the next financial year. Or, it may be your biannual financial review. Good organisations ensure that the budgeting process includes budgeting for projects.
It may be reasonably easy to get your required operating budget for your department, based on actual costs, inflation, and growth targets. On the other hand, getting the money you need for your projects can be very difficult.
This is because the amount set aside for projects must be shared throughout the organisation. So, in this dog-eat-dog environment, how can you ensure that you get the funds you need?
There is only one way to give your project a fighting chance: you need to make a strong and persuasive case for your project to the decision makers. Whether this is a Project Management Office, an Executive Committee, or a Board of Directors – whom I shall refer to as the PTBs (Powers That Be) from here on in – it is a bit like standing in front of the Shark Tank judges. The only difference is you are less likely to get funding here, than on that particular TV show.
Answering the five questions below will give you the best fighting chance:
Step 1: What problem does it solve?
This is the compelling reason for doing the project in the first place. If someone else’s project is more important, or appears to be so, then you will get less money, if any at all. This is why it is so important to make a compelling case for your project.
This is best achieved by not only clearly outlining the problem that the project will solve, but by also describing what the root cause of the problem is. Once you have done that, you can show why this project is the best way to solve this particular problem. Showing the impacts of the problem – not just in terms of financial, but also wasted time and resources, environmental, legal or labour impacts – will further convince the PTB’s of the importance of your project.
Step 2: How does it align to strategy?
The project has to align to the overall organisational strategy. If it doesn’t, then the PTBs will question whether the project is needed at all. This is also important to ensure that the project is not a pet project, because somebody heard some new buzzword, or thinks the project is some kind of unicorn or silver bullet.
To show the alignment to the strategy, you need to know what the overall organisational strategy is, how this affects your department, and then link the project back to the strategy. It also strengthens your case if you can show how the project benefits or improves a specific KPI (Key Performance Indicator). For more about KPI’s you can read this or this article.
Step 3: Why do it now?
While most projects should be able to clear the hurdles above, many are not urgent. For the PTBs to allocate resources to your project now, the urgency must be made clear. Without a very good reason to invest the money now, your project will be relegated to the back burner, and the chances of your project getting money, after being turned down once, is minimal.
One of the best ways to illustrate this – if the project is not legislative or a risk reduction project – is to show the return on investment. Losing money is always an urgent matter.
Step 4: How much is it going to cost?
To be able to give a detailed return on investment, you must have a detailed budget. Bonus points if you have a project cash flow. There is nothing as bad as standing in front of the PTBs, having to explain why some major cost has not been included. While you may be tempted to eat humble pie, and say it will be added later, the funding will go to someone who has done their homework. This homework must include realistic estimates and/ or quotes.
All of this is only possible if you have a detailed plan. Without a detailed plan, you are guaranteed to have forgotten some aspects. Getting to a detailed plan means sitting down with those experts in their area/ department who will impact and/ or be impacted by your project. Their input will be invaluable and make your plans and budget even more realistic.
The people are your stakeholders, which leads us to our next step:
Step 5: Who is going to help you?
Not only will your stakeholders be invaluable in preparing your project plan and budget, but by getting them involved early on, they can champion your project.
The opposite can also be true. By not involving stakeholders early, and often, your project may come as a surprise to them. PTBs hate being surprised, especially if the surprise will cost money, so having a champion (or multiple champions) will go far to ensure funding.