Monday, December 17, 2007

Is Your Project A Budget Catastrophe?


E.M. Bennatan states that "a project is a budget catastrophe if the remaining projected cost far exceeds what the development organization is willing to pay for it". Or as it often is, what the sponsoring department or customer has allotted for the project.

Project overruns are often the result of schedule overruns, or of attempting to reduce these overruns (e.g., adding staff), so usually a schedule overrun is evaluated first.

A budget alarm is usually triggered if the expected remaining cost far exceeds its break-even value, however, many times this value is not given enough consideration up front.

Should the project be canceled if the remaining projected cost far exceeds what the development organization is willing to pay for it? Not always, since it was the projected cost that set off the alarm. Reducing the project scope may be an alternative, thus reducing the projected cost and allowing the project to continue. This is one of the key objectives in disentangling a software catastrophe.

2 comments:

John Franks said...

Great article. Check this: http://www.businessforum.com/DScott_02.html

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