5 Reasons Why Your Project Keeps Going Over Budget

David Bailey |  August 31, 2015 |  Last updated: September 12, 2016

5 Reasons Why Your Project Keeps Going Over Budget

One of the most common woes in project management is when your costs overrun your budget. As a project manager, it is your job to locate inefficiencies and correct them so that you can turn a profit, but it is never easy. Trying to keep to your project budget can be a challenge when there are many factors that can contribute to cost overruns. 
Understanding just a few of these factors and taking steps to correct them will guarantee an increase in profits, giving you extra money to further streamline your processes and invest in methods to raise revenue. So why do your projects keep going over budget?

Lack of Project Management Experience

Occasionally it comes down to the project manager themselves. As a company grows, you need additional personnel to manage projects, and ultimately nobody can become a good project manager without gaining experience first. However, a mismanaged project can lead to poor budget management and missed deadlines.

If you are putting somebody in charge of their first project, have someone to provide guidance in the process. Give your project manager room to make mistakes and learn from them, but have somebody there to step in if things start to go over budget.
A great way to keep your eye on project’s performance and budget, is creating a project dashboard that includes all the important performance indicators. Learn more about KPI dashboards.

Scope Creep

Over time the client may request more additions to the project – more features, better quality, etc. All of there require more time and work. If you are not charging for these additional hours or changes, you are eating into your budget with every change.
If you don’t put a stop to it or at least start charging extra, you may find yourself with no room to manoeuvre down the line, or even more damning, start losing money on the project.

To resolve this, have strict rules on how much you are willing to change in the course of this project, and if the client requests additional services do not be afraid to ask for more money. Better to lose a sale than to work for free.
If you’re still looking for a perfect tool for your project team, learn about the essential features of the best project management software.

Project Changes

A common reason for cost overruns: unplanned project changes. This is not necessarily related to scope creep, this can be linked to anytime somebody makes a change that isn’t accounted for in the budget. These changes could be due to a realization that something was not included that should have been, a need to adapt to a lack of essential materials, or other issues that you cannot plan for effectively.
The best way to avoid project changes is with proper planning, walk through your project from beginning to end with multiple people to identify problem areas in advance.

To keep your eye on all project expenses and see whether you’re ahead or behind of planned schedule, start monitoring performance metrics. See the list of 16 essential project KPIs to get started.


Poor Planning

Every project that you want to succeed must have a plan to back it. Without a project schedule the plan is doomed to fail. As mentioned above walk through the project from beginning to end with multiple people.
Having multiple individuals involved in the planning session, even if they are not project managers, is a very good way to create a solid plan before you have invested too much time and money into the project itself. This will also help you spot problems before they begin.
Get yourself project management software that makes teamwork more efficient.

try project planning software

Lack of Coordination

Having a plan and a clearly defined scope with the best managers doesn’t change the fact that if people don’t know what they’re supposed to be doing, you’ll run into massive inefficiencies. By having precise task lists and deadlines for each member of the team, you can be sure they will never run out of tasks to do until they have nothing further to contribute to the project.
The best way to ensure this level of coordination is to make use of project management software. With the right tools such as time billing software, you can track and bill for time and keep all your employees on the same page.


To summarize large projects requires strain on existing resources, occasionally meaning projects will go over budget. But if you take into account the above factors you can mitigate the damage and in the long run, find yourself coming in well within projected budgets.

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