Product, project, and engineering managers are faced with many tasks on any given day. We must manage people, technologies, and the project itself. Stakeholders need to be frequently updated on the status of the project including utilization of resources, progress toward deliverables, and tracking of the schedule and budget.
Yet, many project managers are appointed to the position based on a strong technical background or because they are effective in leading complex teams. Most project managers have not been directly exposed to managing a budget or schedule. Of course, the client and the sponsor measure success through meeting project goals, including the plan for on-time and on-budget delivery of project results.
Budget Skills for Project Managers
Project managers can learn how to prepare a budget in several ways. Sometimes, senior management will assign a specific budget for the execution of given project work. In this case, the project manager is doomed. There needs to be significant input, give-and-take, and understanding of tasks and deliverables in order for an appropriate budget to be determined. Frequently, senior executives will underestimate the required work – and cost- of a project because they are far removed from day-to-day operations.
In other, more favorable cases, the project manager will work with the assigned project team and sponsor to formulate a viable project budget. While estimating project costs is iterative by definition, sponsors and clients will often hold the budget to the first number they hear. Naturally, project managers are in a difficult position. Project work is often not detailed enough in an early stage to give an accurate cost outlook but padding the number could cause the project to look too expensive and lead to its cancellation.
Learning about Cost Estimates
Many product and engineering managers have not been formally exposed to budgeting and accounting practices in their technical or educational background. One way to gain skills in planning projects is to understand basic project management principles. Project Management Professionals (PMP®) are certified by the Project Management Institute and learn industry-wide best practices in initiating, planning, executing, monitoring and controlling, and closing projects. Cost and schedule estimating tools and techniques are described as part of the detailed planning process. Product and engineering managers will also learn flexible and agile methods for lean product development, including how to estimate the cost of a specific project while the work is still not fully determined. Iterative and rolling wave planning are tools that can help a project manager optimize and balance detailed cost estimates for the near term with longer term forecasts. PMP Boot Camps and New Product Development Professional Workshops will help project, product, and engineering managers learn these tools for the first time or provide a timely refresher to continue to build career skills.
For those that just need a refresher on cost estimating, Simple-PDH is offering a new, two-hour course on Cost Estimating. We start with the basics of creating a plan that balances scope, schedule, and budget. Specific types of cost estimates and types of costs (direct, variable, etc.) are described so you can immediately jump into the budgeting process. The Project Cost Estimating course will earn two (2) Professional Development Hours (PDH, PDU, CEU) for you to maintain your PMP, Scrum, NPDP, PEM certification(s).
To learn more about integrating cost estimating techniques into project and product management activities, please join us for a PMP Boot Camp or NPDP Workshop. You may also be interested in the quick refresher course to earn PDUs or PDHs. It’s quick and affordable.
Every course at www.simple-pdh.com includes study guides, videos, practice tests, and expert instruction. It’s simple to study, earn, and learn! Contact us at email@example.com for more information.
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