Too often, leaders label projects as successes or failures based on budget and schedule expectations. Although time and cost are critical factors, they ignore whether the project delivered the expected benefits.

For example, consider a year-long project with a $2 million budget and $10 million in projected revenue. If the project went 50% over budget and 10 weeks past its due date, it would receive low marks for efficiency from a traditional project management perspective. But if the project realized the expected benefits, then it still brought a return on investment over 200%, even with the additional investment price tags. The project certainly wasn’t a dud from a revenue-making standpoint.

Now, imagine that the same project was strictly managed according to its schedule and budgetary constraints. It is completed on time and hits the projected budget down to the penny. But staying faithful to those benchmarks led to a product so watered down that it flopped and proved invaluable. You didn’t recoup your initial investment. Sure, you stayed on schedule, but you don’t have the ROI—or much else—to show for it.

The difference between these scenarios highlights the importance of ROI in project management. Rather than looking at the project holistically, many project managers and stakeholders concentrate on completing projects efficiently in relation to the original baselines. Consequently, they often assess projects inadequately. Is a project that sacrifices functionality to meet efficiency benchmarks a winner? Frequently, the answer is no.

The Role of Cost Savings in Project Management

Does this mean that direct and indirect costs don’t matter for project management? Of course not. If costs and change orders aren’t kept under control and in line with the project objectives, you end up with scope creep.

But you don’t have to say no to every new suggestion from the team to prevent a fiscal avalanche of snowballing costs. Again, it can make sense to go over budget responsibly if the return is spectacular.

The important question isn’t always how expensive or cheap an investment is. A better consideration to start with is how necessary it is. The last thing you want to do is bloat a project with a thousand tiny, superfluous add-ons while denying a big-ticket investment that could make or break the project.

Moving Toward Modern and More Effective Project Management Strategies

How can you reduce project management expenses to maintain efficiency without hindering your returns? Try these steps.

1. Confront Problems When They Arise

Nothing’s worse than feeling like you can’t talk about things that are going wrong because your company has a shoot-the-messenger mentality. Project managers need to have the authority to stand up to stakeholders, particularly when they need money.

It’s better to spend an additional $1,000 to fix something early. Otherwise, a $1,000 planning problem could end up being a $10,000 development problem, a $100,000 testing problem, and a million-dollar fatal defect in the final product.

How can you create this type of open-door policy? Empower project managers to be forthright with all stakeholders. Fostering a sense of candid communication from day one helps keep everyone in the know. It also reduces the likelihood of a project manager holding back essential information about issues that are bubbling to the surface.

2. Establish the Basis of Control

There are six roles in managing any project: leadership, subject matter expertise, data analysis, scheduling, coordination, and administration. These functions collectively form the basis of control. Although the same person can perform some of these roles, you don’t want to bog them down or stretch them too thin.

Why pay a project manager making $150 an hour to handle administrative work? That’s an inefficient use of your money. Instead, delegate all tasks and responsibilities to the individual best suited to do them as quickly, accurately, and inexpensively as possible.

This approach of delegating responsibilities will help ensure you have a basis of control anchored by strong and competent project team members. If you find out you have any competency gaps, consider partnering with a project management firm to plug your biggest holes.

3. Involve Subject Matter Experts in the Definition and Planning Processes

Your experts—including solution architects and business analysts—deserve to be heard at the first project meetings. They can collaborate over specific solutions and opportunities and determine how to best benefit from them. They can also provide input on the features and functions necessary to deliver the R in ROI.

Be sure to document everyone’s feedback at your initial planning sessions. Good documentation of ideas can be valuable for controlling and guiding the project to completion. Really, you can’t have too much documentation on your hands if you have sufficient coordination and administration roles in place to handle all of it. Keep detailed notes so you can trace recommendations to their source, record project issues, and make it simple for your project manager to track the flow of the project.

Although the goal is to reduce cost during project management, project managers can explain budget fluctuations to stakeholders when they have documentation that shows why anticipated costs have changed.

Everyone hopes for projects to come in as close to forecasts as possible. But costs and schedule efficiencies don’t tell the whole story of successful projects. In addition to controlling your costs, be sure to pay attention to your returns. Sometimes, a project that’s a little late and over-budget is more of a victory than it looks on paper.

About the Author

Gus CicalaGus Cicala is the founder and CEO of Project Assistants, whose mission is to eliminate project failure through project staffing, consulting, and managed services. Gus resides in Wilmington, Delaware.

Featured image via Shutterstock.