Avoid Budget Overruns: Tips and Practical Advice for Business Owners

IT Trends | 4 min min read

Avoid Budget Overruns: Tips and Practical Advice for Business Owners

Tips for project planning and management that will help you to avoid cost overrun and complete your project successfully.

 

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Sometimes, decisions don’t come easy. Some decisions shouldn’t be easy and choosing your software vendor is the one. If you take the wrong turn – your project will end up in a deadlock. The course none of the business owners wanted when entrusting their projects to a third-party development team. But the truth is hard – projects fail, deadlines are missed, budgets overrun.

For 7 years we’ve seen dozens of clients who looked to fix what incompetent outsourcing teams destroyed though were to build. It happens. Nobody is safe. They could do not foresee it.

Or could they?

In this article, we’d like to list some important tips for project planning and management that will help you to avoid cost overrun and complete your project successfully.

Business analysis and planning

Smart planning is critical. It is the foremost instrument against budget overruns and delivery delays. If you have all the features and requirements of the project documented properly, you significantly speed up the development process as your team has a clear roadmap to follow.

If your desired features are backed by marketing or business analysis, you feel safe that the product will find its users and they’ll love it. However, if you start with an idea and pack features that you only think matter to your users, you may then find out that much of you’ve spent on your budget is irrelevant. But the other important features are lacking. This means you’ll have to make more releases enhancing your product which implies additional costs.

 cost overrun analysis

Choose a proper cooperation model

There are 3 models of cooperation with external software vendors - Fixed price, Time and Material (T&M), and Dedicated development model. Each of them has its pro’s and con’s and works well for a particular business case.

Before you start cooperation, you need to consider several aspects like project scope, duration, complexity, work environment, and others and choose the model which suits you best. For example, for small projects of a 3-4-month duration, a Fixed price model will allow you to make sure that the scope of an agreed work will be delivered at a precise price.

For long-term projects where requirements may change in process, a dedicated team will suit better. You won’t have to pay for work that will appear not necessary in the end.

Agile delivery model

Risk assessment is part and parcel of budgeting that aims to reduce costs. The key is not to hope for the best, taking the risk, but to take into account the potentially negative factors in the development process.

Agile methodology has certain characteristics that allow to assess risks and make the process follow the plan – both for the cost and the timeframe.

Among them:

  • Rapid reaction to changes

  • Self-organization of the production process

  • Predictability of the outcome

  • Presence of continuous and constant feedback

  • Risk differentiation

The agile methodology makes it possible to see that all participants in the process are united by one goal - the delivery of quality products for their consumers. Use customized agile project management tools and practices that better suits your project. But always be agile.

Take a trial

When you start cooperation with a new team or vendor, it’s important that you feel confident in his ability to deliver the needed result. The process of choosing and validating new software vendors can be a daunting yet critically important task. You wouldn’t want to put the entire budget at risk, would you? So, take it seriously and invest your time and effort for checking as much as you can about a vendor to make sure it’s a professional team.

See soon: Consider a software vendor? 7 things to check first

However, the quickest and most practical way to validate your vendor is to test his ability to deliver in real work. Within the trial, make sure all promises are fulfilled. And don't be afraid to ask the vendor questions or address with upcoming issues if any and see how your vendor resolves them.

We offer a 3-week trial period and this time is usually more than enough for the client to see if he’s happy with the assigned resource.

Track and measure the progress

Make sure the development process sticks to the agreed timeline. Developers should take part in estimation and discuss with you the needed time and scope of work for a particular iteration. If a developer misses the initially discussed timeline without adequate reason – he underperforms.

If development follows the plan or your developer tells you in advance that there are alterations in the timeline for some reasons, it’s a productive and professional employee. If you start to notice that productivity has decreased, you either discuss possible reasons or may request to change the resource

cost overrun track progress

Perform proper product testing

Timely and thorough quality assurance is what will help you to avoid critical bugs that lag the product release. You know how users and clients are fastidious today – once they got disappointed with the quality of a product you may lose their trust forever. So before rolling something out even if it’s an MVP, you need to make sure that every feature works the way it should.

Perform testing in parallel with the development to eliminate all critical bugs at the early stages. It’s also useful to have QA resources close to your development team. The costs for proper application testing pays off in user satisfaction, your brand reputation and the development process that follows the plan.

Effectively Manage Communication

According to statistics, one-third of the time poor communication is the reason why most projects fail. But it’s not only the clearly communicated requirements and expectations that communication implies.

The more you communicate all details, a higher motivation and productivity your team shows. If a developer reports an issue or waiting for your confirmation to take up the next task for a day, it’s easy to fall behind the schedule. The lost time means lost money. Therefore, you need to not only have proper communication tools that streamline the workflow but also use them along with the rest of the team.

See soon: 5 Tools That Your Remote Team Can Use to Streamline Communication

IT budget planning and management are not always simple tasks for a business owner. Its efficiency largely depends on the properly organized processes, the competence of the project team and the maturity or software IT infrastructure.

If you have all the components in place, your project will be delivered on time and within the budget. To secure your project budget, you need a professional team and quality advice. Get in touch if you need help with planning or estimating your software budget.

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