Goal: Adjust costs to keep the project on budget

Assume you discovered a problem with your project's budget. Now what? Once you identify a budget problem, you can take corrective action by using Microsoft Office Project 2007 to fix the problem and to re-optimize the schedule for cost.

 Tip   This article is part of a series of articles within the Project Map that describe a broad set of project management activities. We call these activities "goals" because they are organized around the project management life cycle: Build a plan, track and manage a project, and close a project.

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number 1 Determine how quality affects costs     Consider your options when you have to reduce costs.

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When costs accumulate beyond the range of your budget (budget: The estimated cost of a project that you establish in Project with your baseline plan.), you should decide what action to take to keep costs under control, keeping in mind the constraints of the project triangle (project triangle: The interrelationship of time, money, and scope. If you adjust any one of these elements, the other two are affected. For example, if you adjust the project plan to shorten the schedule, you might increase costs and decrease scope.). The schedule (schedule: The timing and sequence of tasks within a project. A schedule consists mainly of tasks, task dependencies, durations, constraints, and time-oriented project information.) changes that you make to stay within budget depend on what's most important to you.

You can sacrifice quality (quality: The degree of excellence, or the desired standards, in a product, process, or project.) by using less expensive resources (resources: The people, equipment, and material that are used to complete tasks in a project.), such as people with less experience or materials of a lower grade, and you can change the scope (scope: The combination of all project goals and tasks, and the work required to accomplish them.) and simply remove some of the tasks (task: An activity that has a beginning and an end. Project plans are made up of tasks.) that you meant to accomplish.

Or it may be better to spend more on high-quality resources if those resources help you complete the task or project in significantly less time, which may result in lower costs.

Whatever actions you take to reduce costs, make sure that you consider their effects on other tasks, resources, and the project's deliverables (deliverable: A tangible and measurable result, outcome, or item that must be produced to complete a project or part of a project. Typically, the project team and project stakeholders agree on project deliverables before the project begins.). You may also need to renegotiate quality with customers and stakeholders (stakeholders: Individuals and organizations that are actively involved in the project or whose interests may be affected by the project.).

Number 2 Optimize the plan to stay within budget    

Click all of the following that apply:

  • Remove or replace a resource assignment to eliminate the cost of a specific resource, or to replace a specific resource with one who requires less money or gets the work done faster. Replacing a resource might reduce the amount of work required to complete the task.
  • Reduce resource rates and fixed task costs to optimize costs within your project. You can reduce overall resource costs by applying a different rate that a person may charge for different types of work or by using a different grade of material. Reducing fixed task costs, such as travel costs or printing fees, can lower or eliminate expenditures that aren't crucial to completing a task.
  • Change a task duration if you want to cut the scope for a particular task.

Number 3 Add notes about cost adjustments     You can keep a record of the decisions you made to keep the plan within budget.

Number 4 Examine the effects of cost optimization     You might want to examine the impact of changes you made on resources, dates, costs, and other projects.

Click all of the following that apply:

Number 5 Save a budget with cost adjustments     You may need to add the adjustments that you made to your baseline plan.

Number 6 Communicate the plan to the team     You can communicate the changes you made to the plan electronically or in print.

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Applies to:
Project 2007