Goal: Optimize the project plan to meet the budget

Applies to
Microsoft Office Project 2003
Microsoft Office Project Server 2003
Microsoft Project 2000 and 2002

After you build your project plan, review the planned costs. If the planned costs (planned costs: The latest cost of tasks, resources, assignments, and the entire project, which Project displays in the Cost field as cost or total cost.) do not meet your budget (budget: The estimated cost of a project that you establish in Project with your baseline plan.), you can optimize the plan to stay within your budget. As you change the budget, remember that you are likely to change the finish date (finish date: The date that a task is scheduled to be completed. This date is based on the task's start date, duration, calendars, predecessor dates, task dependencies, and constraints.) or scope (scope: The combination of all project goals and tasks, and the work required to accomplish them.) of your project. This relationship between time, scope, and budget is often referred to as 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.).

 Tip   This article is part of a series of articles 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. The project life cycle is outlined in The Project Map, where you can find a link to an article about each project management goal. Most of the articles include links to supporting information or procedures that you perform in Project or Project Server. These "goal" articles were designed to help you not only use Project but also better understand project management.

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See all goals on the Project Map

Paper money

number 1 View cost totals     You can view totals, costs over time, or costs in a chart. This can help you to see whether you are meeting your targeted budget and whether you need to adjust your costs.

Number 2 Optimize the plan to decrease costs     If you determine that the planned costs do not meet your targeted budget, you can use several strategies to cut costs.

Click all of the following that apply:

Click all of the following that apply:

Click all of the following that apply:

You might need to reduce the scope (scope: The combination of all project goals and tasks, and the work required to accomplish them.) to meet the finish date or the budget (budget: The estimated cost of a project that you establish in Project with your baseline plan.). Or, after building your project plan, you might find that you have more time or money than expected. In either case, you can change the scope of the project. You can choose between changing the 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.) of the product or changing the scope of the project.

  • Cut product deliverables     If you reduce the scope by cutting the product deliverables, you are actually providing less to the customers or stakeholders than you planned. For example, suppose you are working on a new product development project. To meet the finish date or budget, you decide to cut features from the product that were originally planned and approved by the customers. In this case, you probably need to obtain customer approval, and you may need to adjust the contract, if applicable.
  • Cut project scope      You may be able to provide the same product deliverables by changing the way you produce them. For example, on the new product development project, you decide to remove a market research task, and you also reduce the duration of product testing in order to meet the finish date or budget. In this case, the end product and deliverables don't change. However, you changed the method for providing this end product by reducing the scope of the project.
  • Use available time or budget     If you find that you have more time or money than expected, you can add deliverables. Or you can increase the scope of the project itself, which often results in a higher quality product.
  • Consider the impact of the scope on quality     You might need to reduce the scope to meet the finish date or the budget (budget: The estimated cost of a project that you establish in Project with your baseline plan.). Or, after building your project plan, you might find that you have more time or money than expected. In either case, you can change the scope of the project. Consider that quality and scope are closely related. If you cut the scope, you might have to accept a reduced level of quality. If you increase the scope, you probably will increase quality in the project and the resulting product.
  • Change a duration by reducing the amount of time planned for tasks. Make sure that the reduced duration still allows the work to be completed. Also be sure to adjust the corresponding amount of work assigned to resources.
  • Remove a task if it is not absolutely necessary. But be aware that removing tasks can decrease the quality of the overall project implementation. Tasks that must be done should still be reflected in the plan, and only those tasks considered optional should be removed.
  • Replace a resource assignment by replacing a more expensive resource (a person, equipment, or materials) with a less expensive one. Sometimes using less expensive resources results in corresponding tradeoffs of decreased scope, longer schedule, or decreased quality. Still, this is one of the most realistic strategies for optimizing costs.

Number 3 Adjust the plan to take advantage of additional budget     After you build your plan, you might find that you have more budget available. You can choose to bring the project in under budget. Or you can increase the scope and quality goals for the project.

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After you build your plan and Project calculates 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.) and cost (cost: The total scheduled cost for a task, resource, or assignment, or for an entire project. This is sometimes referred to as the current cost. In Project, baseline costs are usually referred to as "budget.") for the project, you might find that you have more time or an increased budget (budget: The estimated cost of a project that you establish in Project with your baseline plan.) available. You can choose to end the project ahead of schedule or under budget. Or, you can increase the scope (scope: The combination of all project goals and tasks, and the work required to accomplish them.) and add quality (quality: The degree of excellence, or the desired standards, in a product, process, or project.) to the project.

Number 4 Enter a note about cost changes     Log information about changes you made to meet the budget. Such notes can be helpful when you are tracking actual progress, closing the project, or collecting data for the next project.

Number 5 Evaluate the results of cost optimization     Check to ensure that you did indeed lower costs, and that the finish date, workload, and other projects were not adversely affected by these changes.

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Number 6 Communicate assignment changes to resources     If you assigned new tasks to resources or changed or removed existing assignments, you need to communicate these changes to the affected resources, either electronically or by printing assignment reports.