Goal: Optimize the project plan to meet the budget

After you build your project plan, review 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.). If the planned costs 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 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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Optimize the project plan to meet the budget

number 1 View the project costs     You can view the totals, the costs over time, or the costs in a chart. Doing 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 the 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:

  • Enter costs for resources to adjust the regular and overtime rates, per-use costs, fixed costs, or cost resources.
  • Remove or replace a resource assignment to cut costs by replacing a more expensive resource (a person, equipment, material, or cost) with a less expensive one, or to reduce the number of comparable resources on a single task. Sometimes, using less expensive resources results in corresponding trade-offs of decreased scope, longer schedule, or lower quality. Still, this is one of the most realistic strategies for optimizing the costs. If you remove a more expensive resource from the assignment (assignment: A specific resource that is assigned to a particular task.), this resource is free to work on other tasks or projects that are more cost-effective.
  • Reassign the remaining work on a task to control which of several resources does what portion of the remaining work, or to specify exactly when the remaining work will be done.

Do all of the following that apply:

You might need to reduce the scope to meet the finish date or the budget. Or, after building your project plan, you might find that you have more time or money than you 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 the product deliverables     If you reduce the scope by cutting product deliverables, you are actually providing less to the customers or stakeholders than you planned. For example, suppose you are working on a project to develop a new product. To meet the finish date or budget, you decide to cut product features 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 the project scope     You may be able to provide the same product deliverables by changing the way that you produce them.

For example, on the project to develop a new product, you decide to remove a market research task, and you also reduce the duration of the 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 the available time or budget     If you find that you have more time or money than you 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. Or, after building your project plan, you might find that you have more time or money than you 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 the quality of the project and the resulting product.
  • Change a duration to reduce the amount of time that is 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 that is assigned to the 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 that are 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 trade-offs 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 the quality goals for the project.

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After you build your plan and Microsoft Office Project 2007 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 available. You can choose to end the project ahead of schedule or under budget. Or you can increase the scope 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 the cost changes     Log information about the changes that 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     Verify that you did indeed lower the costs, and that the finish date, workload, and other projects are not adversely affected by these changes.

Click all of the following that apply:

Number 6 Communicate the assignment changes to the resources     If you assigned new tasks to the resources or changed or removed any existing assignments, you need to publish these changes for the affected resources.

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Applies to:
Project 2007