IT BUDGET PROJECT ANALYSIS

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BACKGROUND

Any project put together boils down to money. With more capital, a massive project can be completed in a week or month. However, this is not often the case (Dinsmore & Cabanis-Brewin, 2011). As the case with the NEO project, every other project faces the trade-off between time, scope and resources. At a post-mortem, these three elements combined further help explain why a particular project dwindled and further give insights on what should have been done. It is entirely impossible to derive a budget without harmonising its scope, time and resources available, why? According to Young (2013), project managers have to breakdown project into activities which calls for prior understanding the scope. Next, costs/resources are associated with activities and, more importantly, activities have a duration, it becomes possible to compute the amount of resources likely to be consumed during the course of a project. Putting all this concept together yields a project budget timeline. In evaluating dynamics that led to the failure of the NEO project, majorly with respect to costs. This paper details what went amiss and recommends solutions to the same.

Peter Drucker, one of the greatest individuals when it comes to the art of planning mentioned, spend 80 per cent of the time planning and only 20 per cent executing. Similarly, allocating enough resources in planning the NEO project would have been a worthwhile course. With approximately $3800 being allocated for planning and only a $720 baseline, it proves not close to effective planning was achieved. What is more, an analysis of work done and what has already been done proves that, for instance in the executing phase Coding, interface development and development review meeting activities are being executed concurrently exerting pressure on resources.  

Judging from the derived Gantt, the technique employed in preparing the budget is bottom up. Major deliverable modules are clearly defined, however, moving down the hierarchy a lot has been left out. Clearly depicting the fact that very little understanding or concentration was focused on activities at the bottom level (Dinsmore & Cabanis-Brewin, 2011).  More so, the execution task is huge detailing every other component that could otherwise stand on their own. This grouping together of modules blurs the object oriented approach that successful projects assumes and could prove catastrophic when assigning resources to tasks (Kuehn, 2011). In his book, Kuehn (2011) argues, a huge module gives a false impression of concurrently multiple tasks at one go only ending up with deficient results due to poor supervision, low team cohesion, constant reworks, time wastage in the case of work dependencies and so much more.

Since no activity ran out of budget, the project manager can be said to have done good in estimating costs. However, this is not likely to have helped much. The total cost variance is positive and proving an $8000 under budget. Reading between lines, the kick off meeting was a $120 over budget. It had not been allocated any resources and ultimately consumed $120. With the assumption that the project is neglected and or most of the activities were actually executed. Most baseline costs are equal to the planned costs showing the project was operating at a tipping point. In most cases, and as depicted by well planned projects, the planned costs are usually slightly higher than actual costs (Dinsmore & Cabanis-Brewin, 2011). As in the figure in the budget could cater for all activities and a small residual amount still remains. This budget further suggests as resources enlisted in the budget got depleted the project team resorted to means such as delivering inferior product so as to stay within the budget space (Young, 2013).

The project at large violates use of contingency measures in case a budget runs overboard. A contingency budget needs to be clearly plan and allocated almost a quarter of resources allocated to the main activity or module. Moreover, a risk analysis should be included to evaluate whether the activity might need more time. More time calls for more resources that in turn escalate project budget (Kuehn, 2011). During the planning phase the project manager allocated $8000 out of which only $2200 was consumed. These figures show, either more than thrice the activity amount was set aside for a contingency budget, or there were serious problems summing up budget totals.

RECOMMENDATIONS

 To make a success out of this budget, a better budgeting technique and tool is vital. Activity based budgeting has proved a better technique because it breaks down all functionalities into independent activities that are tackled exclusively (Dinsmore & Cabanis-Brewin, 2011). At the planning face, for example, it could have been further broken into activities such as: project feasibility study, project plan creation, resource strategy documentation, financial plan writing, agreeing on a test and quality plan, documenting a risk plan, and creating an acceptance criteria. With all this activities separated more light is shade in to the project. Moreover, it gets easier to tackle risks, vulnerabilities and threats that are likely to face a project using this paradigm (Young, 2013). The author further concurs, it is impossible to forecast at 100% effectiveness, therefore, implementing a flexible plan that gives resource allowance is really important.   

References

Dinsmore, P., & Cabanis-Brewin, J. (2011). The AMA handbook of project management. New York: American Management Association.

Kuehn, U. (2011). Integrated cost and schedule control in project management. Vienna, VA: Management Concepts.

Young, T. (2013). Successful project management. Philadelphia, Pa.: Kogan Page Ltd.