In agile project management, budget overruns can be a severe problem as not all companies have an unlimited budget. This is why stakeholders often look at the bottom line to know if their project was a success or a failure.
Changes are inevitable when it comes to software development. Much of these changes could throw your initial budget off track, making your project vulnerable to lots of risks.
To offset these risks, agile teams need to do two things:
- create processes to make the budget more flexible when swapping elements or features; and
- calculate a budget that covers all key elements that the stakeholders need
Here are tips to help agile project management teams create well-defined results while staying on budget.
Determine the actual wants and needs of stakeholders.
For starters, identify project requirements early in the process. Then, confirm and document these requirements with the stakeholders involved. You have to ensure that all concerned parties are aware of them. It’s a crucial step that teams need to complete before setting a budget.
Several managers make the mistake of initiating projects around wants. This immediately puts projects at risk of overruns that could have disappointing results later on.
Save funds for unexpected problems.
When creating a budget, you also need to factor in things beyond your control. Some examples include labor, resources, fluctuating prices of supplies, shortage of products or services, exchange rates, and a lot more.
Set up a backup plan and ensure vendors can deliver on their promises. Gathering input from other stakeholders and vetting suppliers is a good start. It can help you set up a more realistic budget, even if unforeseen circumstances occur.
Keep all team members accountable.
A well-informed agile team is an empowered team. Keep everyone informed about the budget status, so they are more watchful of their project charges. They are also far less likely to charge extra “gray area” hours. These cover hours that team members know they rendered but were not clear about what they were specifically doing.
Create related KPIs.
You can manage a project budget effectively better with the help of key performance indicators (KPIs). Agile teams use KPIs to determine how much time an individual spends on a project. They also let you know the extent to which the actual budget differs from the planned one, and so on.
Manage feature prioritization using a collaborative solution.
Teams need a collaborative and transparent environment with stakeholders during the development process. Take note that stakeholders should see the project progression clearly. You have to provide them control when swapping in and out features from sprints. This results in a high-quality project without going over budget.
Related Content: 5 Ways Agile Methodology Can Improve Your Team's Overall Performance
Agile Project Management Success on a Budget
Your budget should be a living part of your agile project management efforts. It’s something you review with your team and other stakeholders on a regular basis. Project managers should make budget management their primary area of focus for a higher chance of success.
Follow the tips above for a more accurate, flexible budget as you turn the Agile Manifesto essence into action.