Published here January 2021


Musings Index

Managing with No Assigned Project Budget

Some time ago, a leader of a project management course introduced himself to me by stating that he makes his classes access this web site to find and recommend articles to the class as one of their early assignments. Then, in a capstone PM class, students are expected to find and run their own projects and so "learn by doing".

As he says: "The challenge is that many projects do not have a $ spend (think internal company project or a volunteer organization like creating a website for a church), or some, like a renovation project, has $ spend that is only on one branch of their WBS, and the total $ spent in no way reflects all of the effort that goes into it, including the planning/procurement processes."

He continues: "A couple of my students were very 'by the book' and insisted that if it isn't in the PMBOK [Guide] then it must be wrong." He adds that: "From experience I have instructed or strongly advised students to use effort hours if needed when budgets are seemingly $0, as managing to a budget baseline is one of the most powerful PM tools. Is there any help you can give me here?"

This is indeed a very tantalizing question. It flows from the misunderstanding and assumption that just because no budget is stated, then it must be "zero". So I replied as follows:


The reality of life is that you cannot do anything without expending effort or energy, whether money is actually tied to it or not. At the same time, there is no such thing as a "Zero Project Budget". In practice, a budget for the work may not have been articulated or announced, but that doesn't mean that a "pot of money" doesn't exist somewhere for the cost of the intended work. Someone always has to be "footing the bill" from somewhere.

Let us suppose that you have been invited (or told) to undertake a project, but there has been no mention of (tracking to) a budget for the project, or no request for you to estimate one for management approval. You can always ask if "budget" is a concern? Failing that, there is nothing to stop you creating and tracking to your own budget.

However, to be frank, that is not much fun if no one is interested. Or it is not possible if you do not have access to individual records of hours, or dollars, spent on actual project activities. Frankly, the accounting department is typically not interested in the details of time spent on a lot of little projects - they have enough work to do as it is, especially at month end and even more so at year end. Accounting is simply not designed for project cost tracking, and in any case for purposes of project cost tracking general accounting is not sufficiently timely.

However, if you are really keen and at a very minimum, you should at least be able to keep track of attendance on your project(s) to the nearest (say) half day, and see how that compares with your original personal forecast.

In other cases, there may be misleading circumstance in which you are working on a so-called project with an "in-house" team and are told there is "zero budget". That does not refer to "using people", but refers to making purchases. In fact what is happening is that your team is spending "work hours" that are actually charged to one of the organization's overhead salary employment accounts. In this case, time allocations to individual projects are not recognized, but money is being spent on each such project nonetheless.

So when the organization tells you there is "Zero Budget!" chances are that simply means you are prohibited from going out to a store and buying something and then trying to charge it to the organization. If whatever is needed for the project is essential, then the workaround, that of course, is to find someone in the organization who does have purchasing authority and persuade them to make the purchase. Some times you will find that your official purchaser will manage to find a substitute item without having to raise a purchase order in the first place.

If that fails, and your request is still essential, then formally report it to your sponsor as a "supply deficiency", and that your project will fall short accordingly if the situation is not corrected.

That's the simple case. On occasion, you may be a manager in charge of several concurrent projects and are expected to reconcile total man-hours with the department's budget. It may be even more complex if the work also involves those working for other departments. If that is the case, then you are really doing a departmental manager's job of administration according to some organizational standards. In my opinion spreading the hours or money around is not project management, which is why you will not find this discussed in PMI's Project Management Guide.

Finally, if you should really be told there is no support or money for project costs of any kind other than yourself, then you are on your own to do whatever is necessary. In these circumstances, I regret to say there is no way out - you are simply not doing the comprehensive job of being a project manager. But if your goal is to be a "real" project manager, and you don't like what you are offered, then in our democracy you are always free to say "No thank you!", and find work elsewhere.

Indeed, there are always good opportunities for good project managers.

You will find a lot of discussion about Project Cost Management on my web site. In particular, go to the Site Map page and click on "Project Cost Management". From there, take a look at some of the "Issacons" (blue dots). You will find them very instructive. However, in particular, read my short paper listed as "financial a/c vs. pm cost control. You should find that interesting too.

One final thought, not everything that you have to do on a project is in the PMBOK and, by the same token, you don't have to do everything that is in the PMBOK on every project.

Hope that helps,

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