8 Tips for Architects to Prevent Over-Budget Projects

I was recently asked by another architect how my firm was so financially successful: “What is your secret for keeping projects within budget, and what do you do when there are cost overruns?” I thought about this for a second and replied 

“There are really only two things: proper planning combined with regular monitoring.” 

My friend didn’t seem to find that answer satisfactory. So, I realized I need to take her step by step through this. Like a parent teaching a child how to prepare their first batch of pancakes:

1. Gather your ingredients (flour, sugar, baking powder, salt, milk, eggs, and butter.

2. Mix the dry ingredients in a bowl

3. Mix the wet ingredients in a different bowl

4. Combine everything (a few lumps are ok)

5. Cook them on a hot griddle

6. Stack ‘em, eat ‘em, and smile!

It takes 6 steps to make pancakes. I’ll give you 8 steps to prevent over-budget projects:

1. PROPER PLANNING
   As we all know, AE projects can be extremely complex and take years of effort. Having a WBS (Work Breakdown Structure), for each project is the magic for completing such daunting tasks. How do you eat an elephant? One bite at a time. Take the beast of a project and cut it up into the tiniest pieces so you can digest it. Having data (see #4 below), will enable you to review past projects in order to determine the actual time and costs incurred to execute projects of similar scope.
   
   As part of the planning, it is critical that you not only budget the time but also understand who will perform the work, what it will cost the firm to do the work, and how much revenue you expect to earn from their work. You must be realistic with the budget and goals, identify potential risks, and ensure you have the appropriate resources available to do the work on schedule.
   
   Having the right technology, like BQE CORE, makes much of this budgeting work effortless.

2. REGULAR BUDGET MONITORING:
   Clearly, the first two steps are the ones I described in my terse response to my architect friend. Once you put in the hard work of creating a detailed budget and schedule, you must continuously track and monitor your progress. The closer to “real-time” your monitoring is, the less risk you will be exposed to, and the ability to address problems has a chance of getting you back on track. Once again, software tools like BQE CORE are key to getting the real-time feedback you need to make this journey successful. Think about the dashboard in your car. This is the technology that gives the driver control over their future. They see the amount of remaining fuel in the tank, they know if the tire pressure is safe, and they use GPS to provide them with turn-by-turn directions to their destination. All this technology reduces their risk and ensures they arrive as planned. That’s the type of information and control BQE CORE provides to your business.

3. EFFECTIVE COMMUNICATION:
   Completing steps 1 and 2 is essential. But if you really want to ensure success, you will need to have regular and clear communication with the project team and stakeholders. By instituting regular communications, everyone is aware of the status, can discuss issues, and appreciate the importance of timely and cost-effective project delivery. The reason I include the project stakeholders is for accountability. By stakeholders, I don’t just mean the owners of your firm. I actually want you to include your clients. There are many benefits to having regular communication with your client about the status of their project, but by sharing your project plan and the timeline. You will see your client bring you loyalty and trust. When you share deviations from the plan, your client can help become part of the solution. This increases their trust in your firm and establishes you as a trusted advisor.

4. USE OF PROJECT MANAGEMENT TOOLS:
   Once again, I return to software. I’m a huge proponent of BQE CORE as it handles so many back and front-office functions for small and mid-sized AE firms. Using modern, cloud-based technology that is built on a platform of APIs (allowing integration with many other tech tools), means your firm’s data is safe and able to deliver real-time business intelligence and automation. If your firm is using spreadsheets to manage 

5. CONTINGENCY FUND:
   When helping prepare construction budgets for our clients, we’re generally very careful about having a contingency fund to handle some unknowns. The same holds true for your own work. No matter how many times you’ve done similar projects, nothing is ever the same. So please, buffer every budget and schedule with a contingency fund. You’re welcome.

6. STAKEHOLDER ALIGNMENT:
   This is especially true when working with a new client. Make sure you truly understand their expectations and have accounted for this in your budget. Don’t assume anything. For many of you, your client may never have worked with an AE professional before, so they really don’t know what to expect or what you really do. Likewise, you really have no idea what is going on with their own expectations unless you sit down and discuss them in detail. Frankly, this work should have been done as you were preparing a fee proposal. Still, revisit it when preparing your budget and WBS..

7. AVOID SCOPE CREEP:
   We have all experienced scope creep. However, most firms do a dismal job of managing it. This one item is what typically leads to cost overruns. Discuss the dangers of scope creep and how to avoid it. Most cost overruns are recognized during a post-mortem. If your team is aware of exactly what is in the contract, what services are included, which aren’t, and the scope of work included in the Basic Services, you will have a better chance at ensuring the inevitable scope creep doesn’t impact the original budget but becomes an additional service.

8. TRAINING AND SKILL DEVELOPMENT:
   This last item is true of every aspect of your firm, not just in project management. Every member of your team needs to understand the importance of executing projects so that they meet the budget and schedule. When all team members understand the strategy, they become active participants in helping to meet or exceed the goal. When they are working blind and untrained, they handicap the firm.

There you have it. Executing successful projects is only ⅓ more difficult than having a child make pancakes! Follow these 8 steps without exception, and it will prove to be the perfect recipe for a financially successful project and firm.