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Definitions of terms:
1. Budget overrun
A budget overrun happens when the cost of a project goes over the amount that was previously estimated to be required. The overruns have become a primary concern in government spending both in the US and throughout the rest of the world. It does not necessarily mean that a contractor exceeds his cost proposal being contracts are not necessarily at a fixed price and some contracts have escalation provisions, or are cost-plus contracts that accommodate possible project unknowns (Matty & Nightingale, 2011).
2. Dilapidated Infrastructure
Dilapidated infrastructure occurs when a project is done poorly or in unfair conditions and below standards with numerous ongoing issues at the close of their services life. A big share of the system shows major deterioration and aptitudes are of significant concerning with the strong risk of failure. The ultimate cost of dilapidating infrastructure condition is significantly more over time than the cost to maintain the same infrastructure in good condition(2015).
3. Employee unrest
Employee unrest involves grievances or a feeling of discontent or dissatisfaction or distress or suffering among workers. When an employee feels that injustice has been done to them it becomes a grievance. The unrest can cause workers not to meet the given production targets. The entire system can be affected when negotiations fail to yield any results (Halczman, 2017).
Five ways to fix budget overruns
1. Guaranteeing of good preparedness of projects
As a manager, one is required to approve a budget that is realistic depending on the project cost. Adequate research should be launched before approving the exact budget and what is should look like while getting an essence of the proposed projects. The manager should prepare the team or the employees for best result and retain a clear line of communication with all the stakeholders. By maintaining team communication related to the budget status, it is likely they will be more aggressive to work hence keenly keeping eye on their work and ensure no waste occurs. Through effective communication either to workers or shareholders can help to reduce the delays by avoiding working on wrong things(Westland, 2011).
2. Stick to the scope budget
Scope creep is one of the major effects of budgets overrun. Allowing major changes to creep in is a sure way to the management overrunning the budget quickly. As a manager, it is necessary to set some firm parameters or necessary changes and ensure they are followed. The manager needs to allocate one person to act as a financial guard if for instance each change proposed is analyzed for true need and affordability. Even though some of the changes might be necessary, too many changes might put the project in danger in terms of cost. As a manager, one must prudently manage scope making change orders for work that is not enclosed in the initial requirement blueprint
3. Utilization of quality management software
This involves implementation of a system that can be dedicated to a project to get continuous enhancement and improve the organizational competence. The core function of the systems is to properly and exactly define the procedures and will cause the creation of quality results and services. Quality is measured continuously due to the suitable measures that ensure instant corrective actions on the incidence of defects. Maintaining good oversight of all project details is one of the best ways to reduce the chance of running over the set budget.
4. Integrate cost management with cost control systems
In cases where a project faces budget overrun it is most important to set up cost switch systems that will control over the budget actuals, subcontractor’s contracts, alteration orders, cash flow and counting the capacity to support purchase demands online. As a manager, one must be able to work on simultaneous information and switch key needles such as profit, finishing point percentage. With such a system, data is collected in real-time of which it relates to time, as well as specific project costs that will facilitate the managers ability to examine troubled areas immediately and act accordingly(Westland, 2011).
5. Track employee workforce
Although at times employees may not understand why they need to keep track of their time. Most employees might earn a set salary, but identifying how much time is devoted to each portion of the project is an effective method that help contain costs and know where to concentrate efforts when certain areas fall behind the preset schedule. An employee time tracking software makes project management frugal and more operational, particularly when the institution can only give a limited number of workers to work on a project. This facilitates the creation of work schedule facilitating workforce to handle the entire task appropriately (Halczman, 2017).
As a city manager, I would recommend that all the stakeholders should be included in the quality system, and appropriate preparation be agreed to enrich the abilities. A useful system must be a tactical tool which is projected to simplify success of the city government. Assessment of the effectiveness, competence, and capacity of a quality management system is vital(Edwards, Kaeding, & Institute, 2015). On a real sense, despite proper planning, all the efforts of the management, sometimes establishments get in the project cost overrun. As a manger needs to run from previous errors and strive for excellence in efforts to minimize the risk of budget overrun in the future (Ingason, 2015).
- Edwards, C., Kaeding, N., & Institute, C. (2015). Federal Government Cost Overruns. Tax & Budget Bulletin.
- Halczman, A. (2017). Quality management system requirements. International Journal of Engineering and Management Sciences. https://doi.org/10.21791/ijems.2017.4.14.
- Ingason, H. T. (2015). Best Project Management Practices in the Implementation of an ISO 9001 Quality Management System. Procedia – Social and Behavioral Sciences. https://doi.org/10.1016/j.sbspro.2015.06.133
- Matty, D. M., & Nightingale, D. (2011). Stakeholder salience influence on bureaucratic program enterprise value creation. Engineering Systems Division.
- Westland, J. (2011). Project Management: 4 Ways to Manage Your Budget.
- (2015). Performance Management: A Guide for City Leaders. International Public Management Review.
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