One drives the other. Or the 2nd drives the 1st. Or vice versa. Which should come first, the schedule or the budget? It’s a tough call – each plays a huge role in the other, right? And it depends on who is pricing the project, I suppose.
I’m not sure how your organization is run, but most organizations that I’ve been associated with have had a sales or account manager aspect that worked with the outside project client to establish the services to be rendered, came up with a draft schedule and a price, and then handed it all to me when the deal was closed. What I ended up with was a shell of a project schedule that showed we basically understood what needed to be done, and then a price to match it to. That’s not the best way to do it, that’s why the project manager sometimes gets a frustrated customer with expectations that don’t match the price or the schedule and that’s why a project manager should always be involved at the beginning of customer engagement – not just once it becomes a project.
So let’s consider the other scenario – the scenario where a project manager engages a customer (internal or external) and initiates the entire engagement with them. In this type of situation, still many project managers are inclined to start with the budget first, but that can be a dangerous way to start the planning and estimating portion of the project. Why? Because time is money and everything that goes into the project schedule – every single task, every expensive resource assignment, every deliverable review process and signoff…everything – will cost money and that will affect the budget. That’s why I say, schedule first, then budget.
Man cannot survive on budget alone
Based on my experience on projects and observing my colleagues over the years, the best project managers establish the schedule before finalizing the budget, even if senior management is screaming for the money portion. There may be a need to utilize mind mapping software to plan out how the project is going to get from Point A to Point B and that’s all part of the planning process as well – but it still happens before any significant detail can go into the project budget. It’s truly best to try to determine how much time is really required to complete a project before you let your money – or lack thereof - get in the way of your detailed project planning and real-world thinking.
The experienced project manager can look at a task, understand what’s required, and provide a reasonably realistic guesstimate of the time requirement as if pulling the number from the air. Plus, you have a team of seasoned experts to go over the tasks and either provide very serious estimates or confirm your initial estimates. Be wary of those stakeholders and senior managers who may try to pressure you and your team into planning some unrealistic dates and timeframes or shortened task efforts that are not reflective of reality for the complexity of your particular project. It won’t work and in the end it will still be you explaining why your project is over budget and over time.
A good schedule proves the project is viable2
Building a schedule also verifies the project’s viability. If, when assembling the schedule, time is not on your side, you may need to work out an extension with management or an increase in resources. Working on the schedule might also reveal missing tasks – which in turn affect the budget. And if you were handed a project with the price already set but the project schedule in rough draft mode, then once you’ve mapped out the real project timeline, you can begin to justify the change orders that will likely be necessary to really get the work done. Remember - it’s all interrelated, so expect to adjust budget as you adapt the schedule.
We are usually pressured from above to think $$ first. We often are given a price that we have to back a schedule or task into. That’s crazy from a logic perspective because your schedule needs to be based on reality, not what an exec says it has to cost. But the real world isn’t always fair, so as PMs' we must submit to this rationale at times, right? Usually, after a few iterations of not pleasing the upper management, I just started asking for the number it has to be and then give it to them. It’s a bad way to manage. The best scenario is always to work the real timeframes into the schedule, then put together a budget that really works for the project.