I am often asked for guidance on costs overruns — and not necessarily at the end of projects.
Often projects heading south are in the middle of their execution phase when the program manager (PM) “does the right thing” and calls it out.
But with customers demanding ever-tighter schedules and an ever-expanding scope, controlling and reducing costs can be a real struggle for a rushed and overwrought PM.
There is a whole industry dedicated to providing advice on cost savings, but the advice is usually targeted at operational department managers or small businesses. Tips can involve outsourcing, insourcing, supplier negotiation, leasing and re-financing and eliminating redundancy (check out these great articles from Harvard Business Review and American Express).
But where should program managers and project managers look for cost savings?
Undoubtedly, as any good program manager will know, there are already policies laid out for corporate and strategic cost savings. It’s likely that the organization will have a proven method and procedure for reducing costs in place. These tactics can be implemented within your program, and one benefit of this approach is that it helps align the program more tightly to the organization’s overall strategic objectives.
But how can we cut costs on day-to-day tactical projects?
Listed below are my 46 favorite ways of reducing costs without sacrificing quality. Let me know what you think.
- Remove non-value-adding activities. Ask, why are we doing this in the first place?
- Consider inspection a cost with no value added. Remember, “right-first-time” should resolve the need for inspections.
- Stop chasing purchase orders. This takes time, and if a supplier is unreliable, the supplier should be changed.
- Cut duplication, e.g. entering two sets of time sheets.
- Reduce overproduction, e.g. doing more than is required.
- Examine paperwork. How much of the bureaucracy is really necessary? Can the program claim a dispensation, for example?
- Watch modifications. Unless paid for, modifications are a cost that will have a direct affect on the bottom line.
- Stop inconsistencies in naming. Do different teams refer to the same artifact using a different word? Resolving this will help lessen confusion.
- Minimize documentation. Will anyone ever read it?
- Spot discrepancies. A discrepancy not spotted now can lead to major cost issues down the track.
- Examine warranties. Is a warranty specified in the contract? Is this an up-sell opportunity?
- Watch for over design. Do we need all these bells and whistles?
- Keep an eye on lead times. Are they really that long? Have lead times been challenged? What else can take place during this period?
- Question supervision. Supervision is a direct cost for zero value add. Do we have the right skillset? Do we have the right people in the right roles? Professionals shouldn’t need supervision.
- Eliminate rework, eliminate costs.
- Stop checking. See 2) Inspection. A check is a cost to the program and to your project.
- Eliminate remediation, eliminate costs.
- Reduce admin tasks. See 6) Paperwork. How much administration can be dispensed with or sourced outside of the direct program/project?
- Stop chasing progress. Are we reporting by exception?
- Cut unnecessary reporting. Who do these reports go to anyway? Are they read?
- Prevent obsolescence. Ask, is our solution current?
- Improve communications. Do people know who to call?
- Speed up the resourcing process. Why the lag between identifying a requirement and fulfilling that requirement?
- Eliminate scrap, eliminate costs.
- Cut back on unnecessary meetings. Is everybody contributing? If people are not contributing, do they need to be there?
- Anticipate complaints. Can we anticipate complaints in our risk and issue workshops?
- Limit testing software. The broader the testing, the higher the costs.
- Limit prototyping. Ask, is it necessary? Is a prototype just a Production BETA version?
- Uncover the reason for bugs in software. Was it the developer’s lack of skill or experience, poor requirements definition or something else?
- Reduce inaccurate reporting. Do you have personnel that you trust to give bad news as well as good?
- Reduce wrong information. Do you have a team that can “say it straight?”
- Do away with dual-entry systems. Are you double-handling data?
- Stop chasing work. Is your work assignment process functioning correctly? Is everyone 100% utilized?
- Reduce illness/stress. Are staff members excited and motivated about your program? Will a pause now help reduce stress later?
- Make filing easier. Are documents filed logically and with little effort?
- Ensure adequate planning. Has everyone been involved? Have all comments, positive or negative, been considered?
- Halt wrong requirements. Do you have a gated approach to prevent wrong requirements being worked on?
- Limit discussion without purpose. Do we have meetings for meeting’s sake?
- Stop searching for data. Where is the repository? Where is the data dictionary?
- Stop covering for other people. Is the team functioning well?
- Own problems. Do people report bad news as well as good?
- Cut back on unnecessary levels of authorization. Are you being restricted in your ability to lead the program or project?
- Ensure the right skillsets. Do you know the skillsets required? If not, who does?
- Investigate credit notes/ budget write backs. How did these happen? Are there alternatives to writing back?
- Evaluate budgeting. Are budgets pragmatic, targeted and do they add value?
- Make your own personal non-value-add list. Keep this as a PM checklist and refer to it regularly. What other costs can be saved?
I’d love to hear your thoughts on my list and the tasks you would add. Feel free to share in the comments below.