Traditional cost optimization still begins with the current budget and asks how much of it can be removed. Hiring is frozen, discretionary lines are reduced, and every function absorbs a similar percentage. The result looks decisive in the first reporting period, but is rarely durable. The organization continues to perform the same activities, through the same structure, under the same governance. When pressure eases, cost creep restores much of what was taken out. Complexity, duplicated work, a
budgeting (5)
Traditional Cost Optimization treats the inherited budget as the working map of the enterprise. Controllers apply across-the-board reductions, pause recruitment, and restrict discretionary spend. The exercise is familiar, measurable, and incomplete. It lowers a number without changing the work that produced the number. Within a cycle or two, cost creep restores much of the baseline. Complexity, overlapping services, and misaligned investment continue to build in the parts of the organization the
|
Here we are. February 2018. For many, February is a trying month. How well are those New Year’s resolutions holding up? Have the early-morning January gym visits started to fade? Are salads getting old? Personal goals aside, here’s one thing we hope won’t decline: the excitement over your freshly finished 2018 budget.
The new year tends to bring about an intense wave of optimism for what we can accomplish in the next 12 months. Too often, however, this optimism gets stomped on by the surprises of
Here’s a common Project Manager story:
You, the Project Manager is creating the budget for your project. Your high level WBS (Work Breakdown Structure) is ready and you have the high level estimates needed for a budget baseline.
As a smart Project Manager, you will add a contingency (20-25%, which is common practice nowadays) to account for unknown events that may add to your cost. In that way, you save your project from going over budget. So far so good.
It seems like you have done your due dili
