No one said IT budgeting was easy. It seems like you just finished last year’s budget and now it is time to start all over again. Not only is this task difficult, it is made worse by the fact that most organizations do it in an overly simplistic way. This often results in up to 40% of the projects grossly missing the mark, which wreaks havoc on the enterprise resource plans and results in disappointed business stakeholders.
A large part of successful IT budget planning is identifying grossly unrealistic projects – the ones that are likely to fail and the ones that are ultra conservative and wasteful. Our solution is to perform a basic feasibility assessment on each project as it enters the budgeting process. Ultimately, we will want to make adjustments to these projects, making them more reasonable and improving the overall project performance.
So how is this feasibility assessment done? Start by creating a set of historical trend lines for schedule, effort, and staffing versus size of functionality produced. The trend lines provide a basis for the average capability that could be expected. It also gives us a measure of the typical variability that can be expected. Next, position the initial budget requests against the trend lines. The intention is to identify whether or not the projects are outside of the norm and typical variation; i.e., projects that are high risk or poor value. Figures 1 through 3 highlight some of the techniques used to identify those types of projects.