I think when you exceed the budget, you need to get creative. You need to find ways to reduce costs an do a cost of goods reduction exercise. I would advise going to your costing department to see where all the expenses are going. Then, you can try to find areas to reduce costs. For example, you might try to source a cheaper component in your product in an effort to reduce costs. 

It is important for project managers to be flexible in order to be able to successfully manage projects. Flexibility allows for project managers to be able to make tough decisions, particularly in regards to budget. Since medical devices are so complex, many changes occur and different risks may arise that were not originally planned for. A project manager can resolve this predicament by understanding the whole scope of the project and seeing how to rearrange the budget of the project. If there is another component of the project that has a surplus of money, that money can be used to address the risk that arose. It is also important that the project manager does not cut any corners in the project, specifically in a medical device project, in order to ensure that the patient is not at risk when using the device. In cases where the spending exceeds the budget, the project manager may have to request an increase in the budget if there is the proper business justification. 

A project manager can address budget concerns by reassessing the risks and identifying where costs can be optimized. From my own experience where we felt that we were allocating too much funds too, we would reevaluate inefficiencies within the system to reduce scrap, since in the case for industry, having a reduced yield rate can dump a lot of the budget into unnecessary scrap costs. We also looked to streamline certain processes that didn't contribute much to the development or function of the device without sacrificing the overall function.

It is crucial that the project manager deals with budget concerns by evaluating where all the costs can be allocated. When exceeding the budget, it is important that the project manager evaluates where the money is being allocated. Every single penny should be used in the right way when it comes to a project of this manner. The people working on the project should be using the money to the fullest extent and not be wasting it on things that are unnecessary. The budget needs to be allocated before the project starts so there is no wasted money.

I’ve spoken at length about this in another thread, but I was tasked with creating a working prototype for a novel concept in my undergraduate capstone class. Our team settled on creating a bottle that could hold half a gallon of water, but also fit within small cupholders (i.e., in cars).

During our initial planning phase, we discussed the ideas we wanted to integrate into our design. When we agreed on how to move forward, we calculated the rough estimate for our budget. This was chiefly manufacturing expenses, including all of the attachments to assemble the bottle prototypes. Our budget initially assumed we would only need standard Fused Filament Fabrication 3D printers using PLA filament. 

The attachments used simple “bayonet” fasteners that we figured would be feasible on an FFF printer, but the result was a poorly adhered and brittle version of that design. This is when we considered the more sophisticated SLA printer, which uses a laser to solidify resin, resulting in more detailed finishes. The resin, however, was much more expensive than PLA ($50-$200/L vs $20-$50/kg). Thus, our budget was at risk of a cost overrun. We decided that we would only print the parts with the most attachments on the SLA printer and simpler parts on the FFF printer. In the end, we managed to stay within our budget, managing our variance through selective manufacturing without having to redesign our final prototype.

The lesson we learned → review your schedule, budget, scope, and resources. Doing so will give you and your team a good idea of what state you are in and allow you to make timely economic executive decisions. While we were able to successfully maintain our financial goals with our original design and resources, sometimes technology can fail and reveal technical limitations. Thus, we may need to modify technical requirements or designs to meet said planned & executed goals.

If financial support is hurt during the execution of the project due to unforeseen circumstances, and the cost is far too great, it is often seen in some professional settings, like large corporations, to simply drop the project and invest in other, safer projects. In smaller companies, such pivots are hard, and so it is likely that they will chip away at the areas of the project that are increasing the expenses. They will aim to preserve what is required to meet customer needs, and any embellishments, such as aesthetics, speed, etc., will be cut. A similar situation arose in my capstone project, but not in money exactly, but time. Due to the time it took to order a key component, we decided to drop the more aesthetic component we were hoping to add to reduce the size and clutter of the product. Although it wasn't the outcome we wanted, we were forced to settle, or else the project wouldn't be completed on time. In such cases, it is important that the company reaches out to stakeholders to communicate the issue and all affected departments. It is unfortunate for such situations to occur, but it doesn't have to mean the end of the project. That said, is a saying a financially taxing project worth it in your opinion? 

During the planning phase, a healthy amount of cushioning should be added to the project budget, however, things never go exactly as planned. It is important to be able to understand that sometimes you will need to go over budget, especially when it comes to safety, regulations, and standards for a product. In these cases, it will need to be understood that the extra budget is integral to the success of the product. 

@mmd55 We had a very similar strategy to your teams, where we tried to minimize costs wherever possible to ensure that later oversights would not surpass the allotted budget. However, there were times that we did not go with the cheapest option because we knew that doing so may raise problems later on, which may cause us to exceed the budget by an even larger amount. Our strategy was to maximize ROI, ensuring that we stayed within the budget but also maintained quality.

Exceeding the budget in a project specifically in the medical industry is not an uncommon occurrence. For this reason, this is why it is integral to keep a very focused vision on what you want out of the project to get a more clear understanding on what the project is meant to be. Exceeding the budget can be seen as a problem but it can also be seen as a wake up call for the project team to focus on what truly needs to be done about the product. It can also be a more direct way to discuss next steps with the project funders and the stakeholders because of much can stand to get impacted if the budget was changed ever so much. 

While, I have never been in a budget meeting before. I assume the higher ups decide what is the worth of this project to their portfolio and how much shareholder will this project give them. An example is if a medical device company is deciding to do a second generation of their own device this means their current device is doing good in the market and the second generation will give them better holdings on the market. But, it is dependent on time and costs, will the end of this device make profit? The company has to understand the risks that comes with launching a new product and must mitigate all risks.