A budget cut will affect the cost estimation of a project because if in development stages of a product the budget is cut the project team has to reanalyze the scope of the project. Project managers will need to remain calm so that the project team does not panic. Then they need to present the project to the business to show how the project fits the business strategy and inform them that the project will be successful after managing the cost. The project manager will find out what the business can afford for the project and communicate with the project sponsor. The project manager will need to review the requirements of the project and prioritize them according to the new budget. Eliminate the requirements which are not a priority and try to come up with more efficient ways to get the outputs that are desired. The project manager will present the new scope to the senior management team and communicate with the project team the modified requirements which were approved.

I agree with the above and believe the budget cuts will indefinitely have some marginal affect on cost estimation. It really is up to the project manager, and the project team on how the project can still be carried out and turn out to be a success with a new budget they're working with. Cost estimations will be skewed with the newly reduced amount that is being invested into the project, so the scope will have to be re-evaluated as well as other design control documents such as the DDP if necessary. The DDP especially will probably need some reevaluating since that document states how exactly the project will be done. Since their is a new cost estimation the project manager will have to inform stakeholders how exactly the project will be developed by being hit with a budget cut.

I agree that working under budget will definitely helps in the situation later on if a budget cut were to occur. Since you're working under budget from the start, and if a budget cut occurs and the project is fortunately still within the newly reduced cost estimation, then there will not be as much reevaluation needed for the overall project development.

A spending cut will influence the cost estimation of a venture in light of the fact that if being developed phases of an item the monetary allowance is sliced the venture group needs to reanalyze the extent of the venture. Extend chiefs should resist the urge to panic so that the venture group does not freeze. At that point they have to introduce the venture to the business to show how the venture fits the business system and advise them that the venture will be effective in the wake of dealing with the cost. The venture director will discover what the business can manage the cost of for the venture and speak with the venture support. The venture chief should audit the necessities of the venture and organize them as per the new spending plan. Kill the prerequisites which are not a need and attempt to concoct more productive approaches to get the yields that are coveted. The venture director will exhibit the new degree to the senior administration group and speak with the venture group the adjusted necessities which were affirmed.

sorry i posted on wrong place

I agree with what everyone had to say about the consequences of a budget cut. However, I believe that is it very important to understand why the budget is being cut. If it is an overall organizational cut then as mentioned above, the project manager need to evaluate how the budget will be reassigned regarding what is left to carryout a successful overall project. Key changes has to be made in terms of prioritization and documentations. I found this link to be useful in listing exactly the most important steps to be made in such situations.

https://www.lynda.com/articles/10-things-project-budget-cut

I believe budget cut would affect all the phases of the project. When you are initiating it if you require $10,000 in order to develop and assemble the final product but you only have $6,000 for the project then the product can’t be finalized. On the same way you also have to pay the salary to the team. When you measure the risks, if you come up with a couple of risks that require the purchase of additional things in order to make sure that the product works correctly then that is also additional money to the original $6,000. My point is that money is key when doing a project, in order to gain money, you also need to invest it. Since the company I used to work for was a small business, we knew the budget capabilities of the company and we forced to discard the projects that required more money than what we had. It is painful to say but you need to be aware of every aspect before doing a project, one major aspect is the financial one.

Let me know what you think!

Sincerely,
Roberto Pineda.

A budget cut is something a pm and a whole project team should always be prepared for. It does affect the overall cost estimation of the project, but more than that, a budget cut can result from several issues outside of the project team's control. It can be difficult to adapt, but a pm should react by taking the resources he/she has and start allocating them to the components most critical to the development of the product. This is why project planning is so important with regards to customer needs and weighted design evaluations. If the budget is not high enough to accommodate all the customer needs, it's important to focus on the most critical ones and worry less about trivial ones.

For example, I could design a knee brace to provide structural support whilst also integrating a pedometer. If there were budget cuts, I would probably scrap the pedometer and focus on the structural support aspect of the knee brace. Budget cuts can happen, but it takes a pm with engineering intuition to adapt suitable and professionally to the situation, or else the product itself will suffer in the end.

A budget cut as stated by the previous posts is a critical factor in project management. While planning under budget is a good idea for any project it is more difficult to achieve in a medical device project. I believe that it is harder to have a realistic budget because of the lack of data and the innovative factor in medical device projects. For many other projects there is usually a precedent on the cost, however for medical devices the data is not always easy to find as stated in the lecture by Dr. Simon. With this lack of data it becomes hard to go under budget because even the project manager may be constantly updating their budget expectations. This also can lead to problems with upper management and proving that you need a budget increase because there usually isn't much financial data to back your projections.

I agree with the above posts that budget cut is very common problem that most project managers deal within a company. In the planning stage of the project, most project managers create a Bill of Materials (BOM) and an estimated labor costs and parts. However, as the project continues, problems arise and the project team needs to review the plans and come up with an efficient solutions. In some problems, it may be necessary to notify the customer whose products are being manufactured. Lastly, if working under budget from the beginning, there wouldn’t be much to reevaluate as the project manager can quickly identify the priorities and starts the project right back with the new budget.

The budget is an integral component of a project. Without financial support, the project will not be able to continue and resources cannot be procured. Budget cuts are very detrimental because during the cost estimation for a project, the best option within the available budget is chosen and because of the budget cut, changes must be made which may reduce the quality of the project. However, despite that, people are still able to come up with the best version of a project with the resources available.

Hi All,

I can definitely agree that a budget cut will effect the project, thus area that may have been clear may have to be reanalyze to take into consideration the budget limitation. This aspect is very important for the project manager to maximize the budget fund to ensure that key areas within the project are not hindered by this limitation. Bill of Materials (BOM) is an important tool to estimate costs within projects.

Chris

In regards to the original question of “does a budget cut affect the cost estimation of a project”, I believe it does. However, I would like to add to the conversation that the timing of the budget cut within the development process has a lot to do with the final cost estimation of a project. If the project experiences severe budget cuts early on, it is more susceptible to be significantly altered to fit the new budget. This is in contrast to a budget cut that occurs later on in the project’s life where the timeline, R&D, and most of the expenses have already occurred. In this latter case, an unaccounted for budget cut would be more crippling to the project due to all the compensation occurring towards the end. Ideally, it is good proactive to concede minor successions throughout the project rather than cut major parts out at the end directly compromising the end product.

During my time in industry, the project I was working on was actually overestimated (both funds and amount of time required) which allowed for more time and effort to be put into the solution. When this occurred, the PM generously extended the contracts of some temporary employees to give them more experience within the company and “returned” the remaining unused money back to the company.

David

Like everyone else, I believe that a budget cut will greatly affect the cost estimation of a project. This especially true depending on the phase that a project is in. If still done early on during the planning stages, a good project manager should be able to allocate the resources accordingly to do the job. This may mean changing or dropping certain vendors for cost efficiency. If a budget cut occurs during the doing phase then it can completely sink a project because layoffs and not having enough money to go to completion. At this point it comes down to the project manager to continue on or not.

A budget cut certainly has an effect on cost estimation. I believe generally most projects hope to come under budget or plan ahead to have some wiggle room as more often than not, projects are more costly than expected. A budget cut is an additional hurdle that may have grave consequences on the project. This could mean as much as its shut down. Different options such as cheaper labor, staff reduction and changing vendors could be explored to adapt to the decrease in funding.