Every project has the obvious costs associated with it. You’re paying a project manager, a team lead, or a creative director. You have team members working on the project and materials being used up.
And then there are meetings. And more meetings. Did I mention meetings?
Plus third-party vendors. Project stakeholders that need things and provide things. More meetings. Probably even some post-project support.
You expect all of those things. But what about the hidden costs?
I’m talking about the costs that are usually associated with risks that get realized. I’m talking about the unplanned issues that come up and knock a project off its budget and timeline. And I’m talking about work that you may have to give away for free to satisfy a frustrated client.
Even if you’re an outstanding project manager, these things happen. They’re just part of the process.
The real key is making sure you know what could happen. If you’re prepared and your eyes are open, these unexpected costs are less likely to doom your project to failure.
There are 5 key areas where hidden costs can rise up and knock a smoothly running project off the rails:
1. Vendor acquisition and management
Not all projects require outside vendors. But when they do, you need to go out of your way to consider what could go wrong so you’re ready for it.
There are always risks.
In some cases, vendors can’t offer what they intended to offer. Or they can deliver the goods — but it’s going to take a lot longer than they promised.
You may end up with additional costs associated with waiting on a vendor to deliver or having to find a new vendor to provide these services.
2. Client engagement
You plan the project as if your client will be available whenever you need them. Getting approvals and input in a timely fashion should be a sure thing, right? After all, this project is at the top of their priority list.
Sadly, this is often not the case. And you may have no control over the situation.
Lack of client availability can result in costs associated with delayed timeframes and delayed decisions.
3. Resource management
When you plan a project, you are usually anticipating complete availability and compliance from your project team.
However, there may end up being team member conflicts. You may also have resources who are suddenly tied up on another project — or resources who go on vacation or leave the company altogether.
Replacing resources or waiting on them can be costly.
4. Senior management involvement
Senior management can be a good thing. They can help breed customer satisfaction by getting involved and making clients feel more important, or by helping knock down project roadblocks.
They can also sometimes hinder progress by needlessly getting involved for their own purposes. This can include calling extra meetings and requesting new reporting during critical times of work and progress on the engagement.
5. The little things
Oh yes…the minor issues that come up here, there, and everywhere and must be resolved. They’re small, so you never really plan for these….but they do happen on nearly every project.
Each individual issue may be small. But when they start to pile up, you’ll really start to notice their cumulative effect.
What you can do
When you’re planning a project, you can anticipate the obvious costs. At the very least, you know what to expect and what you’re looking out for.
But these hidden costs are the scariest and can quickly doom any smoothly running, well planned and well managed project.
The best thing you can do on these projects is plan for risks. Expect the unexpected. Put enough up-front planning time in so that you’re ready to handle as much of this as possible without letting it kill the project budget.
Of course, this is easier said than done, and you’ll never catch everything. But the more thoroughly you plan, the more successful your project will likely be.
Do you have any hidden cost ideas to add to this list? Any scary stories of your own that come to mind and have changed the way you manage your projects? Feel free to share them here.