What to do when your project budget is cut

Discussion of an economic recession is a guaranteed way to overwhelm a project manager. When the economy takes a downturn, cuts have to be made, usually across departments and projects. For a project team that’s already kicked off work or preparing to start, the prospect of having the budget abruptly reduced is frustrating and upsetting. This is especially true if you’ll be expected to meet the same deadlines and goals despite the change, which sometimes might be outright impossible. The key is to keep a level head and approach the situation pragmatically. 

Here are four important steps to take when your project budget has been reduced. 

Understand requirements and set expectations 

Even if the project has already started, take some time to go back to the beginning and review the project goals and timeline. Leadership may still expect the same results, but that will likely mean changes to the process. Can you still get the same results if you have the same timeline with a reduced budget? If you go with cheaper materials, can the project still get done on time? Once you have insight into where the budget reduction cause the least pain, approach leadership with your recommendations and plan. Make the process as collaborative as possible but be clear that things cannot be exactly as laid out in the original project management phase. 

Understand the why 

As part of this conversation with leadership, dig in on why the budget is being cut. If the country is in a recession, it’s likely many projects and departments have had their budgets cut. Ask for honesty and clarity on why your project in particular is seeing a reduction. Once you have a handle on why the budget is being cut, gather your team to communicate what you’ve learned. If there is a perception that your project team is not bringing enough value, for instance, that is something you may be able to turn around. If the reason doesn’t have anything to do with team performance, make that very clear to the team. Budget cuts can be disheartening, and maintaining morale is vital. 

Prove your team’s value 

If budget cuts are tied to team performance, use the opportunity to prove what your team brings to the table. First and foremost is ensuring that the current project meets and even exceeds expectations where possible. (Setting expectations with leadership is key here). Second, data is your ally. Pull together reports and justification for your team and project to share with leadership. You don’t have to wait until the end of a project to do this; take every chance you have to share data around improvements, efficiency and success. 

Over-communicate 

When it comes to both your team and leadership, over-communication is not a bad thing when you’re dealing with budget cuts. Provide constant updates, ask questions to get clarity, and keep a regular schedule of check-ins. Budget cuts are often not a one-and-done situation, and more changes may be on the horizon. Consistent communication helps keep the team flexible and prepares you to pivot when needed. 

Budget cuts don’t have to be a project’s death knell. Keep a cool head, make sure you understand the situation, and focus on communicating your team and project’s value.