How to Cope When Project Budgets Are Slashed in Your PMO

Pm Majik
5 min readJan 27, 2023

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How to Cope When Project Budgets Are Slashed in Your PMO

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How to Cope When Project Budgets Are Slashed in Your PMO

With challenging economic times across the globe, it’s unlikely that your project management office (PMO) will come out unscathed. Either your office or your projects will be affected so we’re going to look at how to cope when project budgets get cut.

Whether your PMO is looking after an internal change agenda or monitors projects run for external clients, cuts can come from anywhere. You will have processes at the beginning of a project to plan the budget and schedule; this work will need to be revisited with your PMO’s support.

The support you give projects when they face a budget cut will be vital to make sure something stills gets delivered. To help with that, we’re going to look at:

  • What can be cut when a project budget is slashed
  • How to go about figuring out what to cut
  • Who do you need to work with to get a project finished

Where can I find cuts when a project gets a constrained budget?

When a project is asked to deliver work with less money, you will need to help the project manager know where to find economies. If the project budget was planned well to start with and not overinflated, there will need to be compromises made.

Compromising project scope

You can consider reducing what actually gets delivered when there is less money to get it done. Handing over partial capability may be better than none at all.

There could be wiggle room in some functionality or the product aesthetics, as long as the core requirements are met. You could also consider an overall lower-quality delivery, as long as it’s agreed by the stakeholders or clients.

Compromising project deadline

The other option to reduce the spend on a project is to deliver it slower. This would usually mean having fewer resources dedicated to the project, which could mean cancelling a freelancer or contractor and waiting for an internal resource to be available instead, for example.

How to decide where and what to cut when a project budget is reduced

The first step to helping your projects work with reduced budgets is to make sure conversations happen with the project manager and the project sponsor or client. Expectations and requirements would have been laid out based on financial resources, and these need to be recentred.

This is the opportunity to understand what the priorities for the adjusted deliverable is.

Next, you need to give the project team and stakeholders the opportunity to come up with ideas. A workshop setting would be ideal for this — you have a clear question and an outcome to determine.

Once you have generated plans of what cuts or adaptations can be made and where it can be useful to present options to stakeholders. With an outline of what can be expected with less cash to spend, the project’s final outcome can be in the hands of those cutting the budget.

Who to work with to get a project over the line on a reduced budget

Bringing in a project on the new budget will require extra motivation from the people involved. It’s important to work with the project manager to maintain good spirits within the project team — these are the people who will make the new plan a success or otherwise.

You may also need to ask people on the project team to upskill or take on new responsibilities in light of the changes to the project.

Maintain open communications with project stakeholders. With the bump in the road and the need to refocus the project, things can get missed or misinterpreted. Make sure changes are documented and shared with everyone, so reductions in quality or timeline overruns are fully understood.

Coping with slashed project budgets

Your PMO will be affected when a project has funding cut. There will be work you need to do to make sure the project can still be successful. However, that is redefined. Remember not to panic and to work through the changes methodically to help you cope when project budgets are slashed in your PMO.

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Role of Project Sponsor in Agile Project Management
Defining project success - the importance of your Project Mantra!
How to Transfer Project Deliverables When Closing a Project
Four Steps for Project Review to Close a Project

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