This is a good question and an issue that comes up quite often.
You could panic, , , but there is a better option.
Let’s break it down a bit.
First, when you submit a budget it’s important to list the business assumptions you are basing the budget upon. This includes any special project initiatives that you think you will be working on in the coming “operational year”.
It’s normally impossible to know everything you will be working on so in most cases you should build in a few “buffers” to cover the surprises that you are inevitably going to run into in the coming year. I’ve never managed an IT operation when there were no surprise projects to pop up and had to be taken care of.
Quantifying your assumptions and building in a certain amount of buffer for the extra things that will come up is your best safeguard.
Second, if you have done a good job in quantifying your assumptions and have buffer, you may be able to absorb the new project and still make your plan. If it will cause you to exceed the plan (spend more than the budget), you need to manage senior management’s expectations in that such a project was not planned for and it will require several things, one of which is redeploying resources to focus on the unplanned project.
As soon as you can, you should quantify the incremental cost of the project and the extent it will cause you to exceed your budget and lay it out for management to see both the resource impact and the budget impact.
The new project issue may be something the company would prefer not to do but has no choice (like a regulatory issue that has come up). Helping senior management understand the cost and resource implications helps them manage to the company’s overall budget and positions you in a light of “business manager” and not just the “technical manager”. In doing this you are also trying to ensure they understand that the original project plans you were going to accomplish are affected by this new project requirement.
In my IT Management Models book there is a model called the 5-pound sack. In this model, it explains that your IT organization has a certain amount of capacity. How the capacity is used can be changed and you can even find several ways to add more capacity. But you can’t add capacity for long periods of time without adding more resource without causing morale issues.
If the company requires you to take on a large unplanned project and your commitments are already a “fully loaded 5-pound sack”, something has to give.
Managing resource availability is very similar to managing budget dollars. The key is that you have to manage other people’s expectations as to what is realistic and enlist their help in determining the best way to use the resources when “key projects” compete for limited resources (either staff, equipment, or budget dollars).
Finally, let’s assume you have no buffer in your plan. Your efforts still must be focused to managing senior management’s expectations and that there will be a trade-off of resources and budget dollars to focus on the new project.
In IT, we don’t really care where we are focusing our teams as long as senior management considers it to be in the best interest of the company and provides best value for their IT investment. As a CIO, I will certainly help direct where these resources can be best utilized but ultimately my mission is to serve the company’s needs so I answer to my customer – the senior management of the company and department heads who manage the resources utilizing the technologies of the company.
If you are caught off guard (something that rarely happens when you do a good job of quantifying your budget business assumptions and you have strategically inserted a few key buffers that will offset many such surprises), you will need to quantify the new project as quickly as possible in terms of resource needs, existing project implications, and cost. Before you have all the information, start setting the appropriate people’s expectations that you believe there are budget implications and impacts to current project plans.
When you have determined the specific impacts, sit down with the appropriate people to explain the impacts this new project will have on current plans. In this meeting you should lay out the implications, offer suggestions for possible alternatives in managing the issue to minimize budget impact or planned project impact, etc.
Your senior management team can help you arrive at a decision as to what are the best options to take or will take the issue offline to gather more information to determine what’s best for your company in meeting overall objectives.
One of the best ways to minimize these types of impacts is to develop a strategic plan where you identify all the major project initiatives planned for the next year. This helps you manage senior management’s expectations and is tremendous help when budgeting your IT organization for the following year.