Overestimation to Scope Creep and Budget Overruns

The Costly Misconception

Many organizations believe that the best way to plan a project and minimize risk is to throw excessive amounts of money at it.

Imagine you, as a project manager, are tasked with delivering a 5,000 sq. ft. office renovation. Executive management approves a $3 million budget. But how realistic is that number ? Either way, you seem to have more than necessary. So why worry ?

This flawed organizational culture eliminates any real effort to control project costs because the budget provides too much flexibility. It opens the door to scope creep and gold plating. In the end, the result is chaos; no scope control, no budget control, schedule delays, budget overruns, and a poor project delivery experience.

The Reality of Benchmarking

One way to assess project performance is by comparing its final cost to industry benchmarks, both internal and external. In the commercial real estate (CRE) sector, similar office renovations may be completed for $300 per square foot—data published by leading CRE firms. Yet, your project's approved budget is $600 per sq. ft., nearly double the industry standard. Is that an efficient use of corporate resources?

Worse still, because of this flawed budget mentality, your project will likely end up costing $700 per sq. ft. And instead of addressing the inefficiencies, the project management team will celebrate staying within a 20% variance, ignoring the fact that the initial budget was already inflated.

Setting the Right Tone

It’s time to pause and rethink. Executive management must establish the right financial discipline from the outset. They are equally responsible for poor project performance and the organizational culture that enables it. Throwing money at every obstacle is not a project management strategy.

Why be a manager if you don’t assess how efficiently your team delivers projects? Do you track performance metrics and benchmarks? If not, it’s time to implement them.

Another common issue is relying on accidental project managers—team members assigned to projects without the expertise or structured support to drive them effectively. Whether it’s a minor refresh, an employee relocation, or a full-scale gut renovation, outsourcing project management can be the best solution. Establishing a Master Service Agreement with a trusted partner ensures informed decision-making, controlled project execution, and value-driven outcomes. All while allowing you to focus on growing your business.

At Xenofan Consultants, we go beyond traditional project management; we deliver value-driven project management. Our unique approach emphasizes rigorous planning and transparent communication, ensuring an exceptional project delivery experience.

Contact us for benchmarking and project delivery solutions, and let your next project create real value for your business.