How to monitor that agile projects do not exceed their budget?

By Mathieu Boisvert – April 2024

In one of my recent workshops, a participant asked me a question: how do we monitor agile projects to ensure they stay within budget? It’s a relevant question, as some have noticed that agile projects can sometimes end up costing more or having a less predictable budget compared to traditional projects. However, according to the theory of the inverted triangle, this shouldn’t be the case.

For those who are not familiar with this theory, let me explain. In a traditional project, we start by defining the project scope. Once this scope is clear, we can then establish a budget and a schedule to deliver the solution. Subsequently, project management focuses on the efficiency of delivery, closely monitoring activities.

In an agile context, where the final solution is not yet defined, we manage financial risk by setting a schedule and a budget. Normally, in this context, the most flexible management lever is the scope: the aim is to deliver the greatest possible value with the available resources.

Below, you will find an example of the inverted triangle, translated and adapted from the book Choisir l’Agilité by Mathieu Boisvert and Sylvie Trudel.

In theory, an agile project should be stricter than a traditional project when it comes to adhering to the budget and schedule: once resources are exhausted, the project should stop. So, why do some projects exceed their budget? Here are three project management anti-patterns that explain these overruns.

Failure to plan for an MVP

The MVP, or Minimum Viable Product, represents the minimum scope necessary for the product to be usable by the target audience. In an agile project, it’s crucial to aim beyond the MVP because this version often doesn’t provide enough added value. However, the MVP serves as an important checkpoint: once reached, it can be decided whether the project should continue or stop. Achieving the MVP early helps limit the risk of exceeding the budget and schedule, unlike a project that neglects this step and risks having to continue indefinitely to obtain a usable product.

Failure to track budget and schedule indicators during reporting

Few agile methodologies explain in detail how to report project progress. However, it’s essential to track delivered scope and achieved value. This can be done using progress charts such as the burndown chart or the Sunset graph. These tools visualize progress made so far and project what remains to be delivered by the end of the schedule. This projection helps estimate if the MVP will be achieved and how much additional value can be delivered with the available resources.

But these charts are insufficient because they measure scope progression on the schedule but not the budget. Therefore, it’s a good practice to add budget tracking, measuring actual expenses from one sprint to another.

Failure to project consumption until the end of the project

A frequently overlooked practice is projecting budget consumption over the remaining schedule. This projection is relatively simple to perform because in an agile project, human resources typically represent the main expense and are usually stable over time. If projected expenses exceed the initial budget, it’s crucial to review the product backlog to separate essential items from optional ones.

If you have to fail, fail fast

If, despite improving your practices, the budget continues to exceed forecasts, it may be necessary to reconsider the budget itself or terminate the project if projections indicate imminent failure. However, these measures represent last resorts and should not be the norm in agile project management. On the other hand, the good news is that with better monitoring practices, you will be able to make a decision earlier rather than too late.

Below, you’ll find an example taken from our dashboard template for tracking actual and projected expenditure indicators within an agile project.

Still curious?

For those who want to learn even more, follow the blog series called Series – An agile project dashboard with Power BI by Simon-Pierre Morin and Mathieu Boisvert.