Managing Budget Overruns in Projects

I've helped dozens of companies tackle budget overruns. Most try complex solutions: zero-based budgeting, new policies, department restructuring. But the most effective approach I've seen? One CEO spent 60 minutes reviewing coffee expenses line by line. Seven years ago, I was managing a team at a different company. Our expenses had skyrocketed, and our revenue wasn't keeping up. So when the CEO called in the head of the worst-offending department, everyone expected the worst. We'd spent the previous week brainstorming ways to prevent the crisis: rebudget, assign a new budget owner, cut next year’s budget by 20%, slice the data three more ways, add new policies—the list went on. But our CEO was over it. So he asked for the previous quarter’s expenses from the most problematic department, called in the department head, and spent an hour going through each expense line. It wasn’t pleasant, it ruffled feathers, and it even involved the CEO grilling the department head about “coffee costs.” But it worked. That department became one of our most efficient spenders the next month. That’s when I first saw the power of the line-by-line review. Ultimately, you want to give your teams the flexibility to spend money, encourage fast action, but still retain control. When done successfully, it changes the culture of how teams spend and empowers department heads to own their expenses. The beauty of the process is that it doesn’t require a kick-off meeting, a PowerPoint, or a team alignment meeting, saving the executive team’s time. All you need to do is: 1. Get the last quarter’s expenses - To keep the review focused, include only the amount, date, and description. Anything else is superfluous, and you don’t want to get caught up in chart-of-account categorization discussions. 2. Sort expenses from high to low - Generally, a quick sort will ensure focus on the "biggest of the small stuff." The one exception to this would be if you notice a huge amount of small costs that add up to a large total when doing your initial review. 3. Go through each line - While this requires nuance, consider asking questions like: • Was this expense necessary? • What was the result of this spend? • What would you have done if this budget line was cut? 4. Ask about missed spending opportunities - This is the KEY step. The goal of a company is to generate returns by spending money productively. So as we cut unnecessary or wasteful spend, we should also be looking for opportunities to spend this money more advantageously. To get to the heart of this, I recommend asking at the end of the meeting: • What could you have spent more on to produce a better result?  • If you added an extra 20% to your budget, where would it go? This is how we learned of a fantastic training course for our sales team that drove record numbers the following quarter. Money well spent! One of the best parts about this approach is that it requires hardly any planning. So why not give it a shot today?

I showed a CFO how to unlock $12M in savings over a 45-minute call. Here’s what I shared. 6 months ago, I got a DM from a CFO at a $300M energy and construction EPC firm. "We’re bleeding cash on every project. I know there are margin leaks… but I can’t see where they are." This is something I hear ALL the time. 90% of infrastructure projects go over budget by 30% or more. Margins evaporate. Fast. The CFO asked: "If you were in my seat… what would you do?" So I told them exactly what I’d do 👇 🔴 The problem? The company was managing complex energy and construction projects. They had: - Change orders piling up - Vendor payment delays - Cash flow inconsistencies - No real-time financial visibility Every day, the CFO was reacting to chaos, not controlling it. ✅ My AI Playbook I told him: “You don’t need 10 consultants or a 2-year project. You need the right systems working together.” We built this 5-part AI Margin Defense System: 1️⃣ Data Consolidation - Connected all finance + project data into Snowflake - Built 1 single source of truth No more scattered spreadsheets. 2️⃣ Predictive Risk Alerts - Used nPlan to analyze thousands of past project data points - Spotted cost overrun risks before they happened We turned hindsight into foresight. 3️⃣ Real-Time Project Controls - Integrated Procore for live project + budget tracking - Automated alerts when line items drifted 2%+ from baseline This caught small problems before they became big disasters. 4️⃣ Dynamic Cash Flow Forecasting - Built live rolling forecasts in Anaplan - Predicted liquidity squeezes 60+ days in advance The CFO slept better at night. 5️⃣ Automated Reporting - Built instant dashboards - Reduced manual reporting work by 70% The finance team got time back to focus on strategy. His results? In just 6 months: - Prevented $12M in potential cost overruns - Increased project margin by 25% - Cut reaction time from weeks to hours - CFO gained full control of project financials All with a system that can be scaled company-wide. My takeaways? You can’t manage what you can’t see. AI-powered financial systems give infra CFOs the visibility + control they’ve never had before. Margins don’t erode randomly. They erode silently. Until you install early-warning systems. Ask yourself… If you’re leading finance at an infrastructure firm: 👉 Are you reacting or predicting? 👉 Do you know (today) which line items are drifting? 👉 Could you spot a $1M leak before auditors do? Want my full playbook? Comment “Control” below, I’ll DM you the full system map. Repost this if you know a CFO who needs to see this. Follow me (@LylyaTsai) for more real-world AI finance wins!

This one change added $4M to a client’s bottom line. Zero new customers needed. I was hired to work with a $40M services firm with razor-thin margins. Their books looked fine. Revenue was steady. But profit margins were at 8%, and leadership couldn't figure out why. A financial assessment discovered project scopes were routinely underestimated, and change orders weren’t enforced. 73% of service firms leak 15-25% of potential profit through poor scope management and weak change order processes. Here's how we stopped the leaks and added $4M to their bottom line in 12 months: 1. Project Boundaries • Created a scope control checklists for every project type • Defined what's included vs. what triggers additional billing 2. Accountability • Trained account managers to negotiate change orders • Established clear escalation paths for scope discussions 3. Uncover Hidden Costs • Implemented weekly project gross margin tracking • Built early warning systems for budget overruns 4. Generate Recurring Wins • Systematized the entire process across all teams • Built change order conversations into client onboarding They recaptured revenue that had been leaking for years, and In 12 months, margins went from 8% to 18%. Making profitable project management the default, and not the exception consistently delivers ROI. Sometimes the fastest way to grow is to simply stop the internal leaks. The fastest path to profit starts with stopping the money walking out the door. Please share your thoughts in the comments. Follow me, Beverly Davis for more finance strategy insights.