Tag: Project Budget

Creating and Maintaining Project budgets

Project Budgets

A project is deemed successful based on many criteria, in particular cost, scope and time, staying within budget is paramount. There are six steps which can help create the budget and establish a dependable system to track project expenses. All projects cost money, being able to manage and track expenses is what keeps the project within a budget. Stakeholders are not likely to consider the project a success if it costs them too much.

To avoid expenses from getting away, there must be a system in place to monitor and track it. That’s the only way to control expenses and in so doing stay on budget. Have a system in place to deal with project expenses and have the capacity to track them. This can be via a robust project management software with dynamic functionality or something more static like an Excel spreadsheet.

Regardless of which mechanism is chosen, data must be collected and identify who is spending what and when. This is the bare minimum and a good place to start. Without a system in place there’s no way to know where money is going.

The next logical step is to have a system that is online. Being able to gain access to tracking system anywhere and at any time is more than just a luxury. It has become an essential part of any project management plan. Team members may not be in the office every day, hence an online tool provides access to the system.

A system is important, but it’s useless until items have been identified in the budget. Understanding where the costs are going. To create a budget, estimate the cost of all the tasks that make up the project, including all the resources needed to execute them.

For example, money on resources will be spent, such as equipment and the team; their might be real-estate costs, legal and travel expenses. All these items must be identified and listed in order for expenses to be tracked.

It’s all part and parcel to creating a budget, identify fixed and variable costs and expenses figured out before tracking them. The budget will be the umbrella under which all the project expenses will be covered.

Once the budget is created, it must be approved. This will allow parameters for expenses and help tracking and determining the permissible spend and when those costs are going beyond what has been earmarked for the project.

A system, budget and everything related to managing the project costs are all for nil if there is not a person in charge of overseeing this process. Assign someone from the team who is tasked with operating the system devised to track expenses. This person will become invaluable. They’ll be on the front lines of the actual budget and can raise concerns when costs are exceeding what has been approved for the budget expenses.

To streamline this process and make it more effective, use an online tool. In this respect online project management software has an advantage over Excel, in that it’s constantly updated and reflects actual spending on expenses. Therefore, if a spike in spending is noticed, not only has it been identified quickly but can be addressed before overspending occurs.

The six steps mentioned are critical to ensure there is a handle to a budget, and avoid expense overrun. It doesn’t have to be hard, but it should be maintained, to avoid headaches during the delivery of the project. Use templates if they are available and pay attention to details.

If you have tips and tricks on maintaining a project budget, we would like to hear from you. All the very best on your project management journey.

Setting up for Successful Project Budget

Funds are always needed to deliver a project, the amount received will depend if it will be delivered as scoped, successfully and to the stakeholders satisfaction. SO planning out the project budget is very important, as it’s the lifeblood of the project. The following discusses how to secure the funds necessary to support the project through every phase.

The first step is to define the project budget, which is the total projected costs needed to complete a project over a defined period of time. It’s used to estimate what the costs of the project will be for every phase of the project. The project budget will include such things as labor costs, material procurement costs and operating costs. But it’s not a static document.

The project budget will be reviewed, evolve and be revived throughout the project. In simple terms a project costs money, but there is much more to it than that. Because, the budget is the engine that drives the project’s funding. It communicates to stakeholders how much money is needed and when it’s needed. It’s not only a means to get things that the project requires, that is paying teams, buy or rent equipment and materials, however that’s only half the story.

The other part of the importance of a project budget is that it’s an instrument to control project costs. The budget is the plan, which acts as a baseline to measure performance as the actual costs is collected once the project has been started.

Being able to create a project budget is an art, there are many components necessary to build a budget, including direct and indirect costs, fixed and variable costs, labor and materials, travel, equipment and space, licenses and whatever else may impact project expenses.

To meet all the financial needs of the project, a project budget must be created thoroughly, not missing any aspect that requires funding. To do this, outlined are several essential steps towards creating and managing a project budget:

1. Use Historical Data

The current project is not likely to be the first to try and accomplish a specific objective or goal. Looking back at similar projects and their budgets is a great way to get a head start on building the budget.

2. Reference Lessons Learned

To further elaborate on historical data, learn from previous projects successes and mistakes. It provides a clear path that leads to more accurate estimates. It should also be able to provide information on how responses to change affected the budget.

3. Leverage Your Experts

Another resource to build a project budget is to tap those who have experience and knowledge—be they mentors, other project managers or experts in the field. Reaching out to those who have created budgets can help a project to stay on track and avoid unnecessary pitfalls.

4. Confirm Accuracy

Once the budget is in place, that is only the beginning, as the budget should be reviewed and ensure figures are accurate. During the project is not the time to find a typo. Seek out experts and other project team members to check the budget and make sure it’s right.

5. Baseline and Re-Baseline the Budget

The project budget is the baseline by which a project will be measured throughout the duration of the project. It is a tool to gauge the variance of the project. The budget should be re-baseline as changes occur within the project. Once the change control board approves any change then the budget can be re-baseline.

6. Update in Real Time

The sooner a change is identified, then the better for the outcome of the project. This can be better managed with the use of cloud based software which allows for real time changes and status updates.

7. Get on Track

The importance of having a project management software that tracks in real time, can easily provide information needed to get back on track sooner rather than later. Things change and projects go off track all the time. It’s the projects that get back on track faster that are successful. If project expenses are managed using these building blocks then a sound foundation will be set for a project’s success.

Once tasks are broken down for the project and the team in place. Next is to review materials which will be needed, that could be laptops, other devices and equipment, all must be accounted. When this is in place, other line items need to be addressed such as travel expenses and renting space to house the team. Then there are fixed items that are true for any project. These are things where the cost is set and will not change over the course of the project. There should also be an entry for any miscellaneous costs that doesn’t fit elsewhere in the budget.

The budget must have a forecast versus actual documented, as this is a way to track the expenditure to make sure the budget is on track.

It’s clear that building an accurate budget is key to setting up for a projects success. If a budget template is required it can be downloaded here. Please share your budget planning experience, it would be great to receive your input.