Budgeting Project Profile Preparation
Here are seven tips and practices for creating a budget that supports your project:
1. The hardest project budget you‟ll ever write is the first one. After that, you have both a model for budgeting similar projects, and the experience for writing detailed budgets going forward. For your first budget, get help from an experienced team member or mentor. If you‟re a collaborative group, get input from everyone‟s work estimates. The point is, you don‟t have to do this alone.
2. Learn from other projects. Find a past project that was similar in type or scope to the current one, and use it a model. Some teams turn to their project management tool to mine data and information on how much time and money went into certain projectsand identify where resources were added or subtracted.
3. Know your core costs. Start by entering coststhe absolute must-haves to get the project up and running. They include team members, equipment, software, travel, etc. Next, compare those core costs to the total budget. If your costs fit under the total cost figure, you fit under the cap. If not, you need to have that first conversation with your boss or stakeholders about how to scale the project to be completed within the budgetor about expanding the budget.
4. Prepare to change budget estimates. Most initial estimates are just that estimates. With the common occurrences of scope creep, unexpected surprises and the nature of doing business, at some point in the project the budget can easily change. This fact just underscores the need to manage the project budget continually. Vigilant project manager compares actuals-to-date against the initial budget and then against anticipated costs toward completion at regular intervals. And then it‟s time to tweak the work plan to bring expenses in line with the total budget.
4. Monitor resources. You want your team members working on the right tasks to their full potential. Salaries are a big component of the budget, so review resource usage weekly to make sure that everyone is working the highest priorities and putting the proper amount of hours per week into their tasks. A project management tool with strong resource leveling features can help manage this.
6. Be transparent. Keep your team informed of the evolving budget forecast. Communicate what‟s expected of them to stay within budget. People might start watching how they designate hours and other costs to your project. And they‟ll understand any requests to change directions if they come up.
7. Manage scope. Scope creep busts budgets. To avoid unplanned work that leads to cost overruns, create change orders for work that goes beyond initial project requirements, with accurate projections of additional cost. Seek additional funding for the project to cover change orders.