Project Budgeting – Introductory Steps

Way back when I started my blog, I had started with a detailed explanation and steps on how MS Project can be used to track Project budget and track the project budget vs actuals by using the earned value management concept.

Here,we will focus more on the tips on how to manage the overall project budget.

To start with project budgeting, always check on the following:

• What is the project fund allocation.
• Is the budget provided enough? Do a first run and check:
  • Which expense are optional.
  • Which expenses are mandatory without which project cannot be delivered. For those who would have seen the documentary on India’s space mission to Mars would have observed this. This is critical and one might need to be very creative to see what and how expenses can be managed within the budget.
• Can we get realistic estimates? This is always a challenge but getting a realistic estimate helps initially to understand whether the project ca be completed in the funds allotted.
• Has this type of project been done before? If yes, study the estimates and actual timelines of such a project to get a good picture of where you stand.
• Have a good look at the key/major expenses such as Labour/resources, Material, Hardware, Software costs, and any major hidden cost trapped in any communications and not very evident.
• Discuss contingency reserves ahead in time with the management. So that, you dont need to bloat the estimates and budget forecast.
• Check the cost vs budget analysis with your sponsor or top management.