Step by step guide to building a project budget

Step by step guide to building a project budget

Without a budget, you may struggle to complete your project successfully, so it is incredibly important to ensure that you develop your project budget properly. This step by step guide will help you to make sure that you have the funds needed for every stage of your project. 

First, however, let’s take a quick look at what a project budget is. While you might have learned about budgets during any project manager courses you may have taken, there is no substitute for putting your education into practice.

What is a project budget?

The total projected costs that might be needed in order to finish your project within a set period of time is your project budget. 

It is important however to remember that this project budget is not set in stone. It is something that should be revisited and, where necessary, reviewed at points in the project. You may find that project budgeting software will assist you with this. 

Why does your project need a budget?

The work that you do on your project will cost money, and it is really important that you have a thorough plan that looks at the work involved in the project and therefore the amount of money that you might need to complete the project. A budget is used to communicate to the stakeholder how much money you might need and, more importantly, when you might need it. 

The budget is key when it comes to controlling the costs of your project. It is necessary to pay for your teams, purchase materials, and rent equipment but it is also a plan; something that can be used to measure the performance of your project as you begin to add those actual costs up.

How do you create a budget?

In order to create your budget, you will need to consider all of the things that might represent a cost to the project. Don’t miss or minimize anything, no matter how small. The following will help you to create and then manage your budget:

Historical data

A great place to start is by finding a project similar to yours and then using this as a starting point for your budget.

Learn from other projects

The historical data is not enough. Consider the mistakes and successes and use these to help you make a more accurate budget that will reflect the lessons previously learned.

Talk to experts

Speak to those who have experience in the field and learn from their expertise. This can help you tap into their knowledge of what works, and what doesn’t. 

Check the figures

Once you have your budget, don’t assume that it is correct. Check it and check it again. You don’t want to find mistakes once your project begins. Run it past someone else if you want a second opinion. 

Baseline your budget and check it

The budget you set for your project is a baseline. It will be used to measure your progress on the project once it has begun. It will also be used to look at any variances as you go along. There may be times when you will need to check it as you go along. Changes may need to be authorized for you to re-baseline.

Use real-time updates

You need to know about any changes as soon as possible. This means you really should consider some form of cloud-based software so when your team alters things you see them immediately.

Get on schedule

The right software is vital. It will help you keep on track of everything in real-time, which means you will have information to hand when you need it and be able to keep an eye on the project no matter what is going on. This will allow you to keep on top of your budget as quickly as possible. 

Software

Training for project managers can give you some very important tools to carry out your role efficiently and effectively and one thing that you will certainly learn is that using the right software can be really important to your project. 

Working with your budget

Whether you are looking at your project budget or identifying which aspect of the project is most suited to each team member, the right software will make a huge difference. With the possibility that not all team members will be working in the same location, it has never been so important for communication to be at the heart of everything that your project team does. 

Timescales for each component of a project are simply that; an indication of the time that is expected to be spent on a particular part of the project. The unexpected can happen far too easily, impacting your timeframes and then your budget. The right software will allow you to see what team members are up to and be notified of any issues as soon as they come up.

This is where you can make those all-important tweaks to you your budget before costs begin to increase. 

No matter how carefully you put your budget together or indeed consider your timescales, you need to allow for a level of fluidity to be present. This will allow you to make those adjustments without causing too much disruption to your overall budget and therefore risking your project.

These adjustments can then be run past your stakeholders as they occur allowing for any further budget adjustments to be made at the appropriate time. Being able to keep your stakeholders in the loop is a key part to the success of the project if there is a chance that you may need to make some adjustments to the budget that will need their approval. 

Conclusion

While there is no doubt that carefully planning out the workload for the project, completing your budget, and checking it, are all vital to success, it is also important to remember that the unexpected can happen and it is a good idea to be prepared when it does.

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