Managing a project budget is crucial, of course, so you should put care and effort into how you make one, and Jennifer Bridges, PMP, is here to help. For additional support, try our free project budget template.
Here’s a shot of the whiteboard for your reference!
In Review: How to Create a Project Budget
First, Jennifer defined what a project budget in fact was, which is the total projected costs needed to complete a project over a defined period of time.
She then went on to detail the components necessary to build a budget. These include direct and indirect costs, fixed and variable costs, labor and materials, travel, equipment and space, licenses and whatever else may impact your project expenses.
Jennifer outlined seven essential steps towards creating and managing your project budget:
- Use historical data
- Reference lessons learned
- Leverage your experts
- Confirm accuracy
- Baseline and re-baseline the budget
- Update in real-time
- Get on-track
If you manage your project expenses using these building blocks you’re going to have a sound foundation for your project’s success.
Pro-Tip: Be sure to track the budgeted vs. actual costs when you’re in the project to see if you’re adhering to that budget. Because after you make a budget, you have to know how to manage it.
Tool-Tip: Track and manage your project expenses while project planning within your project management tool. You don’t want to keep all the data separate, where it could quickly become out-dated. Rather, track project costs as you manage your project online.
Thanks for watching!
Today, we’re talking about how to create a project budget. And, with that, I wanna share seven expert tips.
But first of all, let’s clarify what the project budget is. It’s the total projected cost to complete a project during a specific period of time, with a specific result.
We wanna be sure that we include several components.
First of all, we wanna include the direct cost, directly related to the project, as well as any indirect cost as well.
We also wanna include fixed and variable cost, any labor and materials as well as travel.
There may be some travel related expenses we need to include, as well as equipment we may need and any space, any leases or license costs.
And there may be some other costs as well, but these are just a few ideas.
Why do we want to create a project budget anyway? Because it helps us to track the budgeted versus actual cost.
That gives us a variance that lets us know in the end, or all along the way, how we’re doing.
So let’s talk about the expert tips. First of all, use historical data if it exists. If you have a similar project, use historical data so you can compare data, so you won’t have to start from scratch.
Also, reference lessons learned. You wanna be sure not to repeat those same lessons. You can take that and include it in this project as well.
Leverage your experts, and that includes your team members as well. So your team, who possibly have done similar projects, can provide input, as well as your stakeholders.
Then confirm the accuracy. Once you build your project budget, you wanna maybe provide input and have people look at it to ensure that data is accurate.
Also baseline. Once you have finalized your project budget you want a baseline and that’s what you’ll use all along the project to gauge the variance. The re-baseline to me is one of the keys between a failed and a successful project. If you have changes to the budget, and your change control board approves those, then that gives you the ability to re-baseline that budget.
Also, you wanna update the budget real time. If there are changes, you wanna be sure that that’s done on a regular consistent basis so you’re tracking against the right numbers.
Also, get things back on track as soon as possible because every little deviation just compounds the problem.
So if you need a tool that can help you create, manage and track your budget, then sign up for our software now at ProjectManager.com.