While doing a project we need to budget our project first. Predicting your project expenses and make them reasonable. You can be budgeting your expenses using estimation methods like:
1. Analog Estimation (if the previous project has similar goals, activities, or targets to the latest project).
2. Parametric Estimation (uses historical data and statistical modeling to estimate the costs required for a project. It is often used in construction projects sample planners. You can get a budgeting excel of construction project costing template here.
3. Top-Estimation (the main benefit is providing an opportunity to use data that is more holistic than previous projects, including minimizing risks associated with costs).
4. Bottom-Up Estimation (using breakdown technique of a large project into several smaller components to make it easier to calculate the cost of each component).
If you are still confused and don’t understand what a project budget is including how to create and plan it, you can read them in an article about Project Budget Template Excel.
After compiling a project budget and ratifying it, the next step is of course you have to prepare to do your project.
But is it enough if you just run your project?
Do you also need to pay attention to how your budget is executed?
Yups, budgeting is not only about creating your budget at the beginning. You also have to control it and manage it to helps you monitor whether your budget is being implemented correctly and makes it easier for you to evaluate.
But how you can do it?
Here I will give a tip which is called Project Management Budget.
What is Project Management Budget?
Project Management Budget Template is the entire process of administering and controlling finances (including tracking, planning, estimating, budgeting, and controlling costs so that the project can be completed within the approved budget).
So, is preparing a budget also included in the project management process? The answer is yes.
The importance of budgeting in project management
Is it important to budgeting your project management?
Budgeting in project management is important because budgeting helps to measure performance against expenses.
Project management budgeting ensures that the available resources fully support business growth and smooth functioning.
There are some reasons:
1. Budgeting helps restrict unnecessary expenditure to balance revenue against cash flow.
2. With budgeting, it is ensured that money is appropriately allocated to the prioritized objectives of the project at hand.
3. A properly drafted budget plan ensures that all levels of management are aware of how the project should be conducted. This ensures good communication and a shared vision.
4. Sharing budget forecasts with all members of the project can ensure that inputs are received from all levels of the hierarchy.
Project Management Budgeting Tips
1. Document your assumptions when preparing a budget. This is an important pound, as it can help you track your project and review the results.
2. Build some possibilities into your budget for unexpected expenses and delays. But don’t overestimate your budget or you may never start the project.
3. Don’t try and do everything yourself. Make sure you get support and input from various related parties to support your project, especially your boss or those who are experienced and related to your project. They will be better able to provide accurate project cost estimates.
4. Make sure you understand the resources and costs accurately in your project. Don’t forget to include maintenance for machines and equipment. For individuals, be sure to add time off, overtime, insurance, and other overhead numbers if needed.
5. Pay attention to your estimated time. Don’t underestimate the time it takes to complete a task. This can lead to scheduling conflicts that will eventually drain your budget.
6. Use your budget to track your performance and to communicate with other departments before, during, and after your project.
Manage your Project Management Budget Template
There are many factors that lead to the success and failure of a project. One of them there are costs that are too over budget. In project implementation, it is necessary to have control in minimizing the factors that cause the failure of a project.
Controlling is a subfunction of project management that focuses on two things – cost and schedule. Controls are there to monitor the project and ensure that it is going as planned without any outstanding deviations from its original plan and budget.
Reasons why it is necessary to carry out control in carrying out projects.
A project that overbudget budget indicates that the controls carried out is not appropriate. This will have a negative impact on managers, leaders, and the reputation of the wider organization.
Due to additional costing, there will be changes in profit margins, changes in productivity due to opportunity costs, and financial stability due to decreased liquidity.
b. Check the project status regularly and make sure
This activity is an important part of project maintenance that should be practiced by project managers. Receive every update systematically during the project phase, from project initiation to project closure.
This activity is done to see if spending is in line with trends and can help identify problems quickly. If a cost increase is found, it is important to address it and fix it as soon as possible.
c. Manage any changes and communicate them
This is one of the things that is often underestimated when managing projects. Project management specialists understand the importance of communication and how processes affect stakeholders.
The slightest change can have a significant effect on increasing costs, making you waste more on your budget.
The change management specialist must work with the project team to identify, document, and communicate appropriate strategies for dealing with any internal and external changes that have the potential to increase project costs.
d. Tracking and reporting project management budget template
One of the duties of a project manager is to check all aspects of the project on a regular basis. Apart from overseeing the budget, the project manager must also check tasks, resources and allocate them properly, and then reporting them.
To make your job easier, you can use Project Management Budget template to printabledia.
Monthly Project Management Budget Template Excel Download.