How to Budget Projects?
When it comes onto managing project, creating a good budget plan is quite necessary. It’s not enough to just look at your project in a 5 minute time frame and just give it a budget and start. This method tends to work if you are probably running a lemonade stand. Or if you were even back in kindergarten and selling sweets.
But if you are running even a small business with a lot of operations daily, when you are working on a project it’s necessary to create a proper budget. This will help you to save cost which could be re-invested back in the business. It also will force you to find creative ways to run your operations cheaply.
To expand more on the last point because it’s really important if you should take a look around your organization. At times you are always going to have processes that could’ve run a lot cheaper.
Whether renting equipment instead of buying, invest in a great I.T. infrastructure etc. When you have that mentality of being frugal it can have a good impact on the way you approach your budget. To create a simple budget for your project you can follow the process below.
Defining the budget
At the first stage you are going to basically analyze your project to see the different expenses that’s going to be associated with your project. Expenses tend to differ on a project by project basis.
Some typical examples would be labor cost, material, operation cost etc. You are also going to develop a plan on how you are going to keep cost at a certain threshold.
Executing the budget
You are now going to execute your plan. At this stage you are also going to create a budget baseline. What this will allow you to do is to break up your project and budget into time phases. This can enable you to track your budget over a certain period of time to ensure everything is working in harmony as planned.
So for example your entire project is going to last for 6 months. What you can do is review your plan and the project’s progress at certain periods. Probably every two week to make certain everything is flowing properly.
Managing the budget
This stage is an extension of the executing the budget stage. What you are going to do is once you have performed your project baseline. You are going to control your budget and develop strategies to ensure that it doesn’t get out of hand.
If for example you are reviewing your project’s budget against your original budget and things are not looking good. It’s up to you as the project manager to develop plans to try and control it for the next review period. Using project report to help communicate this data across your team or in your organization will help you out a lot in this stage as well.
You are going to implement the updated changes to the budget if there are any. Ensure that the changes are firstly approved by all parties involved. These usually include upper executives, financial managers, main team members etc.
It’s really important to create a proper budget for your project. The steps above are pretty simple to implement in your project. By doing even a simple plan like this will improve your results.