Effective Budget Planning In Project Management

The importance of budgeting in project management is not really a subject for debate. If you want to have a successful financial plan for your project, then an effective budgeting strategy is more than necessary. With the advent of technology, there is easier intertwining of the different parts of an organization, hence more risk in running costs. As a result of this, it is important to get the budget right before the onset of the project

 

Although projects are of different natures, the strategies involved in the planning, setting and writing of the budgets for the projects are common. Mostly, the first project budget you write is going to be the hardest. After this, you have the experience and model to use to write going forward. Below are some tips to help you create a budget which will be effective for your project.

Learn from past experience and project

To write your first project, you can get help from an experienced team of the member. You don’t have to do everything all by yourself, if it’s a group work, learn from as much people as you can. Finding other similar past project to the one you are currently working on can be of great help. You can use the past project as a model. With past data, you can find out the time and money invested into a certain project, as well as identify the resources used for the successful completion of the project.

Know the major costs

You need to determine the basic costs for getting the project running. These include the cost of running the team members, equipment, software, travel, etc. Once you are able to determine the basic cost, check it against the project budget, the lesser the basic costs are to the budget of the project, the safer you are.

Be flexible to adjustments

With the uncertainty surrounding a project, the budget could change at any point. As a result of this, it is important to allow flexibility by making contingency plans against this potential fluctuations in the expenses required to complete the project. The project manager needs to be able to anticipate this and make tweaking the work plan possible so that the expenses don’t overshoot the budget.

Monitor resources

Undoubtedly, salaries are a big part of the budget of a project. For effective budget planning, the project manager needs to make sure that each team member is performing his/her duty to the best capability, and also that enough hour is put into the work so as to be able to finish task on preset time constraints.

Always exercise transparency

Keep your team informed of the evolving budget forecast. Communicate what is expected of them to stay within budget. People might start watching how they designate hours and other costs to the project, and they will understand any requests to change directions if such requests come up.

Manage scope

Creeping of the project scope deals the budget a huge blow. So as to avoid the overrunning of costs due to surfacing of works which are originally unplanned for, a project manager should make gap for this by giving tolerance for such situations in the original plans for the project. With accurate projections, sudden outburst of additional costs will not have a detrimental effect on the pre-planned budget. However, if such happens, seek additional funding to take care of the changes.

Conclusion

If you are able to employ the guidelines above in setting the budget for your project, you will take control of your expenses and have a road map for greater success. As you move from project to project, you will be able to develop effective budget planning skills the more. Remember, most people do not plan to fail, they just fail to plan. So keep up with effective budget planning for success of projects.