Tips to Create a Budget for Your Project

Because projects differ on a case by case basis, there are some common strategies when it comes to writing budgets, such as: Plan for the worst, identify where changes are likely to originate and watch those areas closely. And don’t forget the contingency plan—and a contingency budget—in case things go a bit haywire.

Here are seven tips and practices for creating a budget that supports your project:

1. The hardest project budget you’ll ever write is the first one! After that, you have both a model for budgeting similar projects, and the experience for writing detailed budgets going forward. For your first budget, get help from an experienced team member or mentor. If you’re a collaborative group, get input from everyone’s work estimates. The point is you don’t have to do this alone.
2. Learn from other projects! Find a past project that was similar in type or scope to the current one, and use it a model. Some teams turn to their project management tool to mine data and information on how much time and money went into certain projects—and identify where resources were added or subtracted.
3. Know your core costs! Start by entering costs—the absolute must-haves to get the project up and running. They include team members, equipment, software, travel, etc. Next, compare those core costs to the total budget. If your costs fit under the total cost figure, you fit under the cap. If not, you need to have that first conversation with your boss or stakeholders about how to scale the project to be completed within the budget—or about expanding the budget.
4. Prepare to change budget estimates! Most initial estimates are just that—estimates. With the common occurrences of scope creep, unexpected surprises and the nature of doing business, at some point in the project the budget can easily change. This fact just underscores the need to manage the project budget continually. Vigilant project manager compares actual-to-date against the initial budget and then against anticipated costs toward completion at regular intervals. And then it’s time to tweak the work plan to bring expenses in line with the total budget.

Monitor resources! You want your team members working on the right tasks to their full potential. Salaries are a big component of the budget, so review resource usage weekly to make sure that everyone is working the highest priorities and putting the proper amount of hours per week into their tasks. A project management tool with strong resource leveling features can help manage this.