Struggling to come up with a feasible budget for your project? Here’s everything you need to know about project budget management for all kinds of projects.
What Is Project Budget Management
Project budget management is the foundation of any project. It’s basically the administration, allocation, and supervision of finances related to a project.
Contrary to popular belief, budget management in a project is more than just about coming up with a total sum required for project completion. It involves many elements, such as individual costs, correct allocation, budget tracking, and even justifying the proposed budget.
Needless to say, project budget management is an active and ongoing process that runs alongside the project throughout its tenure. Without it, project completion is simply impossible.
Why Is the Budget and Its Proper Management Important To A Project
It’s not hard to understand why a budget is important for a project; it obviously fuels the entire funding process. However, it’s more than that. A carefully created budget helps stakeholders understand how much money is needed and why. It also helps to keep track of costs and measure performance during the project.
Of course, managing the budget is as important as its creation. Without proper project budget management, the costs may overrun, which may result in the project tanking, or your profits may take a hit. With proper budget management, project managers can determine exactly what fraction of the budget needs to be allocated toward a certain task or resource. They can also ensure the project remains profitable without compromising on essential spending.
A Step-By-Step Approach to Project Budget Management
Project budget management involves both the creation of the budget as well as its overall management. The type of budget you design will vary based on project type and length, as well as the industry you’re working in.
Here’s a general rundown of steps that are typically involved in project budget management.
- Create a comprehensive outline of project tasks, supplies required, and the milestones that need to be achieved.
- Next, estimate the cost of each task to come up with an estimate for the whole budget.
- Once you have a budget proposal, it’s time to get approval to finalize the budget.
- Next, you should create a tracking system to keep track of the budget throughout the duration of the project.
- Once the tracking system is in place, keep a close eye on the project budget, and check and recheck everything regularly to ensure there are no discrepancies.
- If a change is required in the budget plan at any point throughout the project, make sure you make necessary adjustments to the rest of the budget.
- Create a project budget report at the end of the project duration.
While these simple steps should help you get started, check out our Finance Basic For Project Management online training, along with our other project management basics courses at Think IT Project Management. We also offer IT project management services in PA that may be helpful for your project. Check it all out!
