By having an absolute budget, a project manager can make better decisions associated with constraints like time, scope and cost to accomplish the project while satisfying stakeholder’s requirements.
What is project budget?
The project budget is complete amount of monetary resources which are assigned to specific objectives and goals of the project for a particular interval of time. The objective of project budget maintenance is to evaluate and control the cost of the project within approved budget and to accomplish the defined project objectives.
The process of identifying a budget for the project is a task of integrating the cost estimate of unique tasks, work package and to create complete cost assessment that enables framing a formal cost baseline. This baseline is involved in defining the budget. The process of project budgeting is conducting at initial phases of the project plan, and it is carried out parallel to project scheduling process.
Significance of baseline budget for project
A baseline budget provides a decomposition of the expected cost of a project. An adequately managed project will involve baseline budget to monitor the progress against expectations. It contains individual items under two main classifications of “labour” and “material”. A baseline often involves time-phased plan
It must involve indirect cost, direct cost, expected profit and possible contingencies. Direct cost involves labour, material and equipment while indirect cost involves the overhead of staff and office space not directly included within the project.
Conforming to the budget stimulates creativity. When project team members have an attitude like “money is no object”, they attempt to throw money at issues rather than determining creative solutions.
Baseline budget for the project may alter for two causes. The project scope might expand, needing highly expensive budget items. In project course, two tasks might have been underestimated, and baseline should be updated.
Busting the budget:
Evaluation of project progress against the baseline provides an organisation with the ability to alter project scope.
How to generate project estimate and budget
Step 1: Understand your team’s professionals and job responsibilities:
Good project management process estimation methods involved are developed on solid relationships. Solid working relationships incline to make the process of estimation much easier. Thus, stronger collaboration with the team will assist you to receive your project to come closest to project budgets.
Step 2: Understand how the project management process of your company work
After having a better grasp, you need to determine how the moving parts of the project fit together. Make it a mission to analyse how things are performed and what will happen when you move things around.
Step 3: Study the project history of team to generate better estimates
Historical information can guide you through advanced projects, after documenting the history, you can evaluate the information to guide you create effective estimates.
Step 4: Apply a work break down structure
You can break down a project into phases, task as well as sub-tasks. When you map it all, then apply a time estimate for each component. Thus you can generate a solid project estimate.
Step 5: Generating a WBS for any plan assist you to receive granular about project tasks
When your estimate the project by unites, i.e. days, weeks or hours through WBS will assist you to understand very quickly when your project estimate outstrip the intended budget.
Step 6: Estimate project with Team Gantt
Another simple way for project estimation and hourly assign resources is to involve a Team Gantt because it is simple to deploy a potential project. It provides you with a summarised way to figure out the structure of WBS and allocate timelines to the team members.
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