5 Quick Tips for Effective Budgeting within Project Management

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With the extra budgetary pressures every organization is facing today they want to ensure that the money they invest into a project relating to product, transformation or IT is put to good use. Budgeting questions and benefit realisation should be forefront in the mind for the assigned project manager. How much is this project going to cost? Have all budgetary items been accounted for including man hours, equipment, external resources etc.? In short can we deliver within budget?

Budget allocation can determine the success of a project. Any project that is completed within the predetermined schedule and reaches the goals set should not be deemed a success without the project meeting its budgetary requirements. Therefore today, project managers need financial acumen to ensure their projects don’t overrun its financial plan.

A few tips to help keep to the project budget:

  1. Review and Forecast the budget frequently: By not examining the project budget forecast frequently can ultimately leave you in a position of no return. The budget forecast needs to be reviewed with your accounts department to ensure that the budget doesn’t go over the set amount. It will be much easier to make the necessary amendments to the budget if problems are spotted early.
  2. Scope management: Scope creep or change requests can cause huge problems for a project and is one of the most common causes of project cost overruns. Unintended work can’t help but creep into a project. Unplanned resource hours can play havoc on your project’s predesigned budget. As the Project Manager, you must have a process in place to deal with extra work and manage your project scope. Having a change order system in place could provide you with the necessary control needed to keep your budgets in order.
  3. Communicate: Communication is key in any situation and it is no different when it comes to budgeting. It is important that you communicate to the other project team members any details regarding the projects spend and budgets. A well informed project team will ultimately aid you in keeping to assigned budgets.
  4. Risk and issues: Possible risks and existing issues have a way of getting their way into projects and causing destruction. Therefore it is important to keep track of them and reduce the level at which they can affect your project budget. It is next to impossible to stay clear of risks and issues, however you can have a plan in place for when and if they do arise.
  5. Resources: The resources assigned to a project are ultimately where most of your project budget goes. As a project manger it is essential that you examine the resources and skills closely to ensure that they are being fully utilized and that the ideal resources are matched to the right projects.

Budgeting and financial control of your project must be proactively managed; it is an important component of the process and should be reviewed by the project manager, financial team, stakeholders and key project team members regularly. Keeping a firm grasp on the project budget will ensure that it is kept within the forecast set from the beginning.

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