5 Tips for Project Management Budgeting
Time is money; as a project manager, you know better than anyone else the reality of balancing budget constraints with organizational needs and priorities. To accomplish the ultimate objective – a complete project, on time and within budget – a little financial foresight can go a long way. These five strategies can help ensure your team stays within the bounds of your budget and on track to meet your goals.
1. Advantages of Project Management Software
The processes and tools used to manage a project have come a long way from using pencils and spreadsheets to employing sophisticated project management software. Utilizing software has many advantages – it provides a central database for all of the information pertaining to a project, allows for greater document control, standardizes processes, gets new team members up to speed fast and typically integrates with the accounting department so that data does not have to be duplicated. In addition to benefiting the team that is working on a project, the software also enables communication with vendors and clients. The success of a project often involves pleasing a client and giving them all that they want. By taking a snapshot of a current project and communicating with a client it helps keep the project on schedule.
2. Embrace Historical Data
You can learn a lot about the costs for your project by exploring past projects that are similar to your current endeavor. This is where using a software tool comes in handy. By mining data that is related to past projects, it gives you a sense of the money and time that went into their completion. You can identify areas where resources were subtracted or added and formulate estimations based on those results.
3. Understand Your Core Costs
It is often easiest to begin your project by entering the core costs that it will take to get your project underway. These numbers are your minimum expenses for each category that makes up a project such as travel, software, equipment and team members. If you examine each category and the data shows that the cost for each one is under your budget, your life is easy. However, you know that this is the real world! Typically, you’ll have to allocate more money towards one of the areas. If this does not bring your project under budget, it may be time to talk to someone in upper management who has the authority to expand the budget.
4. Explore Different Means of Financing
When a budget for a project needs to be expanded, there are multiple alternatives to cover financing. A business credit card can provide advantageous financial control – this way, business expenses can be managed in one simple account and periodically evaluated to make sure that your project is staying within the constraints of your budget. This type of financing may offer certain business benefits such as airline rewards, insurance coverage or emergency services. If your company typically operates on a project-to-project basis, this means of financing can act as a bridge loan to account for unanticipated costs.
5. Prepare For Change
During the process of completing a project, there are bound to be some changes. Nothing set in stone when you are conducting business. It’s crucial that you monitor your budget estimations on a consistent basis. This will alleviate a 5 percent overrun in your budget turning into an overrun that escalates much steeper. This can be done by comparing the actual costs with the estimations that you came up with from historical data. Use this data to periodically estimate future costs that you anticipate will be occurring later in the project. By staying proactive and continuously monitoring data, it helps keep the project running smoothly and cuts down on unwanted problems.
Financial planning and constant evaluation are the key to creating a successful project. The above strategies can help improve the efficiency of your workflows and allow you to meet the expectations of your clients – on time, and in the bounds of your budget.