Chapter 7 – Scheduling Resources and Budgets
7.13. Creating a Project Budget
A simple budget can be created in 5 steps:
- Break the project into small tasks and milestones: Create a task list. This will help the team understand all the details of what needs to be accomplished. Example: Trainer Fees at $2500.00 does not tell the person in authority any details. Trainer Fees: 5 trainers x $50.00/each per hour = $250.00 per hour for 5 trainers. 10 hours of training x $250 per hour = $2500.00 is an example of a good project breakdown of costs.
- Estimate each task and milestone: Research comparable costs and give each task/milestone an estimation. This is a good time to identify all the resources (people, materials, equipment) work performed, and work out the costs.
- Add the estimates all together: Calculate the total costs by either adding them up. If you use an excel sheet, you can sum to get the total.
- Add in any contingencies, taxes, other costs: This can include overhead costs, reserve funds, and governmental taxes.
- Seek approval: Speak to the person of authority, review the project budget in detail, and get approval with a signature.
You can use a checklist to ensure you have covered all the budget expenses before seeking approval:
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- Can I define the project and its end goal?
checklist - Are there any ground rules, constraints, and assumptions I should consider?
- Do I have sources of data (Task List, WBS, Cost Estimates, Schedule) to rely on?
- Is the estimating methodology in use acceptable?
- Do I know who is going to work on the project?
- Do I have a list of resources and their rates to complete the project?
- Can I compare my estimate against the best practices industry standard?
- Do I have contingency reserves to account for risk?
- Who are the key project team members to help me in the estimating/budgeting process?
- Am I on the same page with Project Stakeholders?
- Can I compare the budget with the original estimates and reconcile the differences?
- Can I define the project and its end goal?
(Viter, 2021)
Watch the video: How to Create a Project Budget by Project Manager [3:05] below. Transcript available on YouTube.
