Tips To Decide Your Project Budget

One of the most common percentage-based budgeting is the 50/30/20 rule. The idea is to divide your income into three categories, spend 50% on necessities, 30% on necessities and 20% on savings.

Approaches to estimating a project budget

  • Rate the individual parts of the project plan and tot them up.
  • Figure out the total, and then split it into tasks or milestones.
  • Analyze the data in similar projects to decide the cost.
  • Using data and project variables to suggest the total.

Steps to a Budget Made Easy

Step 1: Set Realistic Goals.

Step 2: Identify your Income and Expenses.

Step 3: Separate Needs and Wants.

Step 4: Design Your Budget.

Step 5: Put Your Plan Into Action.

Step 6: Seasonal Expenses.

Step 7: Look Ahead.

What’s the 50 30 20 budget rule?

Senator Elizabeth Warren popularized the so-called “50/20/30 budget rule” (sometimes labeled “50-30-20”) in her book, All Your Worth: The Ultimate Lifetime Money Plan. The basic rule is to divide after-tax income and allocate it to spending: 50% on needs, 30% on needs, and putting 20% ​​away for savings.

Why is a project budget so important?

The Project budgets are essential communication tools. They promote visibility between the project team and key stakeholders. As your project progresses, you will use your project budget to track how your actual costs reach your estimated costs and pass that information on to stakeholders. If project requirements change, your budget may also change to reflect the new costs.

Here are a few other reasons why a project budget is so critical:

  • Project budgeting shows the progress and success of a project by tracking budget utilization as the project continues.
  • Project budgeting helps secure funding by providing transparency about how budget resources will be used.
  • Project budgets assist companies operate efficiently by planning costs ahead of time.
  • Project budgets provide insight into future project costs by providing a historical record of the actual cost of the project.
  • For successful budget management, it is in your best interest to take your time and prepare an accurate budget as part of your project plan. 24% of project managers say that unrealistic budgets negatively affect projects, leading to higher costs or other problems.
  • But a carefully prepared cost estimate for your project budget will set you up for success right from the start.

Some steps to creating and managing a project budget:

Creating a project budget is an intensive process, especially if you are working on a long-term or high-budget project. Some project management methods and frameworks outline preferred approaches or techniques for estimating project budgets. For the steps below, we have aligned with the Project Management Book of Knowledge Guidelines on Project Budgeting.

1. Outline your project tasks, milestones, and supplies

Before you can estimate costs for your project budget, you need to know what your project wants to achieve. Take a look at your project plan to identify the tasks, milestones and activities that your team will need to complete. You can also collaborate with the project team or other stakeholders to ensure that everyone is on the same page.

2. Estimate your project budget

With a list of potential project costs in your hand, it is time to start estimating the cost of your entire project. You can view the budget estimate in 2 ways: top-down or bottom-up.

3. Get your project budget finalized

Once you have a clear project budget, you need to finalize it with the key people involved in the projects. You may need to get official approval for your budget from the people in your chain of command, but it is equally important to get your stakeholders and budget managers on board.

4. Create a project budget tracker

No matter how you’re managing your project schedule and other elements, it’s smart to add a budget tracker to your project management system. With a project tracker like this one, you can create a complete task list organized into milestones. Then, you can add columns to track estimated cost and actual cost as well as other important data.

5. Monitor your project budget

It is important to regularly monitor your project budget. By measuring actual costs against projected costs, you can anticipate problems such as scope creep or overspending quickly. This gives you enough time to change course without impeding the progress of the project.

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