How can you create a project budget and what should it include?

It is very important to hold feasibility study meetings with stakeholders and estimate the size of the project and their requirements, then create a work breakdown structure and obtain scope approval.

IT Project sponsors often demand project budget clarity earlier than the scope is fully known or understood by the project team, which makes it difficult to provide the project budget. In such cases an order of magnitude (OOM) budget analysis always helps the project team to provide high level budget calculations while they keep progressing with clarifying and analysing project scope and features. As the project team refines their scope understanding, they can update the confidence level around the numbers reported in the project budget.

In order define project scope: - Identify the need and requirements. - Define its objectives - Define the outcomes/deliverables and milestones - Create an execution plan and identify clear achievables - Allocate resources/Do the capacity planning. - Define exclusions and constraints - Speak to stakeholders and plan the timeline

First estimate your project cost set a cost baseline Prioritize based on the urgency of the deliverable Assign the right resources

In the early phases of a project, establishing a precise budget can present challenges. Nevertheless, we can begin by formulating a preliminary budget utilizing input from architects and subject matter experts (SMEs), subsequently incorporating a contingency to generate an estimated figure.

Another way to classify costs as One-time Costs and Recurring Costs. While estimating the cost of development, one should always consider the cost of change management, new technology adoption, maintenance and support also. Sometimes these costs prove to be heavier than the cost of development.

In my experience, I feel Project costs are estimated by considering factors like resources, labor, materials, and overhead. Detailed project scopes, historical data, and expert judgment help create accurate estimates. Techniques include bottom-up estimating, analogous estimating, and parametric modeling.

Once the scope is clear, the next step is to estimate the costs associated with each element of the project. This includes direct costs like labor, materials, and equipment, as well as indirect costs like overheads. I've found that breaking down the project into smaller components makes it easier to estimate costs more accurately.

In complex projects, when having multiple stakeholders or more than one business owner, you might need to break down costs accordingly. Sometimes you might need to have one pool of resources funded from different streams or different milestones broken down into resource costs or a virtual team approach. Each project will be unique thus we must be innovative in our approaches.

Add budget for known contingencies and then some for unknown. I am not sure if anyone had put any kind of contingency budget to deal with pandemic. Have a good Change Management Process in place to adjust budget if needed.

It's important to include a contingency reserve in your budget for unforeseen expenses. This is something I've always prioritized in my budgeting process. Typically, contingencies are a percentage of the total estimated costs, factoring in the level of project risk.

Leveraging project management and budgeting software can be extremely helpful in creating and managing your budget. These tools can automate many aspects of the budgeting process, from cost estimation to tracking expenses. In my practice, using software tools has enhanced accuracy and efficiency in budget management.

A lot of PPM tools lack integration with finance systems that run and manage budgets. Having a tool that will link schedule, finance and resources brings immense value to the project, especially when producing reports to stakeholders and management

Agile is not just a methodology; it’s a mindset that emphasizes adaptability! Agile budgeting's emphasis on continuous improvement is vital. It enables iterative development, allowing for reassessment and reallocation of resources. This approach ensures that the budget adapts based on lessons learned and evolving project needs, leading to more effective use of funds and overall project success.

A project budget should not be static. It's vital to regularly review and update the budget as the project progresses. This involves monitoring actual spend against the budgeted amounts and adjusting the budget as needed. Regular reviews have been key in my projects to ensure that the budget remains aligned with the project's progress and objectives.

Its a key step in project management as it helps in planning, controlling costs & ensures project's financial success. Here are key steps & components to consider: 1. Outline project scope, objectives & deliverables 2. Break down the project into smaller tasks 3. Determine the resource requirements including Man, Machine, Material, License, Travel, Marketing, Training & etc 4. Estimate costing include overhead & external. Costing should account the Contingencies & Inflation. 5. Review, Revise & Finalize it. Note that the budget should be a dynamic document, subject to periodic review & adjustments throughout the project lifecycle. Regularly tracking actual expenditures against & budget allows for proactive management of project costs.

Clear Identification of Risk, Contingency and Escalation for Labour, Plant, Material and Subbies. Understanding the importance of Design Growth driving Procurement (Major Materials) is key to success of locking the Target Cost.

A personal point of view. The best way to create a project budget is to use a Palantir. For the definition of Palantir, one can refer to the writings of J.R.R. Tolkien. It's a shame that the Palantir were lost at the end of the Third Era.

You can review and can improve your estimation by following some best practices. 1. Use the past historical data to estimate the value based on complexity of your work items 2, validate your assumptions with customers or stakeholders 3. Try to do an experiments or prototypes that can help test work items and measure their value and urgency, allowing you to refine your Cost 4. Involving stakeholders in the prioritization process

In software project management, effective budgeting usually extends beyond initial cost estimation to deliver per the initial objective (sometimes not clearly defined, but we deal with it), and encompass the entire project lifecycle (beyond usual costing scope). This includes lifecycle costing for post-deployment maintenance and decommissioning, and a strong emphasis on cross-functional collaboration to uncover hidden costs and potential revenue streams. Including a budget for change management ensures smooth adoption and integration of project outcomes. It's crucial to establish KPIs for monitoring budget utilization and to conduct post-project benefit realization analysis. Please look a bit outside of your project deliverables to budget!