How do you budget for an SDLC project?

1 Define the project scope

The first step in budgeting for an SDLC project is to define the project scope, which includes the features, functions, and deliverables that the project will produce. The project scope should be based on the business needs, user expectations, and technical specifications of the project. By defining the project scope clearly, you can avoid scope creep, which is the tendency of adding more work to the project without adjusting the budget or timeline accordingly.

2 Estimate the project costs

The next step in budgeting for an SDLC project is to estimate the project costs, which include the direct and indirect expenses that the project will incur. The direct costs are the ones that can be attributed to specific project activities, such as labor, materials, equipment, software, and travel. The indirect costs are the ones that are shared by multiple projects or departments, such as overhead, administration, and utilities. To estimate the project costs, you can use various methods, such as analogy, parametric, bottom-up, or expert judgment, depending on the level of detail and accuracy you need.

3 Set the project budget

The third step in budgeting for an SDLC project is to set the project budget, which is the approved amount of money that the project can spend. The project budget should be based on the estimated project costs, plus a contingency reserve, which is a buffer for unforeseen events or changes that may affect the project. The project budget should also be aligned with the project schedule, which is the planned sequence and duration of project tasks and milestones. By setting the project budget and schedule together, you can balance the trade-offs between cost, time, and quality.

4 Track and control the project budget

The final step in budgeting for an SDLC project is to track and control the project budget, which is the process of measuring and managing the actual project performance against the planned project budget. To track and control the project budget, you need to use various tools and techniques, such as cost variance analysis, earned value management, forecasting, and change control. By tracking and controlling the project budget, you can identify and resolve any issues or deviations that may affect the project outcome and stakeholder satisfaction.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?