How do you set up a project budget for a non-profit or public sector organization?

1 Understand the project scope

Before you can create a project budget, you need to have a clear understanding of the project scope, objectives, deliverables, and timeline. This will help you identify the resources, activities, and costs that are necessary and relevant for your project. You can use tools such as a project charter, a work breakdown structure, or a logic model to define and document your project scope.

2 Estimate the project costs

Once you have defined your project scope, you need to estimate the project costs based on the resources and activities that you have identified. You can use different methods to estimate your project costs, such as historical data, expert judgment, parametric estimation, or bottom-up estimation. You should also include contingencies, reserves, and overheads to account for uncertainties, risks, and indirect costs. You can use tools such as a cost breakdown structure, a budget spreadsheet, or a budget software to organize and calculate your project costs.

3 Align the project budget with the funding sources

Another important step in setting up a project budget is to align it with the funding sources that you have secured or plan to secure for your project. You need to consider the terms, conditions, and restrictions of each funding source, such as the eligibility criteria, the reporting requirements, the matching funds, or the spending limits. You also need to monitor and track the inflows and outflows of your project funds, and ensure that you comply with the accounting standards and regulations of your funding sources. You can use tools such as a cash flow statement, a grant management system, or a fund accounting software to manage and report your project funds.

4 Review and revise the project budget

Finally, you need to review and revise your project budget throughout the project life cycle, as your project scope, costs, and funding sources may change over time. You need to compare your actual project expenses with your planned project budget, and identify any variances, issues, or opportunities. You also need to update your project budget based on the changes in your project scope, costs, or funding sources, and communicate them to your project stakeholders. You can use tools such as a variance analysis, a budget revision form, or a budget dashboard to review and revise your project budget.

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?