What are the best practices for budgeting a digital project?

1 Define the project scope

The first step for budgeting a digital project is to define the project scope clearly and comprehensively. The project scope is the set of features, functions, and deliverables that you agree to provide to your client or sponsor. It also includes the assumptions, constraints, and risks that may affect the project. By defining the project scope, you can avoid scope creep, which is the tendency for the project to expand beyond its original boundaries and increase the costs and time. You can use tools such as a project charter, a scope statement, or a work breakdown structure to document the project scope and communicate it to all the stakeholders.

3 Estimate the costs

When budgeting a digital project, the third step is to estimate the costs of the project based on the chosen budgeting method and the project scope. These costs can include direct costs, such as labor, materials, equipment, software, licenses, and travel expenses; indirect costs, like overhead, administration, utilities, and rent; fixed costs, like salaries, contracts, and subscriptions; and variable costs which vary depending on the project size, scope or duration. To estimate the costs accurately and reliably, you can use tools such as spreadsheets, software or online calculators to organize and track your data. Additionally, you can employ techniques such as expert judgment, analogous estimation or three-point estimation.

4 Allocate the resources

The fourth step for budgeting a digital project is to allocate the resources necessary for successful completion. This includes human resources, such as project managers, developers, designers, and testers; physical resources like hardware, software, tools, and equipment; and financial resources, such as cash, credit, or loans. It's important to consider availability, suitability, capacity, and cost when allocating resources. Additionally, you must balance the trade-offs between quality, scope, time, and cost while prioritizing the most critical and valuable resources. To plan, schedule, and monitor your resource allocation you can use tools such as a resource breakdown structure, a resource calendar, or a resource histogram.

6 Monitor and adjust

The sixth and final step for budgeting a digital project is to monitor and adjust your budget and your timeline throughout the project lifecycle. Monitoring and adjusting are essential to ensure that your project stays within the budget and on schedule, and that you deliver the expected value and quality to your client or sponsor. By monitoring and adjusting, you can also identify and resolve any issues, changes, or deviations that may arise during the project execution.

To monitor and adjust, you need to collect, analyze, and report the data and information related to your project costs, resources, and schedule. You also need to compare the actual results with the planned estimates and baselines, and evaluate the variances and performance indicators. You can use tools such as a budget report, a status report, or a dashboard to communicate and document your project status and performance. You can also use techniques such as change management, risk management, or quality management to handle and mitigate any changes, risks, or defects that may affect your project budget or timeline.