How do you create and maintain a project budget document that tracks your project costs and variances?

1 Define your project scope and objectives

Before you can create a project budget document, you need to have a clear understanding of your project scope and objectives. This means defining what you are going to deliver, how you are going to deliver it, and why you are doing it. You can use a project charter, a scope statement, or a work breakdown structure (WBS) to document your project scope and objectives. These documents will help you identify the key deliverables, activities, resources, and stakeholders involved in your project, as well as the expected outcomes and benefits.

2 Estimate your project costs and revenues

Once you have defined your project scope and objectives, you need to estimate your project costs and revenues. This means estimating how much money you will need to spend and how much money you will earn from your project. You can use various methods and tools to estimate your project costs and revenues, such as historical data, expert judgment, analogy, parametric, bottom-up, or top-down. You should also consider the different types of costs and revenues involved in your project, such as direct, indirect, fixed, variable, sunk, opportunity, or incremental.

3 Create your project budget document

After you have estimated your project costs and revenues, you need to create your project budget document. This is a document that summarizes and organizes your project financial information in a structured and logical way. You can use various formats and software to create your project budget document, such as spreadsheets, tables, charts, or graphs. You should also include some key elements in your project budget document, such as a budget summary, a budget breakdown, a budget baseline, a contingency reserve, and a management reserve.

4 Track your project costs and variances

Once you have created your project budget document, you need to track your project costs and variances. This means monitoring and measuring how your actual project costs and revenues compare to your planned project costs and revenues. You can use various techniques and indicators to track your project costs and variances, such as earned value management (EVM), cost variance (CV), schedule variance (SV), cost performance index (CPI), or schedule performance index (SPI). You should also update your project budget document regularly to reflect the current status and progress of your project.

6 Review and improve your project budget document

Finally, you need to review and improve your project budget document. This means evaluating and learning from your project budget performance and outcomes, as well as identifying and implementing any improvements or best practices for future projects. You can use various sources and methods to review and improve your project budget document, such as feedback, lessons learned, audits, or benchmarks. You should also document and share your project budget document and results with your organization and stakeholders to demonstrate your project value and success.

7 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?