What are some best practices for creating a project budget?

1 Understand the scope of your project

Have a clear understanding of the scope and objectives of your project. What are the main deliverables, milestones, and quality standards of your project? What are the assumptions, constraints, and dependencies that affect your project? How do you measure the success and value of your project? By answering these questions, you define the scope and objectives of your project and align them with your stakeholders' expectations and requirements.

2 Estimate the costs and revenues

Estimate the costs and revenues of your project with historical data, expert judgment, parametric modeling, bottom-up estimating, or contingency analysis. Consider the direct and indirect costs and revenues of your project, such as land acquisition, construction, financing, taxes, permits, and sales. Document and justify your estimates and assumptions and review them with your project team and stakeholders.

3 Create a baseline and contingency budget

Create a baseline and contingency budget that reflect the scope, objectives, and uncertainties of your project and that are realistic, accurate, and transparent. A baseline budget is the approved version of your project budget that serves as a reference point for measuring and reporting the performance of your project. A contingency budget is the amount of money that you set aside to cover any unforeseen changes or risks that may occur during your project.

4 Monitor and control your project budget

Track and compare the actual costs and revenues of your project with the baseline budget and report any variances or deviations. Identify and analyze any changes or risks that may affect your project budget and decide whether to accept, reject, or modify them. Use appropriate tools and techniques to monitor and control your project budget, such as cost performance indicators, earned value analysis, variance analysis, or change control processes.

5 Review and update your project budget

Review your project budget to evaluate the progress and performance of your project and to identify any issues or opportunities for improvement. Update your project budget to reflect any changes or adjustments that have been approved or implemented in your project. Review and update your project budget at least monthly or more frequently if needed and use clear and consistent formats and methods to communicate them.

6 Learn from your project budget

Use your project budget as a source of information and feedback that can help you improve your skills and knowledge as a land developer. Document and share the lessons learned from your project budget with your project team and stakeholders and apply them to your future projects. By learning from your project budget, you enhance your cost estimation and budgeting abilities and increase the success and value of your land development projects.

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?