How to Create a Project Budget

An overview of project budgeting basics

You cannot run a successful project if you’re not clear on your project budget. But how do you become clear on your project budget if you’ve never created one before?

Here’s a simple overview of how to create a project budget step-by-step.

1. Understand the scope of your project

Your budget will be based on the scope of your project, so the first thing you have to do is understand the scope of your project.

If you’re not clear on your scope, you’ll end up exceeding your budget. Scope and budget are connected.

So, what does it mean to understand your scope?

You need to know for certain what you’re doing on the project and especially to define what is in and out of scope. This is the detail that will give you guidance on your budget.

2. Identify Direct vs. Indirect cost

You can’t move onto this step until you’ve done step one.

Once you’ve done that, you can plan out the different direct and indirect costs that will be associated with your project.

Direct costs are directly related to what you’re doing and they’re usually one-time costs.

Indirect costs can be repeated such as software that has to be renewed regularly.

You need to take all this into account because your project budget will cover direct costs but it won’t cover the continuous indirect costs, because those need to be passed off to the business. Since they’ll be the ones taking it over, they’ll need to add that to their budget.

More steps for creating a project budget

There are a few more steps I want to go over with you to ensure you have a solid project budget. Head over to YouTube with me to watch my most recent video where I break it all down!

If you want more step-by-step guides on all things project management, check out my SLAY Project Management online course where I take you through all the steps of successfully managing a project – including documentation – from start to close. You’ll get every template you will need, along with detailed video instructions on how to use them.

--Adriana Girdler, PMP | Creator of Slay Project Management?