In project management, a basic idea to success is implementing a successful budget plan.
First steps in setting a budget involve:
- Identifying the different elements of a project budget
- Understanding the difference between an estimate, a budget and budgeting
The project manager is concerned solely with the ‘internal costs, purchases and reserves’ section of the budget.
Below are traps to avoid in estimating a budget:
- Being over-precise when the needed information is not available for accurate estimates.
- Under-estimating through a lack of understanding of the target or by submitting to target pressures.
- Over-estimating through a lack of knowledge of the area in question (by adding margins)
Managing project costs enables the project manager to:
- Evaluate tasks/project costs in advance
- Estimate tasks/project costs at every stage of the project
- Involve the project participants in the estimating process, ensuring a more reliable outcome
- Provide decision-makers with all the information they need to make transparent decisions
