Creating a Project Budget: What You Need to Know

When starting a project, it is difficult to know how much it will cost. Project managers are held to account for their budget estimates and with so much uncertainty in projects, it can be one of the project managers' greatest challenges.

The ability to create an accurate budget is an essential skill for a project manager. It can be a daunting task, especially for new project managers; however, once you have created your first budget, you will have an approach to use, and it will become easier for future projects.

Budgeting Basics¹

There are two main approaches you can take when creating a budget:

1. Top-down approach: deciding how much the project will cost and dividing the amount between the work packages.
2. Bottom-up approach: estimating th ... Read more »

Having a thorough budget the project manager can make better decisions regarding the constraints (time, cost and scope) to successfully complete the project while satisfying stakeholders’ needs and understanding the implications on the PM schedule and resource allocation. For example, the project budget helps determine what the scope items should be included in the PM plan and which items should be removed from this document. Alternatively, if one of the key constraints is to complete a project before a specified date, then the project budget will help you determine the degree of schedule crashing permitted so that you can deliver the project on-time.

            Project budget management is a process of formally identifying, approving and paying the costs or expenses incurred ... Read more »