Submitted by: John Smith17884
When a project is started, it is essential that a plan is drawn to facilitate its smooth functioning. During the phase of the Project Plan it is equally important to plan the Project Budget. Planning the expenditure and incomes of the project helps to monitor the money spent on the project. A good Project Manager always tries to ensure that the resources are allocated as per requirements and necessity. It is the responsibility of a Project Manager to ensure that a project is well-managed financially. Project Management Professionals (PMPs) who have cleared the PMP Exam by taking a PMP Exam Prep course are well-aware of budgeting their project to ensure successful run of the project.
1. Define Scope of your Project: – Before drawing a budget for the Project it is important to know all pertinent details about Project. When undertaking a fresh and new project it is important to find out about all the required raw materials and workforces needed for the project. Then drawing an estimated duration and estimated funds for the project gives the required information to make a guesstimate of project funding.
2. Set your goals: – Once the project limit and deadlines are finalized then set your budget goals. Begin with the end in mind while drawing out the budget goals. A set goal helps to create a more structured spending and keep the project set towards that ultimate goal. For example your goal could be to complete the project within a specified amount and with optimum usage of all available resources. In such a case, it becomes important to structure money spent in the project in a specific way.
3. Know your net Expenditure: – After setting the goal it is important to have rough estimate of what is going to be your net expenditure. Your net Income may be fixed or variable based on the resource allocated for the project. PMP Aspirant during their PMP Prep uses the Project Management Body of Knowledge (PMBOK ) Guide, 5th Edition, in which the topic of budget is covered.
4. Make your Budget plan: – With the collected data about scope, goal and net expenditure it time to plan the allocation for each individual expenditure based on categories. By dividing the various expenditures into different categories aids in tracking spending on the project. Having a contingency plan for the money spent on the project, prepares the PMPs to look out for any untoward change in the planned project expenditure.
5. Analysis of Tracked Spending: – Create a matrix for calculating and tracking the project expenditure. If the project is similar to any previous project handled by the company then use that particular project s financial matrix for tracking the spending in your current and new project.
6. Allowance for Modification: – No two same or similar project run the same way as the other. So it is important to be ready to make modification as the project rolls out. Thus, it is important that the budget should not be very tight and has some provisions for some malleability of spending.
7. Create Budget: – Using all the above information prepare the budget for the Project and find the required Accounting software application to use for entering your expenses and incomes. Choosing the popular accounting software like Quick Book or Microsoft Accounting provides you with various tools to calculate and account your project expenses and revenues.
8. Budget Evaluation: – This step comes once the budget plan is implemented and after a few weeks have passed since implementation. The best time to evaluate a budget will be to test your financial predictions against one month performance. Based on the information that you gather on actual performance of your project budget, now plan your modification or changes to the budget expenditure. A PMP Exam Prep Course covers pertinent Budgeting topics for PMP Aspirant thus providing a wide spectrum view of the financial aspect of the project.
About the Author: A well-planned budget for a project helps to ward-off unnecessary surprises. Let s learn about Cost Management based on PMBOK concepts with our PMP Exam Prep CourseContact us –