Part 5: Develop Budget
Determining your project budget has been discussed several times on this website. The reason is that many projects experience budget overruns. Many project managers are still having problems determining a good project budget. Based on these facts, I decided to run a series on budgeting best practices.
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Step 5: Develop Budget
In part 4 of this series we developed our schedule. Many project managers think that budgeting is a stand alone process. It is not. Your budget depends on your schedule. Remember that time is money!
What you do when developing your budget is cost each one of the activities you came up with when determining your schedule. The cost of an activity is usually composed of labor, material and equipment. We use a spread sheet to calculate the cost of each activity. You then get your budget by adding up the costs of all the activities.
Budgeting Best Practices
- Make sure your scope has been verified
- Make sure your WBS corresponds with your scope
- Make sure your schedule corresponds with your WBS
- Make sure your budget is in line with your schedule.