While discussing project budgets, I often run into bad budgeting practices. Here is one I would like to bring to your attention.
Bad Budgeting Practices
In order to determine the project budget, a quotation was asked from the supplier that was to deliver the required services. This quotation was then used as the project budget.
This is a bad budgeting practice, because one of the purposes of a budget is to verify that the quotation(s) received are reasonable or not. This means that you cannot use a quotation as a budget.
Good Budgeting Practices
It should be obvious that a budget should be as independent as possible. When determining your budget, you should use several independent sources for your cost information. This will give you a feeling for the current market situation.
Also keep in mind that your budget is based on a certain scope. If the scope is not clear to the suppliers, you will not be able to compare the quotation(s) with your budget.
Budgeting should always be done independent from suppliers.