Managing a Project Budget 101
I’m sure you know that budgeting is essential in the development of any project. Without a pre-planned budget, projects run the risk of falling apart.
Project budgets, like resources plans, reflect your project team’s overall scope of work and the timing of that work. Simply put, a comprehensive budget provides your organization with an understanding of how funds will be allocated and expended over time.
But how do you incorporate a project budget into your overall project management plans? Below, consider some of the ways and benefits of doing just that.
Incorporating a budget into your overall plans allows you to establish the main objectives of your project. Some projects can be overly ambitious and attempt to accomplish too much, especially when it comes to new clients and campaigns. However, viewing your project through the lens of an allocated budget limits the number of available options—thus giving you a more realistic - and profitable - approach.
Without budget restrictions in place, a project is difficult to complete on time. Incorporating a budget into your overall project management strategy allows you, as a PM, to know how much you can spend on any given aspect of your project.
Once you establish a budget, you can determine exactly how much money can be spent on each component of the project. Whether or not you utilize a cost estimator, a budget allows those in charge of media, production, resource management, and other departments to determine what funds are available for use.
Cost estimates not only provide you with a comprehensive overview of how a project pertains to your team, but also ensure that all departments are on the same page—and that a project can feasibly be completed on time and within budget.
One of the biggest challenges of traditional project management is prioritization across a variety of tasks and projects. Incorporating a project budget into your PM strategy provides you with the ability to prioritize based on components of the project.
Project budgets illustrate available funds, and indicate whether or not you have enough money to complete all intended aspects of your project as desired. Furthermore, they allow PMs to prioritize which parts of a project can be completed initially, while other parts are put on hold.
Let’s face it: projects are going to exceed their budgets. In the event that allocated funding to cover necessary costs is trending toward being inadequate, having a budget in place can help your agency plan for future projects. If your budget shows that only four or five main objectives can be accomplished, you should be able to know how much additional funding will need to be raised to complete the remainder of the project.