What it
is: Develop Project Budget
Description
The project budget is a detailed estimate of all
the costs required to complete project tasks. It is much
more detailed than the high-level budget developed in the
Initiate Stage. The typical budget specifies costs for
staff labor, materials procurement, ongoing operating costs
and other direct costs such as travel or training.
Rationale/Reason
The detailed budget provides the project sponsor
with a best estimate of how much the project will cost.
The detail budget helps manage expectations and gives the
project sponsor information to develop a cost/benefit for
the project.
The budget is also used in the Execute and Control stage
to help determine whether the project is financially
on track.
Who is involved?
Project Manager
Project Sponsor
Project Team
Results
This information is included in a separate section
of your project plan often referred to as “Project Budget.”
How to: Develop
Project Budget
Recommended actions and strategies
The table below lists the steps for developing a
detailed budget:
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What to do
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How to do
it
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1
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Refer to your high-level budget from the Initiate
Stage
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Use the high-level budget created in the Initiate
Stage as a starting point.
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2
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Refer to budget information for similar projects
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Consult with the project team, project sponsor
and others in the organization who have worked on
similar projects and refer to their budgets to identify
costs.
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3
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Identify the detailed labor costs associated with
the project tasks
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To determine labor costs, apply labor rates to
the detailed tasks, staff efforts and durations in
the project schedule. Also include any costs to acquire
staff for the project.
Note: Remember to budget for project management costs.
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4
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Identify the detailed material costs
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Refer to any procurement plans that include the
costs to acquire equipment, materials and other non-staff
resources.
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5
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Identify any ongoing operating costs
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If appropriate for your project, determine rates
for ongoing operational costs associated with the
project’s product or service.
Examples include :
- Network costs
- Customer Support costs
- Software Licensing costs
- Advertising costs
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6
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Identify any other specific costs
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Look for potential expenses such as training and
travel etc.
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7
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Build in a contingency by assessing the probability
of exceeding those costs
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Assign a percentage reflecting how much each unknown
factor may affect the project as a whole, or a portion
of the project.
Assessing unknowns is very important to a successful
budget. Without it, the crises that are an inherent
and regular part of any project will affect your
bottom line.
The budget estimate should have this
contingency built in. It is normal for the overall
contingency to be between 20 and 30 percent of
the total project cost.
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Templates/Examples: Develop Project Budget
Introduction
The table below provides several templates you
can use to help develop a project budget.
