Managing Project Budgets | Project Management Fundamentals

Bankruptcy leaves a really bad impression.
If you don't establish, manage and control costs on your project, you can end up with a bankrupt project, where costs exceed benefits.
To avoid this dreadful fate, you should control costs while delivering your project outcomes.
 
 

Going somewhere you've never been before, without a GPS, oreven and old school map, can be a very daunting task.
Moving down the path of delivering a project withoutappropriate information, is a lot like not having a GPS.
The work breakdown structure, or WBS, is like amap from which you can build your project budget.
 
 
 

Going shopping in a mall the United States is verydifferent than shopping in an open market in Mexico, or China.
The cost you see, or are told, about a product is typically fixed inthe US, but is only a starting point for rich conversation in other countries.
These are two very different and distinct costing or pricing standards.

Imagine playing chess, when you don't know the rules and your opponent istaking different shaped pieces and moving themevery which way across the chess board.
It can get awfully confusing, frustrating and might make you believesomeone is making up the rules as you proceed through the game.
Working out different categories of project costs can seem like playing thatfrustrating game of chess, if you don't know a few of the rules.
 
 

Although common and expected of virtually every project manager, estimating in the project management space generally has a reputation for being done quite poorly.
Are you one of the project managers that struggle with this? How can you make this better? The key is not to paint a picture that is more detailed than you have facts to support.
To do this, your estimation should be performed in stages or types.
 
 

A great way to increase your popularity as a project manager isto ignore sound estimation techniques and get your project estimates all wrong.
I guarantee you, you'll get more visitors atyour desk, many more emails, and phone calls.
Unfortunately, they won't be communicating congratulations on a job well done.
 
 

I wish I could tell you that all of my project estimates were accurate.
They haven't been.
And yours probably won't be either.
 

 Imagine being told that you were going to receive a $100,000 salary.
But you were not told when you would receive it.
That would be fairly inconvenient, wouldn't it?You'd not know if you can spend money or when you could spend it.
 

In the movie A Few Good Men, ColonelJessup, played by Jack Nicholson, uttered a famous quote.
"You can't handle the truth.
"Sometimes that is the case with a project budget.

Begin with the end in mind.
It's the best way to think when it comes toa great many things in the world of project management.
When it comes to project budgets, there are two major factorsthat need to be considered when building and managing your project budget.
 
 

The one thing you can be assured of when you establish your project plansand spending projections, is that it willnever come to fruition exactly as you plan.
There are way too many variables in the dynamics of the average project.
The trick is to know how to adopt and respond to those changes.
 
 
 

When it comes to managing finances, there's a fact we all need to embrace.
Just because you still have checks in your check book, it doesn't necessarilymean you still have money in your account So it goes with projects.
Projects by their very nature, are always changing.
 
 

 So, picture this. You're heading down the highway. There isn't a 

Have you ever ordered a repair service tobe conducted at your house, had the serviceprovider show up, deliver the service, and thenask you for more money than you agreed to?If you were like me, it produces an unpleasant experienceand makes you hesitate ever again to call that service provider.
You don't want to be the service provider in that story.
With estimates that are based on sound information, you'll know at any pointin time how much you're spending and how much you have left to spend.
 

If you were to go shopping, search a store for just theright piece of clothing, find it after a bit of searching, and thengo to the register to find out you did not have thecorrect credit or debit card to pay for the purchase, you'd be frustrated.
So, the equivalent of this doesn't happen with your project budget.
You need to understand how the budgetprocesses around your project work, so the processingof your diligent budget work does notget ruined by undue delays and administrative obstacles.
 
 

I thoroughly enjoy having and using a GPS system when I'm driving.
Not only does it give me a bit of comfort that itwill guide me to where I want to go, I can take apeek at it to understand if my next turn is going to beleft or right and put myself in the correct lane ahead of time.
In other words, it gives me a bit of foresight.

When you stop to think about it, the fact thatprojects actually are delivered successfully, could be a small miracle.
There are people in communications that can vary from person to person.
Risks abound.