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  • Chapters
    • Introduction
    • The Stages of a Project
    • Chapter 1. Sponsorship and Leadership
    • Chapter 2. Defining the Objectives and Benefits
    • Chapter 3. Planning the Project
    • Chapter 4. Ensuring the Project is a Manageable Size
    • Chapter 5. Defining the Budget
    • Chapter 6. Managing the Risks
    • Chapter 7. Getting the Right Project Manager
    • Chapter 8. Getting Customer Representation
    • Chapter 9. Defining Roles & Responsibilities
    • Chapter 10. Getting the Right Resources
    • Chapter 11. Monitoring and Reporting Progress
    • Chapter 12. Communicating Progress
    • Chapter 13. Consultation and Leadership
    • Chapter 14. Getting Realistic User Requirements
    • Chapter 15. Defining Your Approach
    • Chapter 16. Conducting Structured Testing
    • Chapter 17. Creating an Implementation Plan
    • Chapter 18. Conducting a Post Implementation Review
    • Chapter 19. Realising the Benefits
    • Chapter 20. Learning the Lessons
    • Chapter 21. Celebrating Success
    • Checklist
  • About Us
  • FAQ
  • 21 Ways to Excel at Project Management

Defining the Budget

Question 5: Have you defined a detailed project budget?

Good Practice: Define all costs in the form of a project budget. Your budget should include all external costs such as licences, third-party services, consultants, consumables, etc. This budget should be signed off by the steering committee or other authority to make sure enough funds are readily available.

A few basic rules will help make sure an accurate and realistic budget is produced:

  • Assume that people will only be productive for 80% of their time.
  • People working on multiple projects take longer to complete tasks because of time lost switching between them.
  • People are optimistic and often underestimate how long tasks will take.
  • When creating your budget, use other people's experiences and your own.
  • Get an expert view.
  • Include management time in any estimate.
  • Always build in contingency for problem-solving, meetings and other unexpected events.
  • Cost each task in a Work Breakdown Structure to arrive at a total rather than trying to cost the whole project.
  • Agree on a tolerance amount with your customer for extra work that is not yet defined.
  • Communicate any assumptions, exclusions or constraints you have to your customer.
  • Provide regular budget statements to your customer, copying your team so they are always aware of the current position.
A woman's hands fanning out nine one-hundred dollar bills

Common Mistakes

  • Lack of budget ownership.
  • Providing funds on an ad-hoc basis.
  • Significant costs are not clearly identified early on; this can result in the project being cancelled later because of a lack of funds.
  • No control or monitoring of actual project spending against planned spending.
Defining the Budget

Question 5: Have you defined a detailed project budget?

6
Managing the Risks

Question 6: Are you managing the project risks?

7
Getting the Right Project Manager

Question 7: Have you appointed an experienced project manager?

8
Getting Customer Representation

Question 8: Do you have experienced and effective user representation?

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