Budget planning is a key aspect of project management to outline and understand the financial resources needed to complete a project. Effective budget planning is essential to ensure that projects are completed on time and within budget, whilst considering project goals, resources, and constraints.
Project planning and management
Budget planning starts with effective project planning. During the planning phase, project managers develop a detailed plan for the project, covering the ‘what, who and when’ to understand exactly what’s required for successfully completing the project. When covering these important aspects, the key factors that should be included are project costs including labour, software licensing, materials, and any other expenses.
As well as making a plan for how everything should go, it’s important to plan for things going wrong! Identifying potential risks that could impact the project budget or timeline should be taken into account. This also includes potential cost overruns, delays and scope changes that can impact the project outcomes.
Once the project plan has been developed, project managers need a project schedule, outlining the specific deliverables required to complete the project. This schedule should include a timeline for each task, as well as the resources required to complete each task, milestones, and deadlines. Project managers must continually monitor the project schedule to ensure that tasks are completed as planned, or adjust the schedule as needed to accommodate any changes or unexpected delays.
The planning schedule is important for budget planning as it helps project managers to understand the financial implications that the schedule has. For example, the cost of what resources are needed and for how long they will be required for is a huge financial consideration. If the project is delayed, what are the potential financial costs associated that should be accounted for.
Project budget planning
Project budget planning involves developing a detailed budget, outlining the entire costs associated with completing the project. This includes identifying all direct and indirect costs such as:
- Resources (both internal and external)
- Any other expenses associated with the project
Project managers should also identify potential risks that could impact the project budget, such as unforeseen expenses or changes to the project scope. You can then develop a contingency plan to address these risks, ensuring that the project budget remains on track.
Project budget planning should be an ongoing process throughout the project lifecycle, with project managers continually monitoring expenses and adjusting the budget as needed to ensure that the project remains on track.
Benefits and return on investment
Return on Investment (ROI) is a crucial aspect of budget planning in project management, and it generally refers to the benefits that you can achieve based on the budget spent, usually measured as a monetary value. Essentially, you want to make sure that you’re getting back more than your putting investing.
Benefits can also refer to the advantages that the project will bring to the organisation or stakeholders., which could be tangible, intangible or a mix of both and can vary from project to project. For example, a tangible benefit could be an increase in revenue or a reduction in costs, while an intangible benefit could be improved customer satisfaction.
When planning a budget, it’s important to consider the potential benefits of the project and weigh them against the cost of implementation. This will aid in determining the feasibility of the project and whether or not it is worth investing in, helping to shape your budget.
Budget release cycles and requests
Budget release cycles and budget requests should be considered when creating your budget for a project. Budget release cycles refer to the periods during which funding is allocated and released for various projects, requiring strict adherence to schedules as one project delay could have a knock-on effect which should be considered.
Budget requests refer to the requests made by project managers or other stakeholders for funding for their projects. Similarly, to accounting for risks during a project, understanding (and keeping some budget to the side for) the fact that scope can change will help you to plan your budget accordingly.
Fluid’s Project Pipeline can help streamline the budget request process by providing a central platform for all stakeholders to submit and track their requests. This helps to ensure that all requests are properly evaluated and prioritised before funding is allocated, saving time and allowing you to make more informed decisions.
Budget planning and PPM software
Budget planning and the overall monitoring is a valuable tool for project managers, helping to streamline the budget planning process and ensure that all project costs are accounted for.
Fluid is comprehensive project and portfolio management software that helps with all aspects of PPM, including budget planning and tracking. Project managers can use Fluid to create detailed project budgets that include all anticipated expenses and revenue streams. The software then tracks actual expenses and revenues in real-time, enabling project managers to stay on top of their budgets and make any necessary adjustments as the project progresses.
Fluid also provides project managers with a comprehensive view of their resource allocation. The software can be used to assign resources to specific tasks and track the time spent on each task, enabling project managers to identify areas where resources are being over-allocated or under-utilized. This data can used to adjust project budgets and ensure that resources are allocated in the most efficient and effective way possible.
Fluid provides powerful reporting tools that can help project managers to analyse their project budgets and identify areas where costs can be reduced, or efficiencies can be gained. This data helps to make proactive, data-based decisions not only during the project cycle itself, but to inform future budget planning and ensure that projects are completed on time and within budget.
Start your free trial today and find out how Fluid can help you with PPM.