Management
1. The importance of project budget
2. Strategies for creating an appropriate project budget
3. Strategies to use when the project has gone over budget
Write a 175- to 350-word summary of your discussion.
Cite at least 2 peer-reviewed, scholarly, or similar reference.
Format your assignment according to APA guidelines.
Project Budgeting
Importance of Project Budget
Budgeting is significant in diverse ways because it helps one or an organization manage its expenditure, monitor the operating cost, and save more finances. Additionally, budgeting can make a project manager makes better financial decisions, prepare for emergencies and stay focused on the project management process and other long-term financial goals (Rossi, 2015). As a project executive, understanding the significance of cost estimation and budgeting from the very start phases of the project is essential. The entire project processes are immensely interwoven around project budgets. The finances available, in significant cases, outlines the duration and type of consumed resources, activities, and operations within the realm of a project.
Steps of Creating a Project Budget
The primary step in planning a budget is to evaluate the project expenses’ estimation to examine the dollar appearance of the project operations. This is all about line-item budgeting, which is forecasting costs by creating an overview of line items. It also engages in identifying expected project costs and other categories of the costs (Manasan, 2016). Now that the budget has been outlined with the particulars on the operating expense per cost category, justifying the budget outline is the second phase in designing a project budget. This involves simply endorsing a project cost approximation by providing the needed statistics to the fiscal authorities. The final step is to maintain cost-effectiveness through covering all the cost that matches the project goals.
Managing Over-Budget
As a project manager, if it is clear the project will not be accomplished using the available method and budgeting, the few options available are to reassign resources to a reduced cost resource. The second step is to lower the project scope and finally seek more funding. Every one of these options has advantages and disadvantages. In general, one might reassign a lower-cost resource to the project, but it might take more time to accomplish.
References
Manasan, R. G. (2016). Assessment of the Bottom-up Budgeting process for FY 2016 (No. 2016-23). PIDS Discussion Paper Series.
Rossi, M. (2015). The use of capital budgeting techniques: an outlook from Italy. International Journal of Management Practice, 8(1), 43-56.
