Success in project management hinges on the creation of a comprehensive and accurate project budget. Find out what to include in your budget and download a free example of a project budget template.
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What is the Goal of a Project Budget?
One of the key elements of any project proposal is the project budget. It is a pivotal tool that will be used by several different groups involved in the project. The project manager will use this budget to determine whether the project is on track; project personnel will use it as a guideline to fulfill certain project milestones; and the client will use it to determine the success of the effort.
But the task of creating a budget for a new project may be a bit daunting- especially if the project manager has had little or no experience coordinating projects. Some expenses, such as salaries, utilities, rent, or equipment costs, may seem pretty straight forward. But there are many contingencies and unknowns that may affect how and when the project is carried out and ultimately completed.
The most important point to keep in mind is that although a project budget should be based on concrete numbers and accurate assessments of the resources needed to complete the task, the bottom line is that a budget is meant to be an estimate.
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What Should You Include in Your Project Budget?
A detailed, line-item budget should be divided into categories such as salaries, fringe benefits, travel, supplies, and equipment. Make sure to also include any overhead costs (called "indirect costs") that will be associated with the project.
Here is a brief description of some of the major expenses you will need to include:
Employee compensation: This section includes the salaries and wages of all full, part-time, and temporary employees involved in the project. You should also include any other benefits and incentives that may not be reflected in their take home pay.
Contract Services: Here you should include outsourced services or workers, such as consultants
Equipment/Supplies: This section covers expenses for office supplies, postage, copier supplies, telephone, fax, computer supplies, equipment repair and maintenance, laboratory consumables, etc.
Travel/Related Expenses: Make sure that you include any air travel, out of town expenses, conference travel expenses as well as daily parking and mileage expenses.
Overhead or Indirect costs: Your budge should also include overhead expenses (indirect costs), which allow the project to bear a portion of the administrative costs of the day-to-day operation.
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An Example of Project Management Budget
The following is an example of the typical expenses included in a project budget. To assist you in your budgeting efforts, this sample budget can also be downloaded as a template in Excel for a year-long project. Feel free to use it and modify it where needed.