Creating a reasonable project budget

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Punyapalit
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Joined: Tue 23 Feb 2021 1:58 pm

At times, the project budget created by a project manager gets disapproved by clients or other key stakeholders involved. So, what all practices should one adopt while creating a project budget that gets approved without much hassle?
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dhaughey
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Hi Punyapalit,

My approach is to create a detailed budget proposal (in Microsoft Excel) showing exactly how I intend to spend the budget and how that spend links to project delivery. I work on a quarterly horizon, showing what I will deliver each quarter and the associated costs. This ensures the customer gets into the project clear about what they will be getting from my team and me.

This list is how my current software development project budget breaks down:
  • Project Lead (CapEx)
  • Finance Analyst (OpEx)
  • Business Analyst (CapEx)
  • Build (Developers and Testers) Q1 (CapEx)
  • Build (Developers and Testers) Q2 (CapEx)
  • Build (Developers and Testers) Q3 (CapEx)
  • Build (Developers and Testers) Q4 (CapEx)
  • Reporting Dashboards (CapEx) (OpEx)
  • Infrastructure (hosting costs) (OpEx)
  • Software Licences (OpEx)
  • Application Management Support (OpEx)
  • Contingency Budget
I show the costs as either capital expenditure that the business can depreciate on the company's balance sheet or operational expenditure required for the day-to-day running of the software application. This approach helps the customer see how much value the project creates and how much is consumed in running costs.

Please look at this article I've recently updated, which talks about some of the techniques used to create a project budget: Creating a Project Budget: What You Need to Know

Duncan
Punyapalit
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Joined: Tue 23 Feb 2021 1:58 pm

The project budget is one of the major constraints for any project. Hence, it is of utmost importance to get it right. After-all, the fate of the project resides on the budget.
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