Know Your Cost

As a Project Manager it is essential to have financial knowledge to manage a budget well and precisely.  Know all the cost to include in your budgets and try not to overlook any important costs.  Once you have identified the costs that need to be included it’s a good idea to start off with estimates.  Your estimates will fluctuate as the project progresses, don’t worry this is normal.  In order to meet targets make sure you have cost tolerances that  meet senior managements expectations.

A budget is more than just a balance of expenditures.  A budget also serves as a metric that Project Managers can use to make informed decisions.  A budget can also be used to identify key points in a project where decisions may need to be made.

The best way to keep track of what your spending is to keep track of the project process itself.  Know where you are in the process and what you budget target was set at for that point in the project.  Make sure the project and the budget match.

The size of the project small or large should not affect how you go about setting your budget.  Small projects are just as much work as large projects.  The budget process should be similar for both just at a different financial scale.

Knowing how to manage budget is a key factor to being a successful Project Manager.

Picture Credit

  1. #1 by Jaana Eubanks on April 19, 2011 - 7:38 AM

    Marisela, great post!

    Knowing and managing your costs are a vital component for successful management, and one of the few components you can actually control. Another is your attitude.

    Ps. Your blog is extremely informative, keep up the good work!

    Jaana Eubanks

    • #2 by Marisela Fernandez on April 22, 2011 - 8:45 AM

      Budgeting is easy but it can be intimidating when dealing with large amount of cash and having to decide where to allocate it. Thanks for stopping by my blog.

  2. #3 by Russell Aaron on April 19, 2011 - 2:16 PM

    Great post, especially since I am just getting into the budgeting world. I often find myself struggling to make critical decisions based off of the money that I have (or don’t). Hopefully it will get better with time 🙂

  3. #5 by Kenneth Munsterman on April 19, 2011 - 3:52 PM

    I agree with Russell. I believe that budgeting is not that hard, but budgeting well is an art form.

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