Budget for a Project

Essentially a budget for a project is the amount of money which is required to get the project delivered. Now estimating project costs and project cost estimation are highly specialised skills which any successful project manager must have, but at a high level the main components to any IT project budget will be:

1.0 Resourcing Costs

Now these can be either external (contractor) costs which may include expenses and internal (permanent) resources. Needless to say you need to be extremely careful when determining your project resource scheduling to ensure you gain accurate resourcing costs.

2.0 Items to be Purchased

Key items to consider here are software licences. Anything from Linux OS to Microsoft SQL Server to even Photoshop. Remember the process of software development does not come cheap! All of these cost money and in the case of some software like SAP or security software significant amounts.

Other key items include of course hardware. Servers may need to be upgraded to cope with increased traffic, or else you may need additional PC's to install say Photoshop on.

Further, don't forget you will need to buy some kind of maintenance / warranty coverage against the equipment being faulty.

3.0 Items to be Rented

There might be things which the project needs to rent such as office or desk space for additional resources. Alternatively you may need to hire additional PC's or types of equipment for a period of time on the project which the Organisation does not currently have available.

4.0 Overhead Costs

These include peripheral staff such as Finance, ITQA and even your Boss. Often all these people need to book their time somewhere and you wil find a percentage will end up on your project. If any of them are external resources ie contractors, you could find your project budget having to increase significantly.

So at the very simplest level your budget for a project should encompass all of the above elements in order to accurately determine what your project time and cost will be.

However one thing you should bear in mind, should you be estimating for a major project is that Without you even realising it, your determination of a budget for a project may already have constraints put on it. This would be as a result of the Business Case which will have had to have been already submitted and approved. Therefore it is vital that you check out what this says in terms of project cost estimation and endeavour to fit within it, if at all possible.

Budget for a Project - Tip

The other thing to remember is that it is not a good idea, and is in fact virtually impossible to determine the budget for a project unless you have approved project requirements, done detailed project planning we well as thorough project resource planning beforehand, since all will have a major impact upon your budget costs.

So spend the time to plan and agree these first and then start working out the project budget when at least you will have a clear idea of what is required and why.