Question

Have you seen project budgets? Do you manage them? Do you perform any analysis? Why do you think project budgets are important to maintain on a job?

Answer 1

The project budget is simply the combined costs of the individual activities or work within which the project must accomplish. The budget is represented by the approved cost baseline against which we will compare actual cost incurred.Before

What is the importance of Project Budget?

There are two key reasons the budget of your project is important.

1. Approved budget- which indicate about project funding. It will tell stakeholders how much money is needed and when it is needed. Your ability to get people, equipment, and materials when they are needed are dependent on the funding provided as a result of your budget.
2. Project Cost Control- Budgeting gives important base line for better project cost control. By analyzing variance project's actual cost against the approved budget, we can determine if the project is progressing according to the plan or if corrective action is needed. We will take such corrective action and find out the gap which need to take on right now.

Information that you will need to prepare your budget

1. Activity Cost Estimates- It provide guidance for how to allocate overhead to different activity.
2. Basis of Estimates- What are assumption has been taken into consideration while preparation of project budget.
3. Scope Baseline- How much can be up or down from base price.
4. Project Schedule- What will be completion date and stage completion date of project or part of the project.
5. Resource Calendars- Availability of resource like money , manpower etc.
6. Contracts- Legal terms under the contract.