Factors Influencing Your Project Budget

This course is a practical way to explore the elements that influence your project budget. We will explore the theory of this course by using practical examples that will reflect real time processes you will need to prepare a project budget.

Discuss the importance to compile an comprehensive project budget

What will be the effect of an incomplete budget

  • Shareholders have no risk
  • There is a risk of shareholders loosing money
  • Profit will always increase

Discuss the importance of  a Work Breakdown Structure.

A Work Breakdown Structure is :

  • A breakdown of the components influencing the project
  • A breakdown of the employee job analysis
  • A breakdown of the work to be done by the product manager

Explain why a cost breakdown plays an important part for budget preparation.

A budget is an estimator of what the work package will cost

  • False
  • True
  • Sometimes

Justify Project Budget

Justify Project Budget

When justifying the budget one of the important factors is to do a work breakdown structure. This way one can establish what needs to be done if one wants the project to be an success.

One of the breakdowns of the project is the cost breakdown. This breakdown one focus on all the different kind of costs that needs to be incurred to invest in the success of the project.

By knowing the total cost needed one can successfully estimate the budget needed for the project.

The following costs makes up a project. Direct cost, indirect cost, fixed and variable costs, labour costs, material costs and unit trusts

To calculate the total costs one must add all the costs together. This might sound easy but there might be hidden costs that only appears later. For example hidden licensing and import costs.

Although cost estimate is part  of budgeting it is important to state that it is a forecast of the cost of the work package. the budget is the allocation of funds to complete the work package . The cost estimate is compiled from looking  at the scope of work, time scale and method the project will be built. Therefore  the project budget is a trade off with the estimated cost to ensure the projects get done.