Budget development and tracking

Budget is in some ways easier to track and manage that scope and time. Budget is easy to measure. It is the almighty dollar or your currency. It is important to understand the scope of your project before you begin creating your project budget. Let’s take an example of a completed project scope for building fences.

Microsoft Excel is a simple and easy tool that I recommend for small to medium-sized projects. After you have mapped out the job, such as the one above, you need to think about how you will deliver the job.
Do the work yourself
Hire someone to perform specific tasks
Find someone to take on all the tasks
All cases assume that you will be the project manager and oversee the completion of the work. If your role is limited to that of a project manager, you will likely choose option 2 or 3. Let’s look at the budget build-up if we choose Option 3. We will need to hire an external person to complete the task.
Step 1, Estimate the cost of your project. Consider your past experience with similar projects. Refer to other jobs your organisation has completed, or industry costing information if you have it. This will give you a rough idea of the cost of the project. It is possible to estimate the time it will take to complete the project and then multiply that number by an hourly rate. This is the time to break down costs to the task level.
After estimating the cost, confirm that the project will go ahead. If you project costs you estimate at $50,000, and you have $15,000 to spend, you should reconsider your options.
Step 2 – Get a firm price. Three quotes are a good rule of thumb to complete the job. In larger organisations, you will have standard procurement guidelines. These will specify how many quotes are required and what form they should be requested. Once you have the pricing information for your project, you can add them all together to calculate the total cost of your project.
Step 3 ,Ai Consider contingency. After you have received your proposals or quotes, you will need to add contingency. Consider the risks involved in the project and who will be responsible to ensure you have enough contingency. Add a separate item to your project budget if you are responsible for the estimated work. Consider the pricing method offered by your supplier.
Pricing Methods
You have three options when you’re project managing a project that involves outside contractors: lump sum pricing, cost-per-hour and a higher limiting fee. Briefly:
Lump sum pricing, Ai you are given a fixed price for the job. It is important to clearly define the scope and that any contractor fails to deliver on time or in accordance with the contract terms. The fence contractor could quote $10,000 for the entire job.
Hourly rate You may have several different types of people working on your job at different rates. Three people could be working on your fence construction project. A surveyor will assess the site and make measurements for $100 an hour, while a labourer will construct the fence at $50 an hour and a painter will paint the fence for $65 an hour. The project budget will also include estimates for the time and resources required for each task. You can either ask your contractor for advice on how long it would take, or you can estimate from your own experience.
Upper limiting fee – is almost a combination the above. Contractors will provide a cost estimate that you can agree to and they will not exceed it without your authorization. You will also be provided with an hourly rate for the work they will do. This helps to re