How to Сreate a Project Budget: The Beginner`s Guide

Here let us go down the list of resources and evaluate costs for them. Determining amounts can be hard and time-consuming. So that is where market research and business analytics come into play. Start with:

• Investigation of historical budgets for similar projects
• IT salary market research
• Consulting with subject-matter experts

Remember, that even with a thorough risk evaluation and estimate, unexpected contingencies may require budget revisions. So, keep calm and establish a contingency fund.

The risk score and clear calculation of the out-of-scope work is a kind of monetary assistance for future uncertainties. Define risk levels and risk treatments. Make effective risk-based decisions and build a reservoir of money kept aside to cover up for unforeseen circumstances. Some companies have compiled risk profiles that are used as a starting point for risk criteria analysis.

Finally, the last level of the track. Here you will deal with:

• Presentation of the project budget to stakeholders or other business units responsible for approving it
• Justifying budgeting items and amount
• Creation of a 'game plan' for how to get project costs under control
• Providing visibility into costs to be able to compensate or request an increased budget with a valid rationale

Developing a project budget can be a tricky task, especially for startups and brand-new projects.
But this is a vital tool to pitch your project to stakeholders and get the funds, explaining how costs contribute to project objectives.

You can select similar projects and create your estimate based on analogous project budget plans, but don't forget to adjust it to account for all details and differences.

So, are you looking for a project budget example to know how to design a software development project budget template? Okay, here we go.

We share with you an example of Freshcode's project budget doc with a cost estimation using the WBS. It includes a layout with detailed sections you need for a budgeting plan.

You can use it as a basic example of software development estimation for the whole budgeting design. All monetary values in the template are customizable — use them as 'N' variable that is assigned a value regarding your project rates.

This simple method is called "analogous estimating" because of the comparison and compilation of projects that are similar to the project that you and your team are undertaking. It presents a number of advantages:

• doesn't require a lot of resources or time
• can be performed with limited available data
• suitable for the project initiation phase
• can be used for initial stakeholder communications
• can be refined and supplemented with extended data over time

For detailed consultation about creating a project budget and how to use estimation templates contact our BA team directly.

Don't under-call the budget, unless you want to end up missing milestones, and keep walking to the finance department to ask for more money.

Don't over-call the budget, unless you want to get stuck on the initial stages and never get off the ground.

So, how to do project budgeting right and prevent the most common mistakes?

The budget helps you hit targets, and be sure you're on track. To have such a great tool on hand you should design it thoughtfully. Review bottlenecks, prepare revenue forecast, and process budget iterations — every step is crucial, from research to implementation.

To be a lone-wolf decision-maker is not the best strategy to create a good project budget. Discuss with your team their project vision, expectations, doubts, and possible solutions to define a common budget vision. Clearly agreeing on what are you going to deliver and how the product development should be set is the key to success. Prevent all possible situations where mismatches may occur.

Unpredictable costs that were not considered in the budget can become a real issue and provoke critical delays in the project development process. You should transform unexpected expenses into the predicted additional costs using advanced business analytical solutions.

Don't get stuck on the calculation only. Shift your focus from financial precision to strategic success.
Exploit a goal-decomposition technique to prioritize budgeting tasks and project activities.

Project budget is not a straitjacket limiting your possibilities. It's a pillow of safety, a shock absorber, finally, a navigator that gives you an action plan and a clear picture of where your money is spent.

Balancing between being thrifty and stingy is a tricky task. The project budgeting process should be simple and clear but thoughtful and comprehensive.

Can you deliver great outcomes by effectively controlling budgets? Yes, you can. But don't feel you have to track every single penny. A well-set-up budget is an engine on your project track that automatically fuels all processes.

Freshcode specialists consult clients on how to create a clear budgeting plan for different software development projects.

We know for sure that a well-crafted budget plan speeds up the product development process and makes it effective. Our representatives are always ready to discuss this in detail. Please, fill out the form on our website or contact our representative on Linkedin.