How to overcome from project challenges? - 4) Budgeting issues

Most managers consider financial issues as one of the biggest hurdles in effective project management.

Finally every project boils down to MONEY.

If you had a bigger budget, you could probably get more people to do your project more quickly and deliver more.

That's why no project plan is complete until we get the correct budget.

But no matter what it is, as a project manager we need to use the Cost Management process to over come from the budget challenges.

Cost management process involves below steps:

1) Create Cost management Plan

You need to plan out all the work you will do to make sure your project doesn't cost more than you have budgeted. This will be the input to the determine the budget.

2) Estimate Cost

Estimate cost is based on scenarios how much it will cost or how much time it will take to complete or how many resources required to complete.

Estimate the costs using the tools like Rough Order of Magnitude (ROM), ballpark estimate, if you are using scrum project you can use story point estimation techniques.

3) Determine Budget

Once the cost is estimated budget will be determined based on below inputs:

• Cost management plan
• Basis of estimates
• Activity cost estimates
• Risk
• Agreements
• Resource experience/salary
• Project schedule
• Project scope
• Organizational process assets

4) Control cost:

Control cost is similar to how we control schedule.

When something unexpected is coming, you need to understand it's impact on your budget and make sure that you react in the best way for your project.

Control cost is all about knowing how you are doing compared to your plan and making adjustments when necessary.