BLR’s Human Resources Training Presentations

1. BLR’s Human Resources Training Presentations Project Management III: Sticking to Your Budget

2. Goals • Recognize the need for careful and accurate budgeting • Understand the basic steps in budgeting • Realize the importance of closely monitoring expenditures • Be better prepared to deal effectively with problems and stick to your budget

3. Why the ProjectBudget Is Important • Defines resources available • Establishes spending limits • Provides you with a guide to planning and spending

4. Basic Elements Of a Project Budget • Labor • Materials and equipment • Time

5. An Overview of the Budgeting and Planning Process • Setting project goals • Determining activities, staffing, schedules, etc.

6. An Overview of the Budgeting and Planning Process (cont.) • Researching and assigning costs • Modifying the plan and revising the budget • Finalizing the budget

7. Preliminary Questions in Budgeting for a Project • What is the time frame of the project? • What is the priority level of the project? • What is the expected outcome? • Is there precedent for the project?

8. Preliminary Questions (cont.) • What are the quality standards? • Has a budget cap already been determined for the project? • Has staffing been allocated? • What outside resources are available?

9. Researching Costs • What to do • Where to look • Researching hard-to-define costs • Dealing with new or unusual projects

10. Assigning Costs • Project plan • Uncertain cost estimates • Labor costs

11. Budget Worksheet

12. What to Watch Out for When Assigning Costs • Don’t underestimate • Don’t overestimate • Don’t skimp on the quality of resources • Don’t skimp on labor

13. Reviewing and Revising Budget Estimates • Could the scope of the project be scaled down? • Could you get by with a smaller staff? • Could you apply different methods to increase efficiency?

14. Reviewing and Revising Budget Estimates (cont.) • Could you live without expensive equipment? • Could you use cheaper materials? • Could you adjust the schedule to save money?

15. Drawing Up a Budget Proposal • Detailed presentation of expenses • Budget format • Contingency budget • Use charts and graphs

16. Emergency Budgets • Shorter deadlines, more staff, etc. • Example

17. Revising the Budget • Changes in the project plan • Consequences of each change • Budget cuts • Final approval

18. Monitoring Expenditures During Implementation • Baseline for comparison • Project management software • Project audits • Expenditure reports from accounting

19. Monitoring Expenditures (cont.) • Actual expenses vs. cost estimates • Schedules • Scope of the project • Cost overruns

20. Budget-Tracking Form

21. Reviewing Your Budgeting Experience • How did the final accounting compare to your budget estimates? • What worked as expected? • Where were the problems? • What would you change for your next project?

22. Potential Budgeting Pitfalls • Insufficient resources • Failing to negotiate for adequate funding • Underestimating costs

23. Potential Budgeting Pitfalls (cont.) • Making mistakes in cost estimates • Forgetting to include expenses in the budget • Failing to account for training needs

24. Potential Budgeting Pitfalls (cont.) • Allocating resources poorly • Facing events you can’t predict or control • Failing to monitor the budget closely during project implementation

25. Goals • Recognize the need for careful and accurate budgeting • Understand the basic steps in budgeting • Realize the importance of closely monitoring expenditures • Be better prepared to deal effectively with problems and stick to your budget

26. Summary • Careful and accurate budgeting is essential • As project manager, you are primarily responsible for developing an estimated budget • You must also track expenditures precisely during the implementation phase • Failure to take these steps can lead to cost overruns and have a negative impact on the outcome of your project

27. Quiz 1.Why is a project budget important? 2. Identify the three basic elements of a budget. 3. What are some of the sources of information you can use when researching project costs? 4. If you are using your own employees for a project, you don’t need to assign a cost to labor in the budget. True or False 5. Name three things you should watch out for when assigning costs.

28. Quiz (cont.) 6. It’s always a good idea to pad your budget a little to account for possible cost overruns. True or False 7. As a project unfolds, you should compare _________ to _________ on a regular basis. 8. You should also conduct a ____________ at key milestones during project implementation to make sure you are staying on budget and on schedule.

29. Quiz (cont.) 9.The best way to monitor expenses during implementation of a project is to rely on expenditure reports from the accounting department. True or False 10. Identify three potential pitfalls in budgeting for a project.

30. Quiz Answers 1. A project budget is important because it defines resources available for a project, it establishes spending limits, and it provides you with a guide to planning and spending. 2. The three basic elements of any project budget are labor, materials and equipment, and time. 3.When researching project costs you can look at past projects of a similar nature, talk to in-house experts, call vendors, and use standard pricing guidelines.

31. Quiz Answers (cont.) 4. False. You should always assign a cost to labor in a project budget—even if you are using your own employees. In this case, the cost will usually be assigned as a percentage of the company’s overhead. 5. When assigning costs don’t underestimate or overestimate, and don’t skimp on the quality of resources or on labor. 6. False. It is best to develop a contingency budget for unforeseen or unpredictable expenses. 7. As a project unfolds, you should compare actual expenses to cost estimates on a regular basis.

32. Quiz Answers (cont.) 8. You should also conduct a project audit at key milestones during project implementation to make sure you are staying on budget and on schedule. 9. False. While expenditure reports should be reviewed and can be helpful in monitoring expenditures, they can’t be exclusively relied on because they don’t tell the whole story. They won’t give you an accurate picture of all expenses to date because they only reflect money that’s already been spent, not expenses that have not yet been billed and paid.

33. Quiz Answers (cont.) 10. Potential budgeting pitfalls include insufficient resources, failing to negotiate for adequate funding, underestimating costs, making mistakes in cost estimates, forgetting to include expenses in the budget, failing to account for training needs, allocating resources poorly, facing events you couldn’t predict or can’t control, and failing to monitor the budget closely during project implementation.