Project Management: Tips for Managing Your Project Budget

Project management requires a lot of your time and effort but learning how to control a project budget takes much more experience. You have to ensure the necessary costs to meet all the project requirements. If your product falls out of scope, it'll put your and company reputation in danger. So, in this article, we want to share the useful tips and tricks on how to manage your budget correctly before it succumbs to whopping cost overruns.

Create a Detailed Project Plan

You need to thin over each detail of the plan and discuss it with all parties to ensure there is no confusion later. The budget should carefully follow the plan and has a few alterations. If this is a first your project plan, get help from an experienced team member or mentor. Whether you seek advice online or from a colleague, you don’t have to do this alone.

Forecast Resource Usage

Since the budget needs consistent forecasting, you also need to do the same for your resources. Your funds are your bread. Try to review the number of people who are working on a project and create a plan weekly. It will ensure that you are utilizing the resources you have and that employees are working as efficiently as possible.

Be Proactive

After you’ve learned how to manage the budget, don't expect that the project will work as planned. If you are ready to present results only to find you have exceeded the budget, you will get an angry client. If you can detect the problem areas that need more money than planned, you will be in a more profitable position to keep the project budget at a manageable level.

Relevant KPIs

Another critical part of the right budget is managing the KPIs indicators. KPIs help you determine how much you have been spent on a project, or show how the project’s actual budget differs from what was planned, etc. These are a few critical project KPIs that are essential to effective project budget management:



  • Actual cost (AC) shows how much money has been spent on a project to date.
  • Cost variance (CV) shows whether your project cost is above or below the set budget.
  • Earned value (EV) indicates the budget for performed project activities up to a particular time.
  • Planned value (PV) is the estimated cost for project activities of the specified date.
  • Return on investment (ROI) shows a project's efficiency and notify you if you've exceeded the costs.



Keep your team informed

An essential part of saving your budget is to notify all team members about the current budget status. In this way, each employee will take full responsibility for his projects. When you keep your team informed, you make them watch their charges and manage the time they spend on the work.

The project budget needs to be like a living part of your company. Project managers who watch budgets will keep stakeholders and management happy, and as a result, they can achieve more significant project and career success.

Use special software

Using reliable project management software, you're able to control and manage all expenses on the project: employee, department, task, and work item. Moreover, it allows you to set hourly rates across the company on a general level or for a particular project. Also, using the app, you can see plans and actual staff hours, and analyze the rate and billing status for each project.

Don't afraid of sudden surprises

When you need to estimate costs, be realistic. Sometimes you can face unforeseen circumstances. Just try to consider various factors outside of your control, such as environmental considerations that may impact the pricing of supplies, resources, financing, and so on. Make sure vendors can deliver on time and have a backup plan. You should know it to set a more realistic budget, even if there are unforeseen circumstances. 

Budget Increase 

Sometimes cutting costs is not enough, and you need to request a budget increase for the project. It's quite a tough step because you should present a loud and clear case to your stakeholders, showing how they will benefit from it. In this case, write down all the strengths of your product and be ready to present them accordingly. 

So, as you can see, managing your project budget requires active involvement from the beginning. First of all, start with a particular project plan and review it with all team members. After that, don't forget to control all the project activities. Your project managers have to be very active in maintaining expenses during the project and tell about all situations and statuses through the work.

Mónica Rodríguez is a writer, art historian, and editor at LendGenius. She specializes in Art History, Art Conservation, History, Literature, Finance, Tech, Wellness, and Travel. In her free time, she’s usually roaming the halls of the museum or the local bookstore surrounded by stacks of books.