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How to Manage a Project Budget – Advantages and Aspects

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How do you manage a budget?

A manager, whether or not he or she knows numbers, understands that ownership of a budget is often a key part of his or her job responsibilities. It can be a daunting task, and projects may have several different types of costs that must be tracked to ensure that everything is within budget.

All those moving parts and fluctuating costs can be better tracked with online project management software. This software has the tools that simplify project budgeting and cost management, allowing you to establish a baseline, track labor rates, and add new costs at the task level.

With these features, the manager can update and add items as they arise throughout the project. But before he can manage a budget, he needs to learn how to create one with accurate estimates.

Learn all about budgeting here

Once the draft budget has been established and expenses have been identified, this information can be entered into the budget management programme. To enter the draft budget, simply click on the program information tab and enter a figure in the box.

There are many ways to add project expenses. First, you can go to the tab of expenses and add fixed expenses that do not have any hourly rates or fluctuations. For example, you can enter the cost of the material required for the project. You can choose to add it as a planned cost at first, and then you can go later and add another expense as an actual cost. This helps to track the planned costs against the actual costs on the dashboard as the project develops.

Another way to enter expenses into the project is through the resource management tools. By assigning resources, or workforce, hourly rates, then placing tasks, and as you work the labor cost is automatically added to the project.

Expenses can also be added at the task level. Assuming that an unexpected task arises that was not in the initial plan. This is good because you can use contingency money to cover it. Only one cost amount is added to the new task in the project plan, and that new cost is reflected in the dashboard and reports.

In general terms, managing a project budget follows these steps.

Controlling the expenses of the entire project

Once expenses have been identified and recorded, actual expenses should be monitored against estimates. This means that project expenditures must be constantly updated with the amounts actually spent on tasks.

Once all planned expenses have been entered into the system, you can use the program’s real-time dashboards to monitor actual versus planned cost. These project dashboards provide a clear window and the ongoing costs of the project are presented in easy-to-read colored bar charts for quick analysis of the budget situation. This snapshot view can be vital when managing a project budget, especially one that has been adjusted.

How do you manage a budget

Report on expenditures down to the task level

The presentation of the project administration report requires the appropriate tools to avoid setbacks. Because, it can happen that by the time the report is presented, the numbers have changed and the report is already obsolete. In this sense, the software can create instant and detailed reports that can be shared with relevant people throughout the organization in the format of their choice.

There are several reports that can be done. However, the expense report is the most crucial for managing the budget. Because with an expense report, you can get an in-depth analysis of the total budget, actual expenses and planned expenses, down to the task level.

Review initial estimates

You need to go back to these reports and make sure they fit the project schedule. If they are not aligned with the time frame, then you need to review the expenditures and make sure that you have included all of them and not left some out.

This leads to the review step because you may need to check the estimates that were made earlier. Do not insist on maintaining them if the project dictates something else that requires changes. Because, by reviewing in real time, the manager ensures that the budget is not just numbers on a spreadsheet, but an accurate forecast of expenses for the project.

Purchasing software for this purpose is very helpful when you consider that you can do Track the budget with real-time dashboards, enter recurring expenses such as labor costs, and report on every aspect of the project, making it clear that the software has what it takes to create and manage project expenses.