5.2 Developing a Project Budget

Developing a project budget involves estimation of costs, subsequent analyses, frequent revisions, and to a certain extent, intuition. Regardless of the type of project budget, the most important caveat is that the budget should be in alignment with and reflect support for both the project and overall corporate goals. Essentially, the project budget is a plan that incorporates the allocation of resources to the various work packages and departments, and a schedule to ensure that the company can is in a position to achieve the project goals. Meaningful budgets are developed through frequent interaction among the concerned parties and require data inputs from a variety of sources. It is worth pointing out that the project budget and project schedule must be developed concurrently, as the budget can provide a clear picture of whether or not project milestones can be achieved.