blr’s human resources training presentations

31511233/1203 © 2003 Business & Legal Reports, Inc.

BLR’s Human Resources Training Presentations

Project Management III: Sticking to Your Budget


Goals

Recognize the need for careful and accurate budgeting

Understand the basic steps in budgeting Realize the importance of closely monitoring

expendituresBe better prepared to deal effectively with

problems and stick to your budget


Why the ProjectBudget Is Important

Defines resources available Establishes spending limits Provides you with a guide to planning

and spending


Basic Elements Of a Project Budget

Labor Materials

and equipment Time


An Overview of the Budgeting and Planning Process

Setting project goals Determining activities,

staffing, schedules, etc.


An Overview of the Budgeting and Planning Process (cont.)

Researching and assigning costs

Modifying the plan and revising the budget

Finalizing the budget


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?


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?


Researching Costs

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


Assigning Costs

Project plan Uncertain

cost estimates Labor costs


Budget Worksheet

ActivityEstimated Total Time

Staff/Outside Resource

Materials and Equipment

Estimated Total Cost


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


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?


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?


Drawing Up a Budget Proposal

Detailed presentation of expenses Budget format Contingency budget Use charts and graphs


Emergency Budgets

Shorter deadlines, more staff, etc.

Example


Revising the Budget

Changes in the project plan

Consequences of each change

Budget cuts Final approval


Monitoring Expenditures During Implementation

Baseline for comparison Project management software Project auditsExpenditure reports from accounting


Monitoring Expenditures (cont.)

Actual expenses vs. cost estimates

Schedules Scope of the projectCost overruns


Budget-Tracking Form

Activity Number Start Date End Date

Staff/Outside Resource

Est. Cost Materials

Est. Cost Equipment

Est. Cost Labor

Total Est. Cost Actual Cost


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?


Potential Budgeting Pitfalls

Insufficient resources Failing to negotiate

for adequate funding Underestimating costs


Potential Budgeting Pitfalls (cont.)

Making mistakes in cost estimates

Forgetting to include expenses in the budget

Failing to account for training needs


Potential Budgeting Pitfalls (cont.)

Allocating resources poorly Facing events you can’t predict or control Failing to monitor the budget closely

during project implementation


Goals

Recognize the need for careful and accurate budgeting

Understand the basic steps in budgeting Realize the importance of closely monitoring

expendituresBe better prepared to deal effectively with

problems and stick to your budget


Summary

Careful and accurate budgeting is essentialAs project manager, you are primarily

responsible for developing an estimated budgetYou 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


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.


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.


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.


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.


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.



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.



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.

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