Planning A Cost Budget For A Project

3. Explain two methods that can be used in order to identify realistic estimations when developing a budget. [2.2]

3. Explain two methods that can be used in order to identify realistic estimations when developing a budget. [2.2]

This research paper is a brief discussion of budget management analysis. Budgeting is the key to financial management, and is the key to translates an organization goals or plan into money. Budgeting is a rough estimate of how much a company will need to get their work done, and provides the basis for evaluating performance, a source of motivation, coordinating business activities, a tool for management communication and instructions to employees. Without a budget an organization would be like a driver, driving blinded without instructions or any sense of direction, that’s how important a budget is to every organization and individual likewise (Clark, 2005).

Staying on budget is one of the key factors that will play a significant role in ensuring the success and the completion of the project in a timely manner. In addition, budgeting will allow this project to develop a spending plan which will ensure that we do not exceed the $3,000 dollars allotted for the project. Furthermore, by having a budget plan in place, we are on the path to setting and meeting our financial goals.

A project manager must be a skillful planner and can inspire his or her team to produce as needed. Per LaBrosse (2007), project management can be used throughout the organization to boost personal and collaborative productivity by building a standardized system that embeds best practices into the way projects are managed” (p.26).

In conclusion, many factors that influence the approvals and denials of projects and a financial plan will present a clear picture of the budget needed to cover the expenses. The expenses are for the construction

budget. As the project evolves, additional information is discovered and further estimates are produced. This is an extremely important process and we cannot emphasize enough the need for this re‐estimation or re‐budgeting process at each phase of the project. In any case, for the purpose of this article, we will call the revised budget the "actual budget." Another standard activity is to provide management with an expected cash flow. From a financial perspective this is an important activity, but it also can be used as your cost expectation.

Eichenberger, J. (1998). Project management, part III budgets for projects. AAOHN Journal, 46(5), 268-70. Retrieved from http://search.proquest.com/docview/101346

Part of project management is the estimation of the project cost. The budget can be derived from the project plan by looking at the following criteria (Marchewka, 2009):

In summary budget include whole project budget. Project manger as to give cost of whole amount. Even they describe part of budget. Summary budget summaries all cost, hardware wage and then total cost. Hardware budget give in breakdown system.

The cost planning is one of important phases for project management. It will goes through whole project’s life cycle. It is foundation of project and it will tell the project are measured, reported and controlled in every process. Estimating is the process of forecasting or approximating the time and cost of completing project deliverables.

Budgeting is crucial in the well-being of a company especially the financial health status of a company. In fact, no professionally managed firm would fail to budget, since the budget establishes what is authorized, how to plan for purchasing contracts and hiring, and indicates how much financing is needed to support planned activity. It is routine for a company to budget for its expenses. Expense budgets act as a guideline of how much revenue a company would require keeping the activities running. It is used to set the company’s targets for a certain period.

For instance, the concept of cost estimation which assists in estimating future expenditure as the expenditure depends on the cost of the respective activities can be applied in the setting of a budget which is simply an estimate and schedule of all costs required to be assigned to an activity. One can make an estimation of the resources required for an activity by applying the cost estimation techniques. Since there are limiting factors to each activity such as scarcity of resources for activities, the concept of constraints can be applied together with the concept of cost volume profit analysis to ensure that maximum benefits are driven from the scarce resources and the number of activities that are available. This facilitates the allocation of resources that most equitable and profitable. The theory of constraints is also applicable in the process of setting up budgets. In setting up budget one considers the amount of resources that are available and cannot therefore set a budget plan that exceeds the amount of resources that are available. This implies that the budget is constrained by the amount of

The keen competition requires companies to consider the cost variable. But traditional budgeting method separates the cost into variable and fixed, put the emphasis on the variable cost and consider the fixed cost implacable.

According to an accounting textbook, cost is defined as a resource sacrificed or foregone to achieve a specific objective. It is something given up in exchange. It is necessary for project managers to understand project cost management since project costs money and consumes resources.