Effective project management: Keeping your tasks & budgets on track

Managing a project isn’t just about deadlines – staying within budget is essential too.

Planning helps you stay on track and keep stakeholders happy. In this guide, we’ll share key budgeting methods, cover pitfalls like scope creep, and help you get organised.

Whatever your project, here’s how to manage project tasks and budget effectively.

What is a project budget?

A project budget shows how much a project will cost overall and the costs for each task or activity. It should have a clear timeline, encouraging you to stay on track with spending. 

All costs involved with running the project should be included, for example:

• Paying your employees

• Utilities and office space

• Travel and accommodation

• Training and research

• Materials and equipment

• Software and technology

You should also budget for emergencies and unexpected costs throughout the project.

A budget sets expectations at the beginning of a project (which can be useful for getting funding from stakeholders) and helps avoid running out of money or going over budget.

The importance of effective budget management

Managing your budget effectively is crucial for a project and wider company’s success.

A project budget is important because it helps stakeholders decide whether a project is worth the investment. By knowing all potential costs upfront, they can avoid surprises!

It also acts as a guide for success. By comparing the budget to your actual spend at key milestones, you can make adjustments if you’re overspending. With efficient budget management, you’re more likely to finish the project within budget and on time.

Budgeting methods

So, how do you estimate a budget for your project? First, ensure you have a full, realistic list of the tasks, materials, and time involved in your project, and their associated costs.

It can help to organise costs by milestones, for example by key goals in the project.

You can then use a variety of project budget management techniques to plan and control costs. Each has their own pros and cons, depending on your company's needs.

Top-down

With this method, you set a total amount you want to spend, and split it between tasks. Possible pros and cons include:

Bottom-up

This is the opposite approach – estimate prices for each task needed, then add together. Possible pros and cons include:

Top-down and bottom-up are common ways to manage project budgets, but these estimation techniques can also be helpful. You may even use a combination of methods.

Three-point estimate

A three-point estimate is a budgeting method that uses costs for three scenarios to plan a project – the best case scenario, the worst case scenario, and the most likely scenario.

You can then use a formula to find an average to get a realistic estimate for the project.

Parametric estimation

Parametric estimation uses historical data from previous projects to predict costs. While useful for projects with similar variables, it may not be suitable if they’re very different.

This method can be time-consuming but accurate in the right situations and industries.

Analogous estimation

Similar to parametric estimation, analogous estimation uses comparison to past projects.

However, it’s much broader. You’re comparing project costs at a high level, based on their size and complexity, rather than calculating specific data. It’s quick, but less accurate.

Choosing the right project budget management techniques are important for meeting your objectives. These different methods offer various ways to estimate project costs, from detailed calculations for accuracy, to quicker and simpler past comparison methods.

8 top tips for managing a project budget

Effective project management is more than setting a budget – it’s about planning tasks, tracking costs, and being flexible where needed. Here are some tips to stay within budget.

1. Set your project objectives

The first step to a successful project is having clear objectives. Your stakeholders should agree on what you want to achieve, and what the key project milestones and priorities are. 

Objectives help you build a roadmap to guide decisions and spend money wisely:

• They help prioritise important tasks and delay/remove others

• They help your spending align with key company goals

• They keep everyone focused, reducing wasted time or money

Having objectives for different stages can also help. For example, if you’re building a website, you could set deadlines for the final design, content population, and testing.

2. Define key tasks

Choosing your key tasks in a project is important for staying organised and on budget.

Breaking your project into smaller tasks allows you to see what needs to be done and how much each part will cost. You can estimate the time taken and money required for each.

For example, if you were managing a construction project, tasks could include:

• Laying the foundation

• Framing the structure

• Installing plumbing

By outlining tasks, you can ensure you have the resources to complete the project.

3. Identify key deliverables

Key deliverables are the most tangible results or products created from a project. For example, they could be a new item, a training session, or a marketing campaign.

They are often linked to deadlines, helping you complete project stages on time.

For example, if you wanted to track progress in a manufacturing project and ensure your budget aligns with production goals, here are some key deliverables you might set:

• Prototype product completed by month 1

• Production line setup completed by month 3

• 1000 products manufactured by month 4

A key deliverable can be something physical, or something with intellectual value.

4. Outline your costs according to your tasks

Outlining costs for tasks is essential for effective project budget management.

As covered earlier in this guide, there are a variety of different techniques for estimating how much a project will cost. By knowing how much each task will cost, you can see where the bulk of your budget is being spent – helping you make better business decisions.

For example, if you had a marketing campaign, you could outline the below costs:

• Advert design and production

• Online advertising and social media

• Event or promotional materials

By estimating costs for each task, you can plan how much money to spend and when.

5. Estimate the total required budget

Again, there are several ways to estimate the budget for a project, including the top-down and bottom-up project budget management techniques discussed earlier in this guide.

Which you use can depend on the time you have for planning and the accuracy needed. 

Most estimates will involve adding up the total costs from each task, alongside extra money for unexpected costs. Some techniques will use past data from similar projects, or take a more high-level approach – depending on time and effort spent estimating the project.

By calculating total spending early on, you’ll have a clear idea of the resources required, help avoid overspending, and give stakeholders a realistic idea of overall investment.

6. Avoid scope creep

If you’ve managed a project, you’re probably aware of scope or project creep!

You know, all the little costs that you didn’t expect, and extra tasks in a project. Often, the project budget and deadline don’t change, so scope creep can become a real worry.

To avoid scope creep, project delays, and extra costs, you can do the following:

• Set clear goals, so everyone knows what’s included in the project

• Communicate regularly with your wider team and stakeholders

• Stick to the plan – if you can’t, adjust your timeline and budget

For example, if you’re building a new office, someone might decide to add a kitchen that wasn’t in the original plan. This would inflate your project costs and cause delays. In an ideal scenario, the kitchen and its costs would have been factored into the budget.

7. Finalise your budget

Once you’ve accounted for all costs, planned for all risks, and factored in extra money for emergencies, it’s time to finalise and agree on your project budget with stakeholders.

Before sending your budget for approval, make sure you’ve double-checked that all key tasks and deliverables are included in your estimates. You should also include a contingency fund, for any unexpected tasks. Then, you can share your plan for review.

With an agreed project budget, you will probably have peace of mind about how sound your finances are.

8. Track expenditure against tasks

Planning a budget for your project is just the beginning – effective project management requires regular checking of costs, to meet deadlines and stay on track financially.

For example, if you notice you’re already halfway through your budget, with over half of your tasks still to be completed, you may need to reassess and cut back on spending. 

Tracking costs helps keep your project in scope before costs spiral out of control.

Final thoughts

We hope you feel more confident in how to manage a project budget effectively.

With careful budget planning and cost tracking, you can deliver a successful project. In summary, here are the key steps that can help you keep your project on track financially:

• Stick to clear objectives and goals

• Define key tasks and timed deliverables

• Remember to accurately estimate costs

• Regularly monitor your spending

If you want to simplify your budget management, QuickBooks’ cash flow forecasting tools can help. Efficiently track business expenses, forecast costs, and manage your finances.

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