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 Your Scope  Your Scope   Your Costs   Your Costs

Introduction   »   Overview   »   Your Budget

The budget is the amount of money set aside for this project. There may already be an amount of money set aside for this project. There may be. There may not be.

In projects delivered by suppliers in outsourcing arrangements or other commercially based relationships, there will be a budget amount or an agreed pot of money from either the customer, the supplier or both. The optimum circumstance in this situation is that both have a budget and they equate to the same amounts. This can be a sizable challenge to accomplish and may require some element of compromise from both sides to ensure the project can start within certain financial limitations.

The availability and accuracy of the proposed budget depend on a number of factors. It depends on whether an estimating process has been performed on the project and depends whether some feasibility assessment has been performed on the budget amount. We look at the feasibility assessment process later but it is an important element to ensure the team will be undertaking a venture that is at least possible and the organisation can support it in terms of financial resources.

But also it is vital to confirm that what you propose to do on the project can be achieved using the specific financial resources that the organisation can make available and under a funding schedule that the organisation will make available. This is a statement you need to get right from the outset.

You will have an idea of the funding cycles in your organisation and will confirm the capability of the organisation to deliver according to this cycle later in the project. This is an important covenant to establish so that the project can be drop funded in the most opportune, yet financially prudent, schedule without holding back the project and without allocating funds too early.

If estimating has been performed you will want to validate that estimate. Remember, you deliver to your budget not to some other persons random ballpark. Uncover the estimate and the date it was produced. Find out who owns the estimate and confirm that you will be revisiting it at the end of your setup stage.

If you cannot find out who owns the estimate then you have to decide are you going to stand on it or ditch it. If you, or your professional estimator if you have one, decide that the estimate is not of the order of estimate you would expect, then it has failed what is known as a WHERE Test. This is the Wide Huge Eyes Raised Eyebrow Test. In this instance it is wise to confirm that the estimate has not passed the WHERE Test and record the fact. Then you can comfortably begin the process to ditch the incorrect estimate and to establish one that passes your professional evaluation.

If you confirm an owner for the estimate then you will confirm to them that you will be revisiting that estimate at the end of your setup stage. You want to avoid the mistake of aiming to deliver a large project with a not so large budget. Furthermore, you may want to reduce the opportunity for extraneous stakeholders to disrupt your project by allowing them to seed it with unachievable financial targets. So you need to take the time to assess these financial targets before you adopt a commitment to deliver on them.

It is certainly easier to specify all financial targets in detail from the outset and to have each of these validated and confirmed. You will want to perform this in further detail to ensure it is absolutely certain that the targets can be delivered and when they can be delivered. In practise, this goal is often an out of reach panacea. The reality is that you will have to start without having validated all financial targets but obligingly accommodate them with the proviso that they will be revisited at a later stage in the project.

We will estimate the project in the Setup stage and we discuss this topic in depth later in the Toolkit. So, your budget is the amount of money your project is allocated. Now we look at the utilisation of that money throughout the project: your costs.


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