Managing the project budget is not necessarily the responsibility of the Project Manager. In my experience it depends on the project being delivered and the structure of the organisation you work for whether or not you will have full or part responsibility for project costs. If you don’t have to manage the budget then most likely the project sponsor or finance department will manage it. However, if you do have to manage the budget whether it’s full management of all costs or just resource costs the following points are important.

• Make sure you know the full annual budget for the project and how it is broken down.

• The two main budget costs will be resource costs and system costs.

• These can be broken down into all the resources such as Project Managers, Business Analysts, solution architects (developers), testers, trainers and so on.

• Each resource cost should be broken down by the minimum amount that can be charged per resource.

• This can be a per hour / per half day / per day charge but is not an exact science and each accounts department will charge as per company policy.

• Costs can be broken down further into contractors whether fixed term or day rate and full-time salaried staff (these though may be excluded from project costs).

• Make sure you know the rate Project Manager are charging and also the full cost including recruitment agency and/or consulting agency fees.

• System costs will include vendor contract costs and may be broken by each phase deliverable i.e. fees being due after requirements or build phases for example.

• Costs may be based off usage numbers.

• Maintenance and support costs need to be factored in too.

• Time is money so a budget buffer needs to be included too and should be at least 10% for unforeseen costs.

• Others costs by department must be included too such as any 3rd party costs / legal / compliance / recruitment / consultancy / sales etc.

• If a resource management system like NetSuite is used for cost management, then this can make the Project Managers job easier.

• However, a lot of companies still use basic excel spreadsheets to manage budgets.

• Booking resources and managing the project flow so that resources are ready when needed is essential.

• Avoid budget burn and overruns by having project phases delivered on time as per project plans.

• Regular meetings should be held to monitor the costs and add updates as needed.

• These meetings are usually chaired by either the Project Management Office (PMO), Finance department or Project Managers but it is rare for a Project Managers to chair such meetings and attendance is normally enough.

• If a contract is available it should contain a breakdown of all costs associated with the project.

• Project Charter, Project Initiation Documents and equivalent should contain all project costs too.

• Payments due to vendors and drawdown dates and stipulations will be contained in contracts.

• Projects may receive invoices from vendors when parents fall due such as phase completion, project closure etc.

• Most likely when Project Managers receive invoices they are acting as a middle man and should be forwarded to the finance team responsible for payment and recorded in their budget.

Once the above points are followed and adhered too managing costs and budgets should not be difficult. Budgeting of projects is not standard across organisations and does not run in a textbook fashion so Project Managers need to be flexible in their approach to budget management.