{"id":42065,"date":"2023-04-18T08:00:06","date_gmt":"2023-04-18T08:00:06","guid":{"rendered":"https:\/\/toggl.com\/blog\/how-to-create-a-project-budget-copy"},"modified":"2024-06-21T11:55:39","modified_gmt":"2024-06-21T11:55:39","slug":"how-to-create-a-project-budget","status":"publish","type":"post","link":"https:\/\/toggl.com\/blog\/how-to-create-a-project-budget","title":{"rendered":"Project Budget Management: How To Create, Tips & Best Practices"},"content":{"rendered":"\n

Project budget management is the process of planning, allocating, tracking, and controlling project resources throughout a project’s lifecycle.<\/p>\n\n\n\n

But creating a project budget that works for you and your client is an art form. It’s the profitability of each project<\/a> that will decide if your business sinks or swims. \ud83d\udcb0<\/p>\n\n\n\n

So in this post, you\u2019ll learn how to create and<\/em> manage a winning project budget like a pro.<\/p>\n\n\n\n

What is a project budget?<\/h2>\n\n\n\n

A project budget is the total cost of all the tasks, activities, and materials associated with a client project.<\/p>\n\n\n\n

A well-defined project budget helps you track the estimated costs<\/a> versus the actual cost. And you can use it to track project expenses<\/a> and reduce the likelihood of running out of resources or going over budget.<\/p>\n\n\n\n

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A poorly defined project budget in Toggl Track<\/figcaption><\/figure>\n\n\n
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Project budget vs. estimate\u2014what\u2019s the difference?<\/span><\/p>\n

A <\/span>cost estimate<\/span><\/a> approximates what the project (or piece of it) will cost. The budget is the final cost that\u2019s allocated to the project.<\/span><\/p>\n

The estimate is more of a ballpark figure, and the budget provides hard edges. You can\u2019t go over-estimate, but you can go over budget.<\/span><\/p>\n<\/div>\n <\/div>\n \n\n\n

Typical project costs<\/strong><\/h2>\n\n\n\n

Project costs will vary from business to business, so we\u2019ll stick with the most common ones:<\/p>\n\n\n\n

Item<\/th>Description<\/th><\/tr><\/thead>
Labor<\/strong><\/td>This includes salaries or hourly rates for team members working on the project.<\/td><\/tr>
Subcontractors and freelancers<\/strong><\/td>If the project requires additional expertise or resources, you may need to budget for subcontractors or freelancers.<\/td><\/tr>
Software and tools<\/strong><\/td>Consider the costs of any specialized software or tools required for the project, such as design tools, project management software, or analytics platforms.<\/td><\/tr>
Travel and meetings<\/strong><\/td>If the project requires on-site visits, client meetings, or other trips, include the costs for transportation, lodging, and meals.<\/td><\/tr>
Production expenses and materials<\/strong><\/td>This may include costs for printing, photography, video production, or other materials needed to create deliverables for the client.<\/td><\/tr>
Contingency budget<\/strong><\/td>Set aside a contingency reserve to cover unexpected expenses, risks, or changes in scope that may arise during the project.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n
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You may also want to consider adding a percentage to the final project budget to cover indirect costs\u2014such as your business’s overhead expenses (rent, utilities, employee training, etc.)\u00a0<\/span><\/p>\n

Generally, you can use a percentage range between 10% to 30% of the total direct costs to cover indirect costs\u2014but this will vary from business to business.<\/span><\/p>\n<\/div>\n <\/div>\n \n\n\n

Techniques for estimating a project budget<\/h2>\n\n\n\n

Before you go ahead and rush into creating a project budget, it’s wise to get familiar with the different budget estimation techniques. <\/p>\n\n\n\n

There are a wealth of proven project estimation techniques<\/a>, but here are the ones we think will be most helpful to you:<\/p>\n\n\n\n