Project Management Central

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Topics: Communications Management, Financial Services, Government
I was recently asked at the start of a project.

Could not you at least prepare a
budget for those expenses that already know that they are going to have a place of all the means that they want, telephone, stationery material before initiating a planning
The answer I gave was a resounding, NO, and explain, the general expenses depend on what we intend to do.
When we carry out the planning, we need to use a wide series of contributions, these
Contributions include people, information, equipment and skills, so most of them involve an added cost to the general costs, which are those that have to be calculated to develop a more real budget.
We finished the meeting and a member of the financial group, left as a pending task to make a budget of the common costs, to which there were more people who felt comfortable with that approach.
They help me, is this correct? Could I do it? I do not think so.
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I would say there are a few layers here.

Layer 1: One-time costs vs. Recurring costs: If I "already know" which recurring costs are going to occur, then I can have a sub-budget created for them. Yes, there is a chance that this may vary, but the first line of the question says "I already know" these costs. So that brings us to...

Layer 2: Fixed costs vs. Variable costs: Let's say I know beforehand that I need to lease a hall to house the project team at a certain monthly rent. That's a recurring fixed cost. The monthly cost itself is not going to increase (yes, if the project extends, the number of months of lease will increase). But I can still create a monthly sub-budget.

Similarly for variable costs. Yes, I cannot budget exactly how much cost will come under the header 'telephone charges'. And this amount will vary month-to-month. But using historical information and environmental factors, I can come up to a good estimate. I can use this to create a 'proforma' sub-budget.

Of course, all of this applies only to portions of the cost budget. For an overall budget, you are correct, there are too many unknowns to arrive at a final figure right at the start of the engagement.

I would say you should start building the budget and here are the areas that you can work:
1 - You can use organizations prior documents of similar projects to get an idea what you can expect in with certain kind of projects.
2 – For one of a kind project you can come up with placeholders based on your prior experience that can give you head start for this particular project
I agree there is always unknown factors that can influence budgets, but this does not mean we cannot plan. At least our plan can reduce unknown
Having said that i think one can start working on budgets in early phases of project and set everyone's expectations with the level of details and % of expected variances upon more information.. I know always "Devil is in detail".

Hope it helps and good Luck !!

A couple of high-level thoughts...

If you think this initial process is going to lock you in to the number you first threw out there, then avoid it.

If you think this is just getting the ball rolling, starting to fill in the parts you know, and helping to illuminate the parts you don't know, then sure go ahead and get started.

Kind of like when you have writer's block, just getting a piece of paper and writing a title and a date on it, can sometimes kickstart the process. It may help others to feel like there is movement.

The answer is simple for me: if financial people is including then they are the subject matter experts so do what they said. They have to provide you all the techniques and tools needed to achieve the compliance.

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