Introduction

It’s one of the key success factors for projects—completing the project within budget. Yet, for many project managers, especially those managing internal projects, it’s the success factor they have the least awareness about. There are several reasons why this occurs, and it does vary by industry, but most of the reasons have to do with organizational management structures and organizational budgeting and cost-controlling policies.

For our purposes, in this age of increased accountability of project investment decisions, we will assume you need to establish a project budget and need to track costs against it as the project is executed.

Because this is an introductory project management we avoid any discussion of advanced financial topics and instead put our focus on the “need-to-know” fundamentals for figuring your project budget. We emphasize the importance of the project budget, review the process and key principles for developing a realistic budget, and highlight the areas where people often go astray. This leads to a budget that has credibility with your stakeholders and provides you with the foundation to effectively track project costs and manage project execution.