The complete kit for budgeting projects like a pro!

By Nathalie Pouillard & Coralie Petit

Published: November 12, 2024

Drawing up a projected project budget is one of the most important stages in project management, and not the least, because it involves the delicate area of expenditure and financial resources.

A realistic budget that anticipates opportunities and, above all, potential risks, is a guarantee of the project's profitability and therefore its success.

Here are 7 tips for drawing up a project budget, a template and an example of a table, as well as a list of tools to support you! 👇

See all software Project Management

What is a budget forecast?

Before getting to the heart of the matter, let's go back to the basics.

The provisional budget is the financial document that summarizes all expenditure and income, i.e. projected income and expenditure .

In other words, it's a financial plan that also enables you to estimate a company's future income and expenditure... And for project management, it's absolutely essential to draw one up, the aim being to anticipate the resources needed and to plan each task as effectively as possible. ☝️

Why draw up a project budget?

Project budgeting is part of a financing process that can be broken down into three crucial phases, during which the project manager must involve all relevant stakeholders:

project costing → established with reference to actual costs of similar projects if possible, and linked to estimated timescales ;
project budgeting → budget envelopes are defined according to the breakdown of the project ;
cost control.

A realistic financial snapshot of your project, the provisional budget (PB) consists of listing, identifying and classifying :

your expenses, initially,
secondly, your acquired revenues or revenues in the process of being acquired.

Thanks to this forward-looking tool, you can visualize the feasibility of your project in advance, make adjustments, and aim for balance or the expected margin.

💼 If you're looking for an example of a budget forecast for a business creation project, read our article dedicated to creating a business plan.

How do you draw up a project budget? Focus on calculation methods

1 - Identify and categorize your investment items

First and foremost, you need to identify your investment items, i.e. all the expenditure you need to plan for, such as :

Direct costs :

operating costs (supplies, subcontracting),
external labor costs,
the cost of purchasing or renting equipment specific to your project (e.g. supplies, paper, training room rental),
project communication costs (graphics, printing, distribution costs, etc.),
travel expenses, meetings, etc,
the sum of salaries in proportion to the number of (estimated) hours dedicated to the project, which we call " full-time equivalents " (FTE).

🤓 FTE calculation = gross salary + payroll and employer contributions x hours worked x number of months or weeks.

Indirect costs :

miscellaneous expenses: water, electricity and telephone bills, rent and rental charges, insurance, maintenance of premises and equipment,
management costs: salaries of cross-functional or subcontracted departments (legal, accounting, security),
taxes and duties,
financial expenses: bank loans, interest payable, agios,
general communication costs, etc.

☝️ The costs of resources allocated to several projects, not exclusively to the project in question, are shared using distribution keys.

Example: To allocate the cost of rent, we take the average occupancy time of the premises according to the size of each project, and allocate it as a percentage.
If project no. 1 occupies the premises 20% of the time, project no. 2 30% of the time and project no. 3 50% of the time, we allocate 20% of the costs relating to rent, electricity, water, etc. to project no. 1, and so on. and so on.

2 - Diversify your sources of financing

Now it's time to plan your income.

Generally speaking, and particularly for projects in the associative sector involving requests for subsidies, the projected budget must diversify the sources of financing (public, private, etc.) in order to :

reassure each investor that not everything will depend on him or her;
mitigate the risk of one of them withdrawing.

Financial balance is the goal. The purpose of a financial backer is not to help you make a profit, but to help you achieve an objective.

☝️ In a projected budget: expenditure = income. A share of self-financing is therefore often added to make up the difference between resources and planned expenditure, and to show the structure's commitment.

Possible sources of income include

sale of products,
provision of services,
subsidies
partnerships,
self-financing, etc.

3 - Value your in-kind contributions

Estimate your "valued" expenses (loan of equipment, loan of a room, volunteer work).

This is all the more important for associations applying for a grant, or companies seeking the participation of a partner: you'll often need to translate the sum requested as a percentage of the total project.

If the cost of the room is increased, the total budget rises, but the percentage requested from the funder falls.

Example of a project budget table

Project budget template to download

🎯 This Excel template is also suitable for a projected budget for an associative project.

7 tips for a successful budget

1 - Break down your budget

Rather than drawing up a budget over the life of the project, try to do it on a monthly basis.

This way, you'll have better visibility and be better able to adapt to any constraints you may encounter (change of supplier, delay in one of the tasks). There's also less margin for error.

In an Excel table, for example, you can present the major phases of your project in column form, with the months on separate lines, and enter the costs for each stage at their intersection. It will then be easy for you to add them up to obtain the total estimated budget.

Distinguish between each item of expenditure. When reviewing the budget, it's important to quickly identify which items are in deficit and which are in profit.

2 - Involve your collaborators

As a project manager, you're in charge of operations, but you can't possibly know all the elements to be anticipated in the accounting forecasts, nor all the expenditure items and needs of certain departments that contribute to the operational phase of the project (marketing, research and development, etc.).

Collaboration is another success factor in project management.

It's essential that you surround yourself with your colleagues and involve them in drawing up the budget forecast, so as to combine all your practical knowledge.

We strongly advise against delegating this task to the accountant alone. Administration and the field must go hand in hand.

3 - Find the right price

It's normal to underestimate or overestimate certain expenditure items.

Overpricing

Contrary to what you may read or hear, don't over-inflate expenses. Let's say that a small safety margin (+5%) for the most uncertain is allowed, but generally speaking, it's better to stick as closely as possible to your actual forecasts.
It's better to set aside a cash reserve, so as not to suffer too heavily in the event of equipment failure or an increase in expenses, for example.

Some people prefer to add a "management costs" line equivalent to 10% of the total budget at the bottom of the table.

Underestimating

Don't underestimate, either: a budget that's too limited can quickly turn out to be a source of problems and conflicts between several tasks, involving the cancellation of some tasks that are at first sight secondary, yet essential (quality control, for example).

As part of the project implementation process, risk factor analysis is designed to avoid this kind of situation.

4 - Don't underestimate deadlines either

Time is money. If you're planning to launch a product too soon, postponing it can cause your budget to explode: extending an email campaign, cancelling and postponing the booking of the event venue, and so on.

And if you ask your employees to estimate their future workload, be aware that they tend to be over-optimistic: add up to 20% safety margin to the time they estimate they'll devote to each task (precautionary principle).

The provisional budget should be derived from the provisional schedule in which all resources have been estimated and allocated.

5 - Monitor the budget rigorously and regularly

It's a provisional budget, which means it can evolve. Track actual expenses and the time spent by each team member on each project task.

Compare estimated costs with actual costs to anticipate what's coming next.

☝️ Keep a record of your calculations so you can go back over them and understand how you arrived at a particular result. And date your budget!

🎯 To facilitate and optimize this follow-up, the use of a tool like Zoho Projects is more than recommended! You benefit from continuous monitoring and detailed budget analysis. Not only do you keep track of costs and time spent on each task, but you also benefit from a global overview of the budget through dynamic reports and interactive dashboards. So you stay on track with your budget every step of the way!

6 - Communicate with your team

As a good manager, you know that the success of a project depends on more than just good management.

It depends on the skills and commitment of your staff.
Good communication, particularly with regard to the project budget and its evolution, will :

stimulate collective intelligence,
decompartmentalize skills,
merge talents,
guarantee good relations within the team,
harmonize workloads,
reassure employees,
and thus avoid many of the risk factors associated with human resources (accidents, disengagement, overwork, etc.).

7 - Use the right tool

Project management software is both a management tool and a collaborative platform.

It is a comprehensive tool that can be used at all key stages, from project planning to project follow-up. On the budgeting side, it enables you to :

compare forecasts with actuals, including the cost of human resources, by task or by stage;
monitor budgets in real time;
create budget interdependencies between different projects (project portfolio management software, or PPM);
reactively modify or move tasks as the budget evolves.

🛠 Project management software

Need a dashboard to track your project budget? The collaborative working platform monday.com offers a simple, clear one for estimating the budget upstream, then analyzing the actual cost of each task. Bonus: use the formulas for more advanced analysis without too much effort.
Project management, task management and project portfolio management software, Proggio's strength lies in putting teams, not tasks, at the heart of its applications.
Project and task manager, halfway between ergonomic task management tools and more complex tools, Wrike is just the thing for agile SMEs.

🛠 If you're dealing with multiple projects, project portfolio management software :

Clarizen is a PPM for more advanced needs, offering budgeting and profitability estimation, as well as tracking a project or portfolio operating account, distinguishing between OPEX and CAPEX-type expenses, among other things!

With FoxPlan, you can manage your portfolios in hybrid mode, supporting both agile (especially to meet the needs of IT teams) and traditional project management methods. As a result, you can easily define your budgets for long-term strategic projects over several years, as well as for shorter projects exposed to change. All the while anticipating drift and guaranteeing the best possible return on investment for your portfolio.

With PPM Project Monitor, you can optimize the budgeting of all your projects: the software simplifies the collection and evaluation of requests from all business areas, and then the construction of budget forecasts. All this data is centralized and organized within a single tool, to facilitate arbitration, monitoring and anticipation of deviations. Save up to a day a week in controlling the management of your project portfolio.

IQar's SuitePro-G software lets you set and configure financial indicators for your projects, manage budget forecasts and report in real time, so you can better control variances and profitability. Visualize the expected benefits of each project, so you can make the right decisions more easily.

Teamleader is an all-in-one solution ideal for VSEs and SMEs specializing in digital businesses. Organized around the 3 fundamental aspects of a business - sales, invoicing and organization - the software helps you manage a variety of in-house and customer projects. You can set deadlines and track tasks in real time to keep within your budget.

A comprehensive and intuitive project portfolio management (PPM) tool, z0 Gravity is easy to use for managing several large-scale projects simultaneously, and suitable for organizations with more than 100 employees.

🛠 Collaborative platforms :

Asana, simple and intuitive, is a work management software that helps small and medium-sized teams coordinate and manage their tasks and projects.
Both a collaborative platform and a project management tool, Gladys presents itself as a complete digital work environment for managing your projects from A to Z, while optimizing productivity and boosting innovation.