Business Insights and Advice

A Benefits First Approach

1. Start with Clear Project Objectives and Benefits

Before setting a budget, ensure and the project team understand the benefits to be delivered, have a well defined project scope, clear deliverables, and success criteria. Misaligned objectives often lead to budget overruns. Ask:

• What are the key outcomes and benefits?
• How are the outcomes and benefits to be measured?
• What are the features required to deliver the benefits
• Which features or tasks are essential versus optional?
• Prioritise the features and include high-level cost estimates
• Work on different ways to deliver the feature

2. Engage Stakeholders Early

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Budget alignment is not just a financial exercise—it’s a communication process.  Make sure you involve:

• Project sponsors for funding priorities.
• Team leads for resource estimates.
• Finance teams for compliance and cost controls.
• Talk to other project managers and gain insights on budget risks, tips and tricks etc.

Early engagement ensures everyone understands constraints and expectations

3. Use Data-Driven Estimation

Avoid guesswork. Base your budget on:

• Industry benchmarks for labour and material costs.
• Risk-adjusted estimates to account for uncertainties.
• Include budget variances and experience from past internal projects – what is the history of the organisation in delivering projects on budget
• Historical data from similar external projects.

Tip: Apply techniques like Fibonacci estimation, Three-Point Estimating or Monte Carlo simulations for more accurate forecasting.

4. Align Budget with Project Timeline

Cash flow matters. Synchronise budget allocations with project phases.  This will depend your methodology. Simple examples include

• Initiation: Planning and design costs.
• Execution: Labour, materials, and technology expenses.
• Closure: Testing, documentation, and post-launch support.

This prevents funding bottlenecks during critical stages.

5. Build in Contingency

Unexpected changes happen—scope creep, market fluctuations, or resource shortages. Allocate 5–15% contingency based on project complexity, organisation history, experience. This buffer protects against overruns without inflating the budget unnecessarily.

The budget can be released at the end of the project to a risk pool.

6. Implement Continuous Monitoring

Budget alignment is ongoing. Examples of monitoring include:

• Earned Value Management (EVM) to track cost performance.
• Variance analysis to identify deviations early.
• Dashboards and KPIs for real-time visibility.

Regular reviews with the sponsor and project team allow quick corrective actions before issues escalate.

Have project reporting such as earned value to demonstrate to the project sponsor and others that the budget is on track.  This will provide them with the confidence you can deliver the project within the budget allocated.

Remember, you may not need to deliver everything.  Low value features can also be excluded if they impact the budget too much.

7. Communicate Transparently

Keep stakeholders informed about:

Any changes in scope or cost drivers.

Budget status.

Risks and mitigation plans.

Clear communication builds trust and prevents surprises.

8. Leverage Technology

Modern tools like Microsoft Project, Smartsheet, or Power BI can automate tracking, reporting, and forecasting. These tools reduce manual errors and improve decision-making.

Key Takeaways

• Define objectives, benefits and scope before budgeting.
• Engage stakeholders and use data-driven estimates.
• Align budget with timeline and include contingency.
• Monitor continuously and communicate openly.

Budget alignment is not a one-time task—it’s a dynamic process that requires collaboration, foresight, and adaptability.