What is the price for the project and is sufficient funding available? There are many good reasons why the project needs to be in control with the money.

Many projects cannot deliver within what is initially estimated. No matter whether it is because of poor initial estimation or because of poor execution, then budget overruns will impact project owners’ overall view whether the project is a success or not.

Having the funding that is needed to conduct the project including sufficient buffer for unforeseen challenges means stability. Overruns on the other hand gives extra work to chase money, to report, explain, replan and re-scope. In the worst case the existence of the project can be in danger.

Creating the initial budget is a key task including being clear on the assumptions. Monitoring actuals vs budget and being able to identify deviations and early warnings is equally important. Keeping a budget will in most cases require a special focus, effort and ability to (brutally) control scope and timeline.

Establish project budget
Identify budget procedures to be followed
Define format for budget
Document budget assumptions
Create budget
Align budget with (detailed) scope
Align budget with project plan and staffing plan
Incorporate contingency
Allocate sufficient funding for stabilization after go-live
Review budget
Get budget approved
File baseline budget
Define process for follow-up on budget
Establish time registration processes
Establish processes to track project costs
Define frequency for budget follow-up
Define follow-up routine
Define reporting format
Establish change procedure
Define tolerances (need to involve project owner and SG)
The project has an endless need for money

Problem: Extra funding has been granted to the project multiple times.

Consequence: Sunk cost considerations are forgotten and the project may be pursued beyond financial reasoning. In addition, stakeholders may lose faith in the project.

Limited tracking of actual vs. estimated costs

Problem: Actual vs estimated costs are not tracked consistently.

Consequence: Early warnings about underestimation may be missed. The opportunity to initiate early corrective action is missed and important learning is not being incorporated into future estimation activities.

Budget lacks risk contingency

Problem: The project budget does not contain risk contingency for unforeseen events.

Consequence: The project is vulnerable to small deviations from the planned costs and will need to spend time replanning or refunding these deviations.

Project is underfunded

Problem: Inconsistency between project scope (what we want to do) and the available funding (what we can do).

Consequence: It may be difficult to realize the defined scope with what's available. The project may have to spend time reducing scope or finding additional funding.