How to Manage a Project Budget in 7 Easy Steps (With Tips & Templates)
Budget management has a bad rap: People associate it with boring spreadsheets and lengthy expense reports. But managing project budgets is actually an art form—and, for those who work at agencies, essential to your company’s business model.
A good project budget is more than just dollars and cents–it’s context. It’s a tool to help tell the story of what your team is doing and how well they’re doing it.
This approach to project budget management helps you see, in real time, what’s working and what’s not. Whichever project management budgeting methods you prefer, they have to help you create a project budget that gets results. Here are the steps you should take to set and track every project budget you’re in charge of.
Managing Project Budgets Like a Pro
Summarize this article for me pleaseWhat Is a Project Budget?
A project budget is a financial plan that outlines the estimated costs of all the activities required for successful project completion. It includes all the resources required for a project, such as materials, equipment, labor, and other expenses.
A project management budget isn’t “$20,000.” It’s a clear breakdown of how you’ll spend that $20,000 and why you’ll spend it that way.
Theoretically, a new hire should be able to walk into your office or agency and execute the budget you’ve created without further guidance. Unfortunately, managing project budgets is not exactly easy without the right approach and tools.
What should be included in a project budget?
As a starting point, your budget should include three things:
- Total project costs: Labor, materials, and equipment
- How resources will be allocated: Project budget allocations are typically split up by deliverables
- A project timeline: This breaks down when you expect to spend the money associated with each project deliverable
We’ll go into more detail on how to build each of these components into your budget shortly.
Summarize this article for me please⭐ Featured Template
Take control of your project costs with ClickUp’s Project Budget Template with WBS. Plan expenses, track spending, and keep your budget in check with ease!
Why is managing a project budget important?
Because your budget includes context about your project, it can be used to guide and track your team. Good budget management can help you with:
- Project scope control: All agency project managers have dealt with that one client who keeps changing their expectations. Active budget management allows you to see whether these modifications fit within the original project scope or whether you need to have a discussion to reset expectations.
- Project Cost control: Keeping track of your spending as you go will flag overages early before hitting a point where you don’t have enough money to finish the project. Cost changes are often out of your (or your team’s) control, but how you address them is in your control — if you catch them in time.
- Progress tracking: When project budget line items are tied to deliverables, it’s easy to see where you are on each task. If you haven’t spent the money for, say, the fonts you need for the webpage, you’ll know the design stage isn’t complete.
- Planning future projects: Watching your project budget progress will help you make a stronger estimate for your next project. You can see where your projections don’t match reality and improve your forecasting skills.
Summarize this article for me pleaseHow to Manage a Project Budget in 7 Steps
Now that you know how complex project budget management is, you might feel a little intimidated. Don’t worry! With a bit of planning, anyone can excel at managing project budgets. Let’s go over how to build and manage a budget step by step.
1. Make a step-by-step project outline
You’ll want to start with a full project plan that’s made in collaboration with your project team and any stakeholders. You won’t even have numbers to work with at this point — and that’s okay!
A good project budget requires you to know the entire project scope and every deliverable your team will be accountable for.
Check out these expense report templates!
💡 Pro Tip: The Timeline View in ClickUp gives you the ideal overview to help plan your project budget.
Just because we’re calling this an “outline,” it doesn’t mean it’s skeletal. You’ll need to break every deliverable down into a step-by-step progression so you can see every necessary resource.
Say your project is a social media advertising package. For managing project budgets, you’ll need team members to:
- Concept the campaign
- Write and edit the copy
- Curate and purchase stock images
- Execute the campaign
- Track and report performance
Bring in your team members to check over each deliverable’s subtasks. They routinely create such project deliverables, so they know everything that goes into making the final product.
Bonus: Bookkeeping templates!
2. List every required resource
Time is money, and so are resources like freelancers, training, and research. Every step your team takes will require at least one of these things.
Under each subtask, make a list of every resource required. Here are some common project resources:
- Team members: How many internal employees will be working on the project and for how much time? Will you need to hire freelancers as well?
- Equipment and licenses: Will you need access to any physical equipment or online tools? Will you be purchasing them outright or paying a licensing fee — and if it’s the latter, for how long?
- Training: What skills will your employees need to learn that they don’t already have? What resources will they use to learn those skills, and how much time will it take?
- Research: Will you need to purchase industry research or pilot studies to learn what your target audience will respond to?
- Travel and hospitality: Is anyone planning to fly out to a client’s location, host business lunches, or hail a rideshare to handle project-related duties?
- Professional services: Will you bring in consultants or other experts to guide your project?
You may have other expenses, like procurement and IT, tied to your project budget, but the list above covers the most common resources required for teams like yours.
💡 Pro Tip: List down all resource requirements collaboratively with stakeholders on virtual ClickUp Whiteboards
Related: Price list templates!
3. Assign a cost to each resource
Once you’ve broken down your project into every resource you’ll need, it’s time to figure out what all these resources will cost.
There are four ways to estimate a project budget. Read the method descriptions below and choose one based on your agency structure and the available tools.
Process 1: The top-down approach
If you already have the dollar amount that’s allocated for the project, your job is to determine what you can achieve with the money you have. Assign a certain amount to each deliverable based on how resource-heavy each step is. Then, project managers should allocate all subtasks.
Budgeting with a top-down approach may require you to pare down the project’s scope and think of more cost-effective ways to meet your objectives.
Process 2: The bottom-up approach
Assign a dollar amount to each resource you listed in the last step, then sum everything up to get the final project budget. You’ll need to estimate work hours, freelancer rates, and tool costs to get an accurate number. Ask your team (or project managers) for help if you’re not sure what’s reasonable for any given item.
💡 Pro Tip: Try the Workload View for effective resource planning and utilization
Process 3: Analogous
Find a previous project that’s similar to the one you’re budgeting for now, and use the actual costs from that project as estimates of what you’ll need for this project. This method only works if 1) your past project costs included comparisons between estimated and actual costs and notes of any unexpected expenses and 2) the two projects are virtually identical in scope.
Process 4: The three-point approach
This method asks you to make three different budgets and then average them. You’ll need to calculate:
- A best-case scenario budget: Every step is completed in the shortest amount of time possible, and all necessary resources can be found at the lowest fair rate.
- A worst-case scenario budget: You fall behind and have to pay overtime or rush fees, you have to buy more expensive equipment, and so on.
- A most-likely scenario budget: People stay mainly on schedule, though a few steps take a bit longer than planned, and you don’t get the lowest prices, but you’re not paying excessive fees either.
Take these three numbers and average them to calculate your total budget. Consider weighting one higher than the others, depending on which scenario you think is most likely.
If you’re torn between project budget estimate methods, don’t sweat it! You can always combine them. For example, you may use bottom-up estimates to build your project budget for the three-point method.
Bonus: Budget proposal templates!
4. Add a contingency
Contingencies are the “oh no” fund in case you really do hit that worst-case scenario budget. It’s an essential part of your cost risk management plan.
Typically, your contingency fund will be 5-10% of your total project budget. You may not need to dip into your contingency funds often, which is great!
But every project budget should have them, just in case. Managing project budgets is just that bit less stressful when you know you have backup!
Bonus: Business model canvas template
5. Document your budget
Once you have all your deliverables and the numbers attached to them, it’s time to make an official budget document. We love using ClickUp for project budgeting (and we’ve shared some useful templates below!).
💡 Pro Tip: Clickup Docs helps you document your project budget securely and collaboratively.
If you’re not using ClickUp (yet), we recommend you use a free project management software rather than a spreadsheet. A good app makes it easier to organize and update all the information you need to include.
And speaking of, your project budget document should include:
- Each deliverable (and all subtasks for each), along with final due dates plus internal deadlines.
- Line items below each subtask with every resource required and its expected cost.
- When you expect to spend the money for each resource based on your project schedule.
- A space to list actual costs and expenditure dates, so you can update your budget as the project unfolds.
- Whoever is responsible for each line item: Who will be gathering travel receipts? Who will be overseeing freelancer invoices?
After you have all that information, add up the total costs for each deliverable or milestone to calculate your projected project budget.
And as one last step, ask your team members working on the project to review the budget (again) to make sure you didn’t miss anything. It’s much better to catch a mistake at this stage than mid-way through the project budgeting process.
📮 ClickUp Insight: 78% of our survey respondents make detailed plans as part of their goal-setting processes. However, a surprising 50% don’t track those plans with dedicated tools. 👀
With ClickUp, you seamlessly convert goals into actionable tasks, allowing you to conquer them step by step. Plus, our no-code Dashboards provide clear visual representations of your progress, showcasing your progress and giving you more control and visibility over your work. Because “hoping for the best” isn’t a reliable strategy.
💫 Real Results: ClickUp users say they can take on ~10% more work without burning out.
6. Get your project budget approved
You may pitch your budget to a client or simply submit it to your boss or other stakeholders. Tailor your ask to the audience.
But make sure you include details that show how your budget will lead to the desired project results — and how any decrease in the funding will necessitate scope changes. The work you’ve done in the previous steps will make it easy for you to justify your project budget request.
7. Monitor (and adjust) your budget
Your budget can only help you track your progress and control costs and scope if you keep it current. You don’t need to update your budget right after every purchase, but you should set aside time to add expenses and gauge whether you’re straying too much from the estimated costs.
The optimal update frequency will vary based on the length of each stage and/or time between each deliverable. A budget that includes a lot of social media ad spend may need to be updated every few days; a project budget for a 200-page website may be fine with a weekly or biweekly check-in.
💡 Pro Tip: Custom Fields in ClickUp help you quickly identify variances in project spends vs. budget.
If you do catch serious mismatches between your budgeted and actual spend, move into mitigation mode. First, figure out what went wrong. Did you miss a subtask that took your freelancer an entire day to complete? Did the client rip up their project plan midway through the deliverable, so you had to backtrack?
Whenever you identify an error, look to see if it’s been replicated in other stages and deliverables. Finally, check whether your contingency will cover the unexpected overage. If not, can you reallocate resources or find a way to use fewer resources for any other subtasks your team hasn’t started on yet?
Or do you need to discuss other options?
These discussions may involve your bosses or the client, and they’re not fun to have. But the sooner you have them, the more likely you are to find a solution that will at least work for everyone, even if it’s not ideal.
Make sure any changes are recorded in your project budget along with notes so you can remember what went wrong and plan to spend accurately in the future.
Check out these general ledger templates!
Summarize this article for me please7 Templates for Managing Project Budgets
By this point, you know project budget management is complex — so why not make your life easier with a template? You’ll save time with all your setup and have access to ClickUp’s excellent Dashboards to help visualize your project budgeting and progress.
Here are seven of our favorite free ClickUp project budget templates that will make you a budget management pro in no time:
1. ClickUp Project Outline Template
Since the budget process starts with a full project outline, why not start your process with ClickUp’s Project Outline Template? It has space for you to add everything you need for pre-budget planning:
- Project Background
- Project Introduction
- Objectives
- Constraints and Assumptions
- Timeline
- Key Deliverables
- Budget and Investments
This won’t be the only template you need to rock for a project budget, but it will be the first template you should use during your budgeting process.
Ideal for: Creating a comprehensive project plan to base your project budget calculations on.
2. ClickUp Project Resource Matrix Template
Cost estimates require math…a lot of math. ClickUp’s Project Resource Matrix Template guides you through those calculations by telling you where to put numbers and calculating the final amounts with formula fields.
Use it to estimate costs for all types of resources (labor, equipment, overhead, SaaS tools, and raw materials), so don’t be afraid to use it for even the most unlikely projects. The views on this template include:
- Getting Started Guide
- Kanban Board
- Resource Input Form
- Resource List
- Costs Table
- Timeline
These features make it easy to input cost estimates, project plan your resource management, and see where you should be budget-wise at any point in the budget timeline.
Ideal for: Efficiently calculating all resource costs for your project budget preparation.
3. ClickUp Budgeted Project Management Template
ClickUp’s Budgeted Project Management Template is designed to help you stay on budget and on track.
With this template, you’ll be able to:
- Organize tasks into sequential phases
- Prioritize tasks according to budget constraints
- Track progress and costs in real-time
Categorize and add nine attributes such as Remaining Budget, Project Budget, Project Phase, Within Budget, and Notes.
The Project Schedule View allows you to plan the timeline and milestones for the project. The Budget View helps you manage and track expenses associated with the project.
Ideal for: Managing project budgets and profitability with ease.
4. ClickUp Cost Analysis Template
With ClickUp’s Cost Analysis Template, you can quickly and accurately assess the impact of costs on a project’s success by tracking and analyzing them in one place.
Open 6 different views in different ClickUp configurations, such as the Cost Variables, Benefit Variables, Current Year Cost Profile, Analysis, and Getting Started Guide so that you can analyze at a glance.
The template gives project managers a streamlined way to track expenses and identify areas of potential savings.
Ideal for: Analyzing project costs to identify scope for improving efficiency.
5. ClickUp Project Request and Approval Template
If you want a more advanced and in-depth tracker than the Project Deliverables template, turn to ClickUp’s Project Request and Approval Template.
- It comes with pre-built List, Kanban, and Gantt views so you can organize your to-do list and see your timeline at a glance.
- The pre-saved List only requires you to add details, so you’re not building your project from scratch.
- There are six Custom Fields in ClickUp, including budget, spent, and budget remaining.
You can set due dates and priorities — which can help guide budget adjustments if they become necessary.
Ideal for: Tracking and managing all project requests and approvals.
6. ClickUp Project Cost Management Template
If you have a lot of project budgets to manage, use ClickUp’s Project Cost Management Template for a high-level view of everything. This template comes with six statuses (to cover everything from new projects to evolving budgets to completed projects) and six views:
- Projects List
- Project Costs Table
- Approval Process Board
- Getting Started Guide
- Calendar
- Project Cost Request Form
It’s the one project budget management template to rule them all—and it will keep you ridiculously organized.
Ideal for: Project budget tracking and visualization across multiple projects.
7. ClickUp Project Deliverables Template
By this point, you know how important it is to break down your project budget by deliverable (and then by subtask). ClickUp’s Project Deliverables Template includes custom fields for budget, remaining budget, and expenditures so far.
It offers six views—including a Gantt view and a project budgeting List— and automation that will post a comment when any custom field changes from a team lead or project manager.
In other words, this template is an agency-ready live budget tracker. Managing project budgets will be a breeze with this template on your side.
Ideal for: Real-time tracking of project budgets by deliverables.
Summarize this article for me pleaseManaging Project Budgets: Best Practices for Success
- Keep it realistic: Use past project data and insights from team members to create a realistic and achievable budget. Create a document (or use ClickUp’s Project Post Mortem template) to keep track of your insights. This helps estimate costs accurately and align them with project goals
- Highlight constraints: Define overall budget limits and specific constraints for individual tasks to ensure efficient resource use
- Keep costs transparent: Divide the project into smaller tasks and estimate costs for each, including labor, materials, and overheads. This transparency aids in tracking potential savings or overruns
- Have a contingency reserve: While planning the project, set aside 10-20% of the total budget for unexpected expenses to maintain financial stability
- Monitor and amend as necessary: Regularly compare actual expenses against the budget to identify variances early. In addition, update budget forecasts regularly to reflect changes in project scope or unexpected costs, ensuring alignment with the project’s progress
- Overcommunicate: Maintain open lines of communication with stakeholders regarding budget status, upcoming expenses, and any necessary adjustments. This fosters transparency and helps manage expectations. Hold frequent budget review meetings with them to validate assumptions and confirm estimates
- Define the scope well: A well-defined scope prevents scope creep, which can lead to budget overruns. Also implement a formal change control process to manage any modifications in project scope that may impact the budget
- Leverage technology: Use project management software like ClickUp to streamline tracking and reporting of budget expenditures, enhancing accuracy and efficiency
By adhering to these best practices, project managers can effectively manage their budgets, ensuring projects are completed on time and within financial constraints while maintaining quality standards.
Summarize this article for me pleaseSimplify Project Budget Management With ClickUp
Budget management success means project success…so take the time to build a thorough and thoughtful project budgeting process. However, it doesn’t end at that.
Success comes through managing project budgets throughout the project to ensure there is no significant variance. When there is a lot going on, this can take up precious time. That’s why project managers rely on specialized tools like ClickUp.
Combine your knowledge with our great tools at multiple convenient price points to build budgets that will lead to successful projects.
Get started with ClickUp today!
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