Please respond to reply to the original post in bold at the end 200 words.
Most firms undertake budgeting as it provides an effective basis for planning, controlling and performance measurement. With regards to project budgeting, it is important to determine: the bare costs required to deliver a particular project, financial needs of a particular project as well as prepare the books to monitor the expenditures plus revenues, the pricing and the total cost of ownership. The project costs refers to the expenses to be incurred in order for complete a project and it does not into consideration the profit. The project costs are made of direct and indirect cost. For this project, the direct costs include: personnel, materials and supply, hardware and software, travelling and other costs like renting equipment and training costs. The indirect costs needed to run the project and make work easy are general overheads (like office space costs, consumables, standard equipment and administrative staffs) as well as project overheads (Meredith et al., 2016). The personnel costs for the project will amount to 400,000 and this is a gross salary for 20 employees working 5 hours a day at the rate of 40 dollars per hour for 100 days. The materials and supply costs for the entire project is 1,200,000 United States dollars. Hardware and systems cost for developing the project will account for 200,000 dollars. This covers for the system needed for the project. Travelling, meetings as well as events will account for 100,000 dollars while other costs such as renting equipment and training materials will cost 100,000 dollars. In total the project will cost 2,000,000 United States dollars.
Hello Christopher – breaking down the budget as you expect costs to be incurred is a worthwhile task. I would add that calendarizing the budget by month is another beneficial task. Deadlines may slip and a new timeline might result in a revised project forecast but knowing how much cost should have been incurred on a monthly (or quarterly) basis demonstrates the financial element of the project is under control. Wether or not the project is over/under budget is a different issue but knowing the facts is a large part of finding a solution. Would you be concerned if any of the cost elements were significantly higher/lower than than budget at any given point?