Creating a budget

financial management

Step 1: Create budget resources for your project

As an example of how to create a budget for your project, imagine that you want to create three budget resources, named Budget-Travel, Budget-Labor, and Budget-Materials. The names that you give to these budget resources will help you to distinguish them from other resources in your project when you categorize them in Step 4.

1. On the Resource sheet, create three resources to be used as budget resources for the project.
2. For each budget resource, click Resource Information.
3. In the Resource information box, create the type of budget resource that you want by clicking the type in the Type list, and then selecting the Budget check box.

Step 2: Assign the budget resources to the project summary task

To show the allocated budget for the entire project, you must assign all of the budget resources to the project summary task:

1. On the View menu, click Gantt Chart.
2. On the Tools menu, click Options, and then click the View tab.
3. In the Outline options section, click Show project summary task.
4. Click OK.
5. Select the project summary task, and then click Assign Resources.
6. In the Resource Name field, select the budget resources that you created in the first step, and then click Assign.

 Tip   If you have many resources of various types, but want to show only the budget resources, click Resources list options . Select the check box under Filter by, and then click Budget Resources in the list.

7. After you assign the budget resources to the project summary task, click Close.

Step 3: Enter values for the budget resources

1. On the View menu, click Resource Usage.
2. In the Resource Usage view, enter values for the budget values by first inserting columns for the Budget Cost and Budget Work fields:
   1. On the Insert menu, click Column.
   2. In the Field name box, click Budget Cost, and then click OK. Repeat these two steps to insert a column for the Budget Work field.

 Tip   If resource assignments are hidden, click the task's outline symbol to display them.

3. On the row representing the project summary task, enter values for the cost and work budgets.

 Note   Keep in mind that the Budget Work field includes values for work and material resources. For a work resource, the budget is calculated in hours. For a material resource, the budget is calculated according to the material label created for the material resource. For example, a concrete budget value of 20 that has a material label of Tons displays as 20 Tons in the Budget Work field.

You can also enter budge t work and budget cost amounts for a specific time period by using the timephased (timephased: Task, resource, or assignment information that is distributed over time. You can review timephased information in any available time period in the fields on the right side of the Task Usage and Resource Usage views.) portion of the Resource Usage view. This method is useful when you want to specify that, for example, you want to allocate a certain amount of money per month throughout the duration of a project.

1. On the Format menu, click Detail Styles.
2. In the Available fields box, click Budget Cost, and then click Show. Repeat these two steps to insert a column for the Budget Work field.
3. Click OK.

The Budget Work and Budget Cost fields appear as rows. Enter budget values per time period. Keep in mind that you can enter values only for the project summary task.

Step 4: Categorize resource costs according to their budget type

In this step, you categorize all resources, including budget resources, according to the type of budget that each belongs to. You do this by creating a custom text field that contains identifying words or phrases for each budget type. After each resource is categorized in this way, in the next and final step, you group the budget types to see how they compare to the overall budget.

1. On the View menu, click Resource Sheet.
2. Create a custom text field that will contain an identifying word or phrase for the type of budget that the resources belong to:
   1. On the Tools menu, point to Customize, and then click Fields.
   2. In the Custom Fields dialog box, click Resource, and then, in the Type list, click Text1 (or any other Text field from Text1 to Text30).
   3. Click Rename to rename the field to reflect the budget category that you want to group, such as Budget Type.
   4. Select the Roll down unless manually entered option, and then click OK.
3. Add the custom resource text field to the Resource Sheet view.
4. In the Resource Sheet view, for each resource (including budget resources), type an identifying word or phrase in the custom field that identifies that resource's budget type.

For example, for each person in your project who is actively working on tasks, you might use the word Labor to denote the budget type. For each material resource, you might use the word Materials. For each cost resource that involves travel, you might use the word Travel.

 Note   Be sure to use these same categorizing words or phrases for the budget resources that are assigned to the project summary task, as well as for the individual work, material, and cost resources.

 A custom field named Budget Type has been added to the Resource sheet.

 All travel resources, including the budget resource named Budget-Travel, are categorized as belonging to the same type of budget.

The categorizing words and phrases that you have typed in the custom field will be used for grouping in the next step.

Step 5: Group resources to view how they compare against the budget

1. On the View menu, click Resource Usage.
2. On the Project menu, point to Group by, and then click Custom Group By.
3. In the Custom Group By dialog box, in the Field Name column, click the name of the custom resource text field that you created in Step 4, and then click OK.

Resources are grouped by their budget type. You can now view how the cost of resources compares to the overall budget that you set up for the project in Step 3.

 The total budget for work throughout the project.

 The total amount of work for all resources on the project. The work assigned exceeds the budget by 24 hours.

 The amount of work assigned to Peter.

 Tip   You can also view a graphical report of your budget. On the Report menu, click Visual Reports. In the Visual Reports dialog box, click the Assignment Usage tab, and then click Budget Work Report or Budget Cost Report. Click View to see the report.

 How do you create budgets and track costs against them?

See also

• The 9 topic areas of project management knowledge: Cost,

• Programme/project financial management

• Introduction to creating a budget

• What is the cost tracking process?

• How do you create budgets and track costs against them?

• The steps for Creating a budget

• Programme/project financial management

• Control and Manage Costs Established in the Projec