Managing Project Budgets: Steps and Templates for Your Project
Caryn DiMarco
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. It also gives you the hard numbers to evaluate your process and level up your budgeting skills over time. Here are the steps you should take to set and track every project budget you’re in charge of.
What is a Project Budget?
A project budget is a financial plan that outlines the estimated costs of all the activities required to complete a specific project. It includes all the resources required to complete a project, such as materials, equipment, labor, and other expenses.
A project 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 agency and execute on the budget you’ve created without further guidance. Unfortunately, it’s 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.
Why managing project budgets matters
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.
How 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 build and manage 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.
The Timeline View in ClickUp
Just because we’re calling this an “outline” 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 resource that will be necessary.
Say your project is a social media advertising package. 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’re the ones who routinely create such 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?
Use ClickUp’s Risk Log to see what tasks or subtasks are at risk of running late or incompletion
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.
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 make an estimate for 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.
Use ClickUp’s Workload View to see who is ahead or behind and easily drag-and-drop tasks to reallocate resources
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, 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.
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.
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!).
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.
Instantly pull progress based on milestones, tasks, time, activity, and more.
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.
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.
Convert comments into ClickUp tasks or assign them to instantly turn thoughts into action items
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.
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?
It’s simple to add monetary values to tasks to keep project budgets on track
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.
5 Templates for Managing Project Budgets
By this point, you know budgets are 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 five of our favorite free ClickUp templates that will make you a budget management pro in no time:
1. ClickUp Project Outline Template
This ClickUp Doc template makes it easy to outline projects from start to finish
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.
2. ClickUp Project Resource Matrix Template
Stay on budget with this in-depth project resource matrix template from ClickUp
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.
3. ClickUp Project Deliverables Template
Get a bird’s-eye view of all your deliverables, assigned owners, timelines, and budget to stay on track
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 an 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 budgets will be a breeze with this template on your side.
4. ClickUp Project Request and Approval Template
This template by ClickUp helps breakdown the approval process into dedicated phases
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.
5. ClickUp Project Cost Management Template
Get a top-level view of your entire budget and manage it all with this ClickUp 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.
Managing Project Budgets: Best Practices for Success
Once everything is delivered and all your bills have been paid, it’s time for you to revisit the budget and make notes on any changes you made during the project. You can expect the lessons you learn to apply to similar projects in the future.
We talked about how each budget tells the story of your team’s work. A clear and detailed helps you remember the details of a project even if you don’t get around to the review right away.
See line items you added after the fact, project tasks that took more resources than expected, and adjustments you made mid-stream to keep everyone on budget. Create a document (or use ClickUp’s Project Post Mortem template) to keep track of your insights.
Review this information before you start each budget so you don’t make the same mistake twice. Budget management success means project success…so take the time to build a project budgeting process that’s thorough and thoughtful.
Combine your knowledge with our great tools to build budgets that will lead to successful projects. Get started with ClickUp today!
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Posted Jun 23, 2023
I conducted SEO research, then crafted an actionable budgets guide to help PMs hit the ground running. I worked with the product team to add relevant templates.
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