DoIT Project Management Advisor
Execute & Control
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Stage 4: Execute & Control


What it is How to Templates/
How to: Manage Budget

Recommended actions and strategies
The table below describes several steps you can take to manage a project budget.


What to do

How to do it


When tracking project finances identify budget variances as they occur

Focus on the following financial components of the project:

  • The baseline budget – the budget as approved by the project sponsor. (Each time the sponsor approves a new budget, the new approved budget becomes the baseline budget for tracking project costs.)
  • The total cost of changes as approved through change control.
  • The cost estimate to complete remaining tasks. Revised estimates from project team members to complete remaining tasks.
  • The actual costs to date expended on all project tasks.
  • The expected at end is the current budget projection for completing the project and is the sum of the actual costs to date plus the cost of any approved changes and re-estimates to complete remaining tasks.
  • The variance is the current baseline minus the cost expected at end .  A positive variance means the actual cost of the project is less that the budgeted cost. A negative variance means the actual cost of the project is greater than the budgeted cost.

Note: The level at which you budget and track actuals depends upon the nature of your project and the requirements of the project sponsor.


Understand the reasons for either positive or negative variances in the budget

Work with the project team to determine causes of variances.

Positive variances may indicate:

  • Project behind schedule
  • Ineffective budgeting
  • Legitimate changes

Negative variances may indicate:

  • Excessive changes
  • Schedule delays
  • Ineffective budgeting


Make adjustments to the budget to reflect any changes or revise the cost estimates

When adjusting the budget pay particular attention to:

  • Scope changes
  • Staff changes
  • Schedule changes

Caution: Be careful adjusting a budget to a lower cost. If some tasks cost less, others will probably take more time.


Assess impacts to project scope and requirements

Budget adjustments (either more or less funding) may impact what the project can deliver.


Communicate any budget changes or issues to the project sponsor

Let the sponsor know about any changes to the budget, the potential impact of these changes and resulting actions.


Get approval from the project sponsor for any budget adjustments

Adjusting the budget results in a new baseline and requires approval from the project sponsor.



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Updated February 1, 2006 - v1.0