How to Make Project Cost Projections

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Cost projections provide details and total funds needed for the implementation of a project. This information assists management in establishing the project budget within the realm of the entire company's budget. For example, if the cost projection is greater than the available budget, management may use the projection to determine where they need to cut back on spending, either for the company or for the project. The cost projection and the budget that follows also helps keep the project on task and avoids accidental over-spending. The projection also provides information the company uses to assess when the project has essentially "paid for itself."

Things You'll Need

  • All proposed spending needs for a project
  • Project proposal
  • Project timeline
  • Company budget information
  • Spreadsheet program
  • Gather together all information relevant to the spending aspects of a project. Necessary information includes the salary for everyone working on the project for the entire estimate timeline, information regarding necessary tool or equipment purchases and the cost of hiring people and training them.

  • Review the project plan or proposal paying particular attention to the projected timeline. Make notes on how long the project will take to complete, when the best time to start the project is, absolutely necessary spending and spending that is less-necessary but can improve overall results.

  • Compare the timeline from the project proposal to the company's fiscal year and budget plans. Adjusting the timeline slightly may allow the project budget to be divided between two fiscal years, essentially sharing the project budget between two company budgets making the overall cost less pronounced to the company's regular spending.

  • Create a list of all projected expenses for the project alone. Separate items listing each with the cost projection for each item. For example, if a dozen people must be hired for the project and trained, there will be a training cost projection as well as the sum of the new employees' salaries or wages which may actually be combined with other salaries and wages unless the manager wants everything listed separately (itemized). Equipment or tool rentals or purchases could be additional items, as well as contractors or supplies.

  • Use the itemized list to create the cost projection. For maximum efficiency, use a spreadsheet program to create both a chart for the itemized list and a graph showing the breakdown of the projected budget. In the graph, certain things may be combined to reflect a bigger picture for the project manager, such as combining employee wages and training costs or combining all tools, equipment and supply costs but separating purchases from rentals and employees from contractors.

  • Write a detailed report outlining the itemized spending needs as well as explaining budget planning for the project. Include information regarding the timeline, any proposed timeline adjustments and where or how the project costs can come from the overall company budget.

References

  • Photo Credit Jupiterimages/BananaStock/Getty Images Jupiterimages/Comstock/Getty Images BananaStock/BananaStock/Getty Images Comstock Images/Comstock/Getty Images
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