20 Questions to Prepare for Project Budgeting

Placards with question marks remind us to ask specific questions before determining a project budgetDo you remember the parlor game “20 Questions”? Maybe you’ve even played it.

The object of the game is for one player to choose an object to be guessed by the other players by asking questions. The questioners have a maximum of 20 questions with which to determine the mysterious object. The player who has chosen the object uses “yes” or “no” in her responses until the object is either guessed or 20 questions have been asked.

If only determining a project budget were that simple. Obviously, there are far too many complexities and variables to be able to derive a good estimated project budget with yes-no questions. However, by answering the following 20 questions, the Project Manager and his team will have a very solid basis upon which they can confidently move forward with the project.

These are 20 questions that I typically use before determining the project budget. I also use these questions or a variation of them when I perform project reviews for teams that request my support to improve their budgeting processes. Other experienced PMs may have a different set of questions. The important point is to have them in place – and ask them thoroughly – prior to developing a solid project budget.

  1. Are the initial project budget and timelines available? The initial budget and high-level schedule used to justify the project establish the organization’s expectations for the overall project. These are needed to help explain the variances between the initial estimates and the detailed project schedule and budget that are developed.
  2. Is the Project Management Plan agreed to? Project staff are intimately familiar with the plan and know how the project will be executed, monitored, and controlled. They and the end-user staff understand the goals and objectives of the overall project and the expected benefits to be derived. They agree to abide by the constraints which govern the execution, the assumptions upon which the plan is predicated, and the rules of engagement.
  3. Is there a Scope Management Plan in place? Project staff understand how the project scope will be defined, developed, monitored, controlled, and validated. They and end-user staff understand how the overall project scope will be elaborated; how business, process, and technical requirements will be defined; and how changes will be requested, approved, and implemented.
  4. Is the Schedule Management Plan in place? Project team members understand and have agreed to the policies, procedures, and documentation of all project scheduling activities. The scheduling methodology and tools are in place. Status reporting, progress reporting, variance thresholds, and performance measurement processes are defined.
  5. Is the Resource Management Plan in place? The Project Manager knows and understands how to acquire and manage resources required for the project – including team members, end-users, supplies, materials, equipment, services, facilities, and other such resource needs.
  6. Is there a Risk Management Plan in Place? Project stakeholders and the project management staff have defined how risk management will be conducted for the project. Project risk categories are defined, and sources of risk are considered. Roles and responsibilities for mitigating project risks are understood. Risk probabilities and impact levels are documented. The protocol for tapping funding reserves are in place.
  7. Have project stakeholders all been identified and are they on board? Project stakeholders from both IT and the client are identified by name, role, and required contribution to the project governance and ongoing execution. The stakeholders are in concert with the project team and each other regarding the project goals and objectives.
  8. Are the system requirements developed to the requisite detail? End-users have defined their business, functional, and usability requirements. IT staff have defined the technical requirements and standards. Project management staff have defined processes for execution of the project and its governance. The requirements are well documented.
  9. Has the scope been completely defined? Project staff know what will be included in the final implemented system and what specifically will not be included. Areas that are not able to be fully defined are described to the extent that information is available.
  10. Is the Work Breakdown Structure (WBS) complete? Activities and tasks are decomposed to their lowest levels. The work packages to be delivered are defined and the aggregate of the work packages describe the complete end product.
  11. Has the project schedule been developed at the appropriate level? The specific project activities required to deliver the WBS work packages have been defined. The relationships among them have been documented. The activities have been sequenced according to how they will be executed.
  12. Have the project activity durations been estimated? Based on the activities defined to implement the WBS work packages, the durations of each activity have been estimated. The activity sequencing has resulted in the critical path for project execution. The basis for the estimates has been documented.
  13. Have quality standards for the project and its deliverables been identified? Project processes are established to effectively manage project quality. Processes are in place to help ensure that work products meet the stated requirements. Quality metrics are defined, and processes are established to measure results.
  14. Have the required resources been estimated? The various types of resources have been defined and quantified. Resource requirements have been estimated for each activity and aggregated for the entire project.
  15. Have contingency and management reserves been estimated? Based on the amount of uncertainty determined for the project, appropriate contingency reserves and management reserves have been established for the project.
  16. Is the estimating methodology reliable and acceptable? The estimating methodology is an industry standard methodology and is in broad use within the organization. It is readily understood by the staff deriving the project estimates. If more than one estimating method is used by the organization, the most appropriate one has been selected for this project.
  17. Have specific individuals been identified for the project? Individuals known to the project management team and their skill levels have been factored into the project estimates.
  18. Are the latest staff rates and resource unit costs up-to-date and available? Resource levels have been delineated for the project, appropriate rates for each level are available, escalation factors for multi-year projects are documented, amounts and types of equipment and other materials are listed, unit costs of equipment and other materials have been secured, and other such resource costs are in place.
  19. Which prospective project team members are available to assist with budgeting? Project Managers, no matter how experienced, must not derive the project estimates on their own. It takes a team of individuals skilled in the various disciplines of project delivery to define and refine the estimates.
  20. Have the people aspects of project management/project delivery been taken into account? Project budget estimation is more than a technical and process-oriented accounting of activity durations, critical path, resource levels, unit costs, contingency factors, and the like. An experienced project estimating team considers whether the people aspects of project delivery have received as much focus as the technical and process aspects.

Determining the project budget is a painstaking process and must not be taken lightly. These 20 questions, or questions similar to them, help the project estimators understand how well prepared they are to finalize a budget in which the stakeholders and project team can have confidence.

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