Every project in a business setting has a budget. It doesn’t matter whether you’re talking capital improvements or marketing. Budgets are part of the game. To project manager’s budgets can be vexing. And heaven forbid a project suffering cost overruns that blow the budget out of the water.

If you are a project manager, wrap your brain around a simple fact: your project budget is no different than your home budget. Now, don’t roll your eyes just yet. Sit back and think about it for a minute. What is the purpose of a budget? What do the budget numbers tell you? If you can separate yourself from your project and look at budgeting objectively, you should be able to see that a budget is just a tool that works the same way regardless of its application.

Wrenches of Different Sizes

The Janiko Group, a Georgia company that offers project management as a service (PMaaS), likens project budgets to wrenches of various sizes. We can apply the illustration in comparing your project budget with your home budget. Just consider them two wrenches of different sizes.

Your project budget may be a 3/4-inch wrench while your home budget is a 1/8 inch. They both perform the same function. They both turn nuts and bolts. It is just that one is bigger than the other. Yet size does not determine function. It also doesn’t determine a wrench’s effectiveness. Size only determines task suitability.

Your project budget is undoubtedly larger than your home budget. It has to be in order to accommodate a larger project size. But your project budget still functions the same way. It still serves the same purpose as your home budget.

The Budget Analysis

Every time you start a new project, you have to do an initial budget analysis. The analysis tells you a couple of things. First, it tells you how much money is allocated to the project. If we were to compare this to your home budget, funds allocated would be equal to your income.

Next, a budget analysis tells you how you are going to spend every dollar allocated. In a home budget scenario, this is the equivalent of listing all of your bills. The expense column of your home budget tells you how you’re going to spend every dollar of income.

Finally, the budget analysis requires you to make certain projections about unknown costs. You do the same thing for your home budget. You have your fixed costs that you pay every month. But you also have unknown costs you do your best to anticipate.

Adjusting on the Fly

Even the best budget analysis will not guarantee your project goes off without any changes. Every project budget has to be adjusted on the fly. So you and your project coordinator track the financials through each stage of implementation. Where adjustments have to be made, you make them.

Guess what? You do the exact same thing with your home budget. For example, maybe your car breaks down. Repairs represent an unknown cost you did not factor in your monthly budget. Yet you still have to pay for them. So what are you going to do? You are going to pull from the entertainment budget and put the money into your car. You’re going to adjust on the fly.

A budget is a guide and a tool for keeping financials on track. As a project manager, you don’t have to lose sleep over your project budget. It doesn’t have to be the stuff of nightmares. Just treat it like your home budget.