BSBPMG533 Task 1
BSBPMG533 Task 1
2) Predict cash flows. A budget is extremely useful in companies that are growing
rapidly, that have seasonal sales, or which have irregular sales patterns. A budget
is useful for predicting cash flows, but yields increasingly unreliable results
further into the future. Thus, providing a view of cash flows is only a reasonable
budgeting objective if it covers the next few months of the budget.
3) Allocate resources. Some companies use the budgeting process as a tool for
deciding where to allocate funds to various activities, such as fixed asset
purchases. Though a valid objective, it should be combined with capacity
constraint analysis (which is more of an industrial engineering function than a
financial function) to determine where resources should really be allocated.
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Step 1: Identify project scope: An ideal approach is to build out a work breakdown
structure (WBS) for the project. The work breakdown structure allows you to capture all
work involved in delivering a project at a detailed level. From there, it becomes much
easier to assess the resource requirements for budgeting
Step 3: Assign amounts: Determining dollar amounts can be hard; that’s where research
comes into play. Investigate historical budgets for similar projects in the past. Perform
research online or talk to team members who have insight into the various items and
related costs for the project. Consequently, it’s effective to create a model in project
management software or a spreadsheet to estimate staffing costs across the timeframe of
the project using an average salary or industry norms for the positions.
Step 4: Build your budget: As part of building your budget, note any assumptions that
went into the figures. This is important because once a project begins, some of the
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assumptions may hold true and others will not, resulting in actual project spend diverging
from the budget. By capturing the assumptions, you’ll understand why the budget didn’t
reflect reality.
Step 5: Obtain approvals and implement: Once the budget is approved, it’s among the
project manager's responsibilities to oversee it. It's a good idea to use project management
software to track costs. As the project management triangle dictates, if teammates start to
fall behind on deliverables or unexpected delays arise, costs will be affected.
This will help you to budget more effectively for future projects.
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6. Explain two key features of using spreadsheets for developing budgets.
a) Linking related data. Another benefit of using spreadsheets is that you can link
worksheets together. This is useful for things like cash flow, where you need to
link the actual balance in the bank at the end of last month to the opening balance
for this month. To do this, just press = in the cell that you want to link from, and
put the cursor in the cell you want to link to. This works well for budgets too,
especially if you have completed a production budget in one worksheet, and this
needs to link to the master budget. Then, if the production budget changes, it
automatically updates the master budget.
b) Useful formatting. When working with lots of financial data, you’ll want to make
it as easy to navigate as possible. Thankfully, most spreadsheet software offers a
variety of tools to help you make your spreadsheets visually appealing and easy to
understand. For example, you can use Ctrl + B when a cell is selected to make all
of the text in that cell bold, which is useful for quickly helping titles and labels to
stand out. You might also choose to colour code cells, and then sort your data by
colour.
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relates technical, time and cost performance, provides data for pro-active management
action and provides managers with a summary of effective decision making. The value-
added approach helps achieve greater visibility and control of the project activities which
helps in responding to issues early on, thus making it possible to meet the project
timelines. It provides a clear communication of the activities involved and improves
project visibility and accountability.
10. Outline four key responsibilities of a project manager in relation to cost management.
Project manager role is to define and allocate a clear and sufficient budget that contributes
to exploiting available opportunities and achieving the project goals. The main idea of
this PM task is to ensure that you do not spend more than you are entitled to; otherwise,
your sponsor will be unsatisfied with the outcome produced at the project’s end.
You need to learn to manage project finances carefully, by creating cost spreadsheets
and estimates while ensuring that project expenses are budgeted upfront. If your budget
is exceeded, you need to immediately communicate with your sponsor and avoid
complications in the future. If you strictly follow this project manager role, you will do
your project within budget, and no over-estimate will appear. And do not forger to
engage your deputy and analysts in performing the cost analysis.