How to draw up a provisional project budget (Examples)

April 16, 2023
Project budgeting tool

What is a project budget?

Project budget: definition

A project budget represents an estimate of all the costs that will be generated during the project's implementation, such as labor costs, but also indirect costs such as subcontracting, travel expenses and material purchases.

The project budgeting is usually carried out before the project begins, to determine whether the project is financially viable, and to identify possible cost-cutting opportunities.

Budgeting is a key tool in project management. Throughout the project, the budget is compared with the actual situation, and with the forecasts to check that the project remains aligned with the initial objectives.

When should you budget for a project?

A project needs to be budgeted as soon as the resources to carry it out are exhausted (which corresponds to the majority of situations). Different contexts call for project budgeting.

  • Business project: When a company launches a project or an initiative, it is necessary to check its financial feasibility and whether it will generate a return on investment.
  • Charitable projects Charitable organizations are financed by donations or grants, and it's crucial that project budgets are carefully monitored to ensure that they can be carried out within the allotted funding.
  • Government projects : Governments often carry out large-scale, multi-year projects. These are financed largely by taxes, and the amounts involved are therefore made public. It is essential that budgets are prepared to ensure that these government projects are completed on time and on budget.
  • Personal projects: it's also often a good idea to create a budget for an individual project, to check that it won't jeopardize personal finances.

Why draw up a project budget?

Beyond its usefulness in determining the feasibility of a project, drawing up a project budget can be useful in many different situations.

Objectives of project budgeting

  • Allocate resources correctly: Costing a project enables you to allocate the work to all types of resources, including human labor, the quantity of materials, the purchase of subcontractors, and so on. In order to allocate needs precisely and optimize the efficient use of these different resources, the project can be subdivided into tasks and sub-tasks.
  • Controlling and managing a project: Throughout the project, the budget serves as a roadmap for the project manager, who must not only complete the project within the allotted time, but also within the costs initially forecast.
  • Accountability and transparency: the project budget provides objectives for the various project managers and stakeholders. It constitutes a series of objectives to be met, and enables any reasons for overruns to be identified transparently.
  • Easier decision-making: Thanks to budgeting, it's easier to understand potential problems that could jeopardize a project, and to make decisions quickly enough to correct them.
Project Forecast Budget Table Template

Download our projected project budget table template

Track your KPIs & check the reliability of your projects.

Download the forecast budget table template

Revising a budget during a project 

This provisional budget, which is the reference point, is not supposed to change during the course of the project. However, if the scope of the project evolves - at the customer's request, for examplethe budget must be revised. The new scope means that the initial budget is obsolete. We therefore need to be able to revise a budget in specific cases, so that it retains the same level of usefulness.

The actual situation must be regularly compared with the budget. There are two ways of looking at this.

  • The situation to date in relation to the budget: to understand the level of budget consumption.
  • A situation that takes into account what has been achieved and what remains to be done: by calculating what remains to be done and adding it to what has already been achieved, a project budget landing calculation enables a clearer comparison of the situation with the initial forecast budget. This type of comparison highlights the risks involved in deviating from a budget. What does a project budget consist of?

What makes up a projected project budget?

To be reliable, project budgets must be as exhaustive as possible. All the resources needed to complete the project must be taken into account.

In addition to listing resources, you need to determine quantity and time spent. A breaking down the project into tasks or sub-tasks can help to simplify costing.

Project resources

Internal contributors

These are all the people within the company who will be contributing to the project in any way whatsoever. We need to identify these people (or the categories to which they belong: developers, consultants, etc.) and determine the time they will spend on the project. 

For these contributors, the cost corresponds to the product of the time spent and the cost of each contributor. It is necessary to determine which unit of time will be used to calculate the cost. If, for example, the budget corresponds to a number of hours spent on the various tasks, an "hourly cost" must be calculated for each contributor. If the unit is the day, a "daily cost" must be entered opposite.


Many projects require the use of subcontractors to carry out certain project tasks.

You need to be able to put a figure on the cost of this subcontracting so that it can be included in your forecast budget, and so that you have an overview of the cost of your internal and external collaborators.

Products and purchasing

Some projects require the purchase of products to make them available to customers, such as user licenses for software. In this case, the cost of the licenses must be taken into account.

The equipment

When a project requires the purchase or rental of equipment, this must also be included in the budget. If the equipment is already owned by the company, it is its depreciation cost that needs to be factored into the budget.


In the course of carrying out a project, costs are frequently incurred, such as travel expenses. These may or may not be re-invoiced. This re-invoicing can be done on an actual basis or on a flat-rate basis.

An estimate of the costs to be incurred in connection with the project, as well as the re-invoicing to be carried out, must be included in the project budget.



When projects are sold to customers (most often external customers, but sometimes re-invoiced to internal customers), a sales figure can be applied to the project. 

The precise sales figure for a project is only known when it is invoiced on a fixed-price basis. The parties involved have agreed on a sales figure for the project, and if the scope does not change, this is the sales figure that will be recorded. 

On the other hand, when a project is invoiced on the basis of time spent, the latter may vary, as it is the actual work that will ultimately determine the project's sale price. As a result, only an estimate can be provided when creating the project budget.


The feasibility of a project depends on the project's cost budget, which must be absorbable by the company, but also on the project's margin, which makes it possible to calculating return on investment.

Visit project margin is calculated by deducting all project costs from sales (including re-invoicing of expenses, products and subcontracting). Every company needs to know what margin levels are expected, to facilitate performance analysis.

How do you draw up a provisional project budget?

What steps are required?

To budget a project, you need to follow certain steps.

  1. Confirm all the tasks required to complete a project.
  2. Indicate the resources required for each of the project tasks (man-time, materials, etc.).
  3. Allocate work to different types of contributors: determine what is done with people internal to the company and what is done by subcontractors.
  4. Confirm the time to be spent by each contributor and obtain a costing for subcontractors.
  5. Estimate project costs (travel, expenses, etc.).
  6. Estimate project sales.
  7. Create a projected budget in the form of a profit and loss statement with the various sales and cost lines.

What tools do you need to draw up a budget forecast for your project?

There are several types of tools available for budgeting your project. 

You may choose to stick to spreadsheets for budgeting. This brings a certain simplicity, but presents some notorious problems: 

  • a lack of consistency in project budgeting; 
  • a lack of communication (data are more difficult to share); 
  • a lack of control (the budget cannot be automatically submitted for validation); 
  • a lack of reliability (it's harder to make a calculation reliable in a spreadsheet).

Alternatively, you can choose to equip yourself with a dedicated project management tool. The approach to project budgeting can vary greatly depending on your business, so you need to equip yourself with a tool adapted to your business.

For example, if you're involved in construction projects construction, a tool like Procore may be just what you need. For projects in consulting or IT services, Stafiz is adapted to your needs.

Discover project management with Stafiz

How do you format your budget forecast?

As the budget is used internally as a roadmap, it is important that it is readable by all stakeholders. It has to be read by the controlling department and management, but also, of course, by the project manager. 

If the objective of accountability and transparency is to be achieved, the budget must be easy to understand, otherwise it may not be sufficiently utilized.

It must therefore respect the vocabulary used by project teams. Its form must therefore be validated by the stakeholders, who must find the most important data and indicators (total costs, project margin, summary, etc.). To ensure that the project budget forecast becomes a genuine decision-making toolyou need to make sure that all those who use it have the information they need to do their job.

Finally, it must be easily replicable, as project budgeting is a repetitive task. The simpler and more automatable the format, the more time the company will save in producing and reading these budgets.

The objective of budget communication

Pince a project's budget also has a communication objective, we need to think about making these budgets easily available for reading.

Dedicated tools make it easy to communicate these budgets to the various stakeholders. If you prefer to stay on a spreadsheet, the budget must be recorded with a clear standardized name to be easily found in a securely accessible folder.

What are the pitfalls to avoid when drawing up a project budget?

A poor project budgeting process is one of the causes of project failure.

There are a number of risks to consider when creating a project budget.

  • Underestimated costs This is a major risk, and one of the most common causes of project failure. When not all costs are taken into account, or when they are underestimated, the budget is exceeded, and the extent of this overrun can rapidly project failure.


  • Poor costing Without the help of a tool, the calculation and costing standards used can be miscalculated, resulting in unreliable budgets and poorly organized planning.


  • Unforeseen events during the project: certain events may occur that no budget could have foreseen (natural disaster, supplier bankruptcy, etc.). A conservative approach is therefore imperative to guard against excessive risk.


  • Lack of flexibility: a budget that is too rigid can prevent you from reacting to certain situations, and jeopardize a project. You need to be able to readjust your budget when the situation calls for it.


  • Poor resource allocation: when work allocation and costing is poorly done, the budget lacks consistency, and planning risks creating situations of disorganization that penalize the achievement of the project's budget and deadlines.

Efficient resource allocation with Stafiz

Finally, during the course of the project, regular monitoring of the situation in relation to the initial budget helps toavoid the risk of deviating from the budget.

There are many ways to restore a situation in which a project's budget is at risk:

  • renegotiation with the customer ;
  • reallocation of resources to reduce future costs,
  • arbitration on the performance of certain non-priority tasks.


Examples of project budgets 

Here are two examples of Stafiz project budgets to illustrate the theory. 

In this first case, it is a simple project, with only human intervention.

Project costing in Stafiz

Project costing in Stafiz

In this second example, additional fees are added, as well as product sales (licensing) and subcontracting.

Project costing in Stafiz with license sales and subcontracting

Project costing with license sales and subcontracting

To test the creation of forecast project budgets in Stafiz, do not hesitate to contact us !

Schedule a demo