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Last updated on 7/1/24

Plan Your Costs and Budget

Understand the Importance of Planning

When you’re in charge of a project, you’re doing what’s known as steering the project. This means ensuring that everything is progressing in line with the agreed schedule and budget.

Before you start contributing to the different specifications or driving the project forward, you first need to create a project plan to set deadlines.

This is an extremely important activity for you because your plan will act as a compass, telling you where you are and how the project is progressing.

When is the ideal time to start planning the project?

The recommended time for defining your plan is once you’ve received and assessed the business requirements.

The information provided in the business requirements, such as the final deadline and the planned budget, will give you the key information you need to start planning.

Make a List of Tasks

Creating a project plan essentially involves listing and organizing all the tasks that are involved in your project.

To create your task list, I suggest a three-step approach.

  1. Begin with a top-down approach.
    Start by trying to identify the major phases of the project. For example, you could take the nine steps in the V-model and add tasks to each of these steps.

  2. Define sub-tasks for each step.
    For each of the steps in the V-model, you can consult the technical team to identify all the activities involved in this step. Once you have all the sub-tasks, estimate how long each one will take.

  3. Set deadlines.
    When setting deadlines, ask your technical colleagues to help by providing estimates for all tasks related to the build. This will give you a realistic view for your estimates.

Now, you’ll be able to define a start and end date for each task. This approach will give you an overview of the total number of days needed for the work.

Establish a Clear Budget

After defining your plan, you can estimate the cost of the project work.

To establish how much the work will cost, we’ll use an average daily rate. In other words, the cost of one person doing one day’s work with all other costs included.

First of all, you need to distinguish four types of costs:

  • Human resource costs 

  • Hardware costs

  • Project management effort

  • Contingency

Let’s start with human resource costs.

As a result of the information gathered during your planning activity, you know the estimated duration for each project task.  

If you multiply the task duration (in days) by the average daily rate of the people performing the task, you’ll obtain the task cost.

Repeat this for all project tasks to get the total amount for completing all tasks.

Here are some examples of human resource costs:

  • Project team salaries

  • Employee training

  • Costs associated with recruiting new staff

  • Paying external experts

Then, there are the hardware costs.

Your budget also needs to include equipment and hardware costs. To determine the price for these items, you can ask the technical team.

Here are some examples of hardware costs:

  • Computers and software packages

  • Maintenance and updates

  • Network and server fees

  • Supplies such as paper, etc.

And the project management effort:

When you’re managing a project, you need to lead, communicate, analyze, and write reports throughout the project. It can be difficult to quantify these tasks or give them an accurate deadline. To overcome this issue, you’ll simply add a margin to the total cost of the project. We call this margin the “project management effort.” It’s a way of calculating a cost for your management work throughout the project.

Here are some examples of project management effort:

  • Project steering and monitoring

  • Liaising with stakeholders

  • Regular progress checks

  • Writing project reports and other documents

In terms of contingency:

There are always unforeseen circumstances when working on a project. It’s almost inevitable! To ensure that you can accommodate these unexpected events, you need to add a contingency of 10% of the total budgeted costs.

Here are some examples of unexpected costs:

  • Money set aside for risks

  • Change control costs

  • Rising resource costs

  • Unexpected events

Identify Dependencies in Your Task Planner

Let’s now think about dependencies.

Wait, what’s a dependency?

Great question!

When you’re defining your project tasks, you’ll realize that some of them can’t be done until other tasks have been completed. This is known as a dependency.

You need to identify tasks that are linked to each other to ensure that they’re carried out in the correct sequence.

Examples include creating use case diagrams before producing mockups, or prioritizing the creation of a “user account” function before starting work on the “create a post” function.

Sometimes, dependencies are more difficult to plan. If you need a hand, you can check in with your team, who will help you identify dependencies. For example, you could create a dependency map diagram, to help you visualize links between tasks or functions. This visual representation will make it easier for you to prioritize activities.

Why should we be interested in dependencies?

Managing dependencies is very important in preventing a blocked task from impacting others down the line. Imagine a car breaking down on a busy highway during rush hour. It’s highly likely that this vehicle will cause serious traffic jams.

Well, the same thing applies to your projects. Your project will be delayed, you could lose money, and this will be frustrating for you.

To avoid all this, you need to establish what are known as the critical paths.

Imagine that you’re building a house:

  1. First, you need to lay the foundation.

  2. Once the foundation is ready, you can build the walls.

  3. With the walls in place, you can then build the roof.

  4. Finally, you can paint the house.

In this scenario, the critical path would be: foundation → walls → roof → paint.

In the IT development context, you can apply the same principle for the tasks or application functions being developed. It might look something like this:

  1. Create the database.

  2. Develop the user interface that connects to the database.

  3. Add a payment system.

In this scenario, the critical path would be: database → user interface → payment system.

If the database creation is delayed, everything else will also be delayed because the user login interface needs the database to retrieve customer information, and the payment system needs a user profile to process a payment. So, we have a critical path.

What do I do if I have tasks that do not have dependencies?

If your tasks are completely independent, you can plan for them to be produced simultaneously. These are known as parallel activities.

For example, you could have one team developing functions while another is working on the graphics. The idea is to plan these two tasks to run at the same time.

So, by running activities in parallel and managing dependencies, you can optimize the time spent by your team on different activity phases.

Over to You!

Background

As AirGalaxy’s project manager, your role is to plan and organize all of the tasks required to ensure that the future application will fully meet the requirements.

The Gantt chart is a key tool that helps you visualize how the project will be run and manage tasks efficiently. It enables you to understand the dependencies between tasks and ensure that the project will progress as planned.

Instructions

  • Create the Gantt Chart.
    Using your list of tasks, durations, and dependencies, create your Gantt chart structure in Notion. Your aim is to produce a clear, visual representation of all tasks and their interdependencies.

  • Expected Results.
    At the end of this exercise, you should have a completed Gantt chart in Notion, representing the development project for AirGalaxy’s rocket testing application. All tasks must be arranged in the right sequence with clearly indicated dependencies.

Let’s Recap

  • Project planning starts as soon as the requirements have been defined, with a margin for unforeseen circumstances.

  • Tasks are defined in a collaborative and methodical fashion.

  • The budget is set by considering all risks and resources.

  • Identifying dependencies between tasks is important to avoid blockages.

  • Independent tasks are planned to run simultaneously (in parallel) to optimize time and resources.

Now that we’ve established the project plan and the budget, the next chapter will cover the crucial task of defining the risk prevention and analysis plan, which is a key element in ensuring that the project runs smoothly.

Example of certificate of achievement
Example of certificate of achievement