Comments on: Capital Budget http://itknowledgeexchange.techtarget.com/itanswers/capital-budget/ Wed, 22 May 2013 05:05:11 +0000 hourly 1 By: leicher http://itknowledgeexchange.techtarget.com/itanswers/capital-budget/#comment-49913 leicher Fri, 21 May 2004 09:44:52 +0000 #comment-49913 We tend to treat projects like customer quotes – during the budget process we solicit project requests/service level requirements from the business we service, we estimate costs by getting supplier quotes and work estimates from the team leaders, then those business folk who want the project/improved service do the sums from a business perspective (the ROI-type stuff) to show business case. Executive Management evaluate and approve capital projects based on these business justifications, and, I guess, what burns them the most from a business execution perspective.

]]> By: soetkin http://itknowledgeexchange.techtarget.com/itanswers/capital-budget/#comment-49914 soetkin Wed, 19 May 2004 07:45:08 +0000 #comment-49914 Some elements that may help you:
- always have a justification for your figure(s): any challenge of these can either confirm the correctness of your estimate or help in adjusting them to a more correct (and hence defendable) figure.
- keep the distinction between a plan (budget, resources) and what is ‘sold’: the plan is the most realistic estimate of the project leader/manager, the ‘sold’ plan is what has been decided/agreed by the client (3rd party) / sponsor. (internal). If there is a difference between the two, the role of the project leader is to warn for the risks (budget, time, resources) and if the sponsor or client still wants to continue, the risk is for him/her. As such you can start a project as demanded by the client/sponsor but with your ‘true’ figures as a project baseline.
- There are tools and methods for project estimation (especially IT projects). You can find information on this all over the internet (e.g. start searching for ‘function point’ or ‘COCOMO’ and you have already a long list of places to look). Anyhow, most of these things thrive on metrics, so if you don’t have any historical data on similar projects (similar may mean same business, same techniques, or other), you won’t get far.
- Without metrics, you can always try a combination of experience and the Delphi method where specialists of different background but knowledgeable on the subject of the project are brought together and provide estimates on the project. When these estimates differ too much, the participant discuss the reasons for their estimate and then estimate again. Normally, the estimates will start to converge and one can repeat the process until the different estimates are lose enough.
- In the company I work for, we have build a spreadsheet with estimates per role and phase for the projects we usually run as well as the assumptions that are underlying to the (average) figures in the spreadsheet. The project leader is free to increase or decrease the suggested estimates based on the project specifics and is encouraged to document his justification for these changes in the assumptions section.

Best regards
Dries GEERAERT

]]> By: jkeairns http://itknowledgeexchange.techtarget.com/itanswers/capital-budget/#comment-49915 jkeairns Tue, 18 May 2004 14:20:31 +0000 #comment-49915 Since project costs can vary from year to year I usually request quotes from the vendors for the projects that I plan to do and up adjust by 10% to allow for cost changes. It sounds like you would have to add 25% to get by.

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