¿Cómo se puede determinar el nivel adecuado de financiación para un proyecto?

Achieving the appropriate level of funding for a project is a multifaceted endeavor, requiring a thorough understanding of both the project's scope and its potential impact. By meticulously assessing the project's objectives, timeline, and resource requirements, one can develop a comprehensive budget that aligns with strategic goals while also accounting for potential risks and contingencies.

To me, figuring out what to do starts with understanding the problem. While many focus on solutions, I'm all about identifying problems because that's where real change happens. So, ask yourself: Why am I doing this project, and whose problem am I solving? This helps avoid falling for flashy solutions and clarifies who's involved. Plus, it stops outside partners from selling you stuff you don't need because you already know what you're looking for.

Scope definitions notion and breakdown helps to define work packets, skills and effort, which helps define and estimate cost. Risk, time line and other factors determine the final cost estimate.

Understanding the scope of the project is the foundation for accurate cost estimation. Clearly defining the project's objectives, deliverables, and expected outcomes will help in addressing the appropriate funding level.

There is no definitive answer to this question, as different SAP projects may have different scope, complexity, duration, and objectives. Its also down to the clients industry and acceptance of change and risk of scope creep. Firstly, establish clear project objectives and scope. Then, conduct thorough cost estimation, including software, hardware, implementation, training, and ongoing maintenance costs. Assess risks and allocate contingency funds. Perform a detailed ROI analysis to justify the investment. Present a comprehensive business case to stakeholders for funding approval. Implement robust cost control mechanisms to monitor spending. Continuously evaluate project value and adjust funding. Having multiple peer reviews is also key!

Understand the need of the project , check if you qualify to fund the niche , identify your strengths to negotiate well , be ready for contingencies, strategies the entire outcome and have periodic review system to check if all in line .

You need to insure that you do a P & L first and have all the costs properly outlined. Too many times the scope of the project are underestimated and someone ends up on the short end of the stick.

Determining the appropriate level of funding for a project requires a multi-step process: 1. Define the scope, clearly define the project's objectives, deliverables, and overall scop. 2. Estimate the costs, identify and quantify all the costs associated with the project. 3. Add contingencies, allocate additional funds to account for unforeseen circumstances and potential cost overruns. 4. Align with the strategy, ensure the requested funding level aligns with the organization's overall strategy and budget. 5. Review and revise your funding estimate to ensure all costs are accounted for and the contingency amount is appropriate. 6. ROI, when possible, estimate the project's potential return on investment.

I have found that to keep costs under control it is key to align requirements with the threshold clearly defined in the initiating documents or project scope. When dealing with the change management aspects, I have had success with having the senior stakeholders determining whether modifications are required to meet the defined threshold or if it is more aligned with a higher end objective. If the former, I believe project managers have an obligation to clearly articulate the trade-offs… if the latter, as project manager I would recommend application of the proposed change to a latter iteration, if possible.

I love that AI is helping us on Funding a Project:) Defining Scope is a big one. But the"secret sauce" is developing a great relationship with your key stakeholders. At Amex we had a major project on offering retirement planning to 9500 Union Employees.I was fortunate to have in 1 room the President of Amex and the head of Benefits from AT&T. Both of the key stakeholders when pressed gave us the "deliverables" and the time frame. My teams job was to come up with a budget for this USA project. The team came up with the best case budget and something not so good in 2 days. Training rooms, Instructors Delivery Costs, Materials, travel costs, lots of moving parts had to be included. The project got done 1 week early and under budget. Go Team.

Once your organization's strengths and weaknesses are clearly outlined, segment your budget to allocate more resources to address weaknesses. For instance, a company with stronger bargaining power in the supply market may tighten the budget for material consumables, while a company with weaker equipment resources may need to be generous with its rental budget.

Budgets at the start of a project should account for the unexpected, as it's hard to anticipate everything before you start. That being said, plan to be surprised, and make provisions for those unexpected elements that might arise so you won't miss your targets. Create your target budget, but build a structure that allows some flexibility so you are able to pivot if needed as the project gains momentum.

Cost estimation for projects can be tricky, especially if it's something new. In our case, when we pitched our Biogas Refining plant on our patented technology, we absolutely had no clue how to prepare exact costings for the same. However, after successfully commissioning the first project, we now know how to do that. 1. Divide the costings into 3 parts A. Bill of Material B. Installation & commissioning C. Administrative expense 2. After expanding the major heads and listing down all costs, Include a 5%-7% 'deviation' expense in each head. This will protect you from any deviations caused during project execution. 3. While quoting the client, there must be A B C D (D = Organisation margin) I hope this will help.

Once established the scope of the project, among serial of methods, my preferred for evaluating costs could be: - Bottom-up estimation involves breaking down the project into smaller tasks or components and estimating the costs for each individual element. These estimates are then aggregated to calculate the total project cost. This provides a granular understanding of costs, making it suitable with a clear breakdown of tasks. - Scenarios : the most optimistic, most likely, and most pessimistic. These estimates are then combined to calculate an expected value, often using techniques like PERT. Three-point estimation is useful for projects with high uncertainty as it accounts for potential variability in task durations and costs.

Maximum from the minimum is what I hear everywhere for a project or a startup, because no matter what, money will always be a scarce resource and the only resource sensitive enough to alter the whole outcomes and behaviour of your team. First the estimations are from layer zero, try to put in costs that answer this, "Which components are a must need that do the bare minimum?" That sets your first layer, go on second layer by answering this "What components I can add value with?" And subsequently add layers till you reach by how can you make it unique and the only one that serves a role where no other does. Hope that helps.

A quality project is based on effective cost management, and it starts before Initiation (Capital Expenditure (CAPEX) & Operating Expenditure (OPEX) Revenue spend). In my experience over the years, one of the primary reasons why some projects have failed is because estimates were understated, the cost of changes or change control has resulted in no funding available to deliver the desired outcome. Be cautious & during cost estimation for business-case ensure the scope, MvP requirements are clear, budget on that basis - all resources, 3rd party, direct, indirect, cost of change, specialist resourcing needs, sufficient contingencies factored and available for Sponsor should a drawdown is required in the future, savings profile mapped out.

Consider overhead costs like administrative expenses, utilities, rent, and insurance. Use past project data and industry benchmarks to estimate costs, compare similar projects to understand their budgets and outcomes. Allocate a portion of the budget for unexpected expenses or scope changes. The percentage varies based on project complexity and risk.

When it comes to determining the cost of a project, I typically start by estimating a baseline cost and then adjusting it as needed throughout the project. My general approach is to allocate an initial 10% buffer, which can be used to account for unexpected costs or changes in scope. From there, I continuously monitor the project's progress and make adjustments to the budget as necessary to ensure that we stay on track. It's important to be transparent with clients about any changes to the budget and to work closely with them to manage expectations and find cost-effective solutions.

Conduct a thorough cost estimation by breaking down the project into manageable components. Consider direct and indirect costs, personnel expenses, materials, and any external services. Accurate cost estimates provide a baseline for financial planning. Example: Collaborate with relevant departments to obtain precise cost estimates for each project aspect.

Indeed, integrating contingencies into the cost estimate is a crucial aspect of robust project planning. This proactive measure ensures financial readiness to navigate unforeseen circumstances, distinguishing it from reserves tailored for known risks. The variability in contingency percentages, reflective of a project’s scale, duration, novelty, and complexity, underscores the need for a tailored approach. It's a strategic method to safeguard against the unpredictable, ensuring that projects remain on track financially even when faced with uncertainty. This practice not only mitigates financial risk but also enhances the project's resilience and adaptability.

I believe the contingency budget is important not just to cover unforeseen challenges and risks but also to enable the business to quickly capitalise on unexpected opportunities that may arise throughout the year. This is so critical in the fast moving world we live in, specially with the advent of generative AI and technological advancements, nearly every single industry is continuously being disrupted, offering endless opportunities for growth. We live in exciting times and the contingency budget is important both as a safety buffer and as a growth enabler for when new unforeseen opportunities arise!

Build flexibility and contingency into the funding plan to accommodate unforeseen changes or evolving project needs. Having reserves or access to additional funding sources can help mitigate risks and uncertainties.

Be strategic about how you present contingency. Lump sums scare stakeholders. Itemizing potential risks ('vendor delay could add X days of labor,' etc.) makes it feel less arbitrary and opens the door for negotiation. Can you get sign-off on smaller contingency with a plan to revisit if certain risks materialize?

Contingencies should be like a rubber band, it needs to fit, be flexible, expand and shrink as needed, and most importantly be resilient when put to use. They should adjust as the needs of the project varies. Responding to unknown unknowns can be a daunting task so always plan for a realistic and reasonable contingency that takes the project size, duration, complexity, and novelty into consideration and plan accordingly to mitigate any known risks with budgeted reserves delineated from contingencies.

Incorporate contingency reserves to account for unexpected challenges or changes during project execution. This buffer ensures flexibility within the budget and guards against unforeseen circumstances that might impact costs. Example: Allocate a percentage of the budget as a contingency fund to address unforeseen challenges without disrupting the project timeline.

There is no straight line of any project in my 28 years of leading a small firm. Just in Feb 2024, we quoted to a client that we will complete their work in 10 working days, and now over 25 days, we are still working on it. There are many complex issues discovered during the process. So flexibility and clear communication with clients are essential skills that our team needs to develop.

Risk Management beinhaltet genau das: Welche Risiken sind wahrscheinlich, unwahrscheinlich, ausgeschlossen? Es gibt viele Modelle, die derlei Risiken bewertbar machen- für mich spielen aber immer auch Erfahrung und Expertise eine übergeordnete Rolle. Mit ausreichend viel gesundem Menschenverstand, wird aus Risikomodellen dann auch eine passende Einschätzung.

Adding contingencies to your cost estimate is crucial for unforeseen events. Distinct from reserves, contingencies account for overall project uncertainty. Typically a percentage of the cost estimate, the amount varies based on project size, duration, novelty, and complexity. This financial buffer ensures readiness for unexpected changes during project execution.

"Beginning with end in mind" helps in identifying appropriate funding for the project. It's important to prepare possible scenarios while preparing the project plans. Creating projections of what needs to be achieved and how it needs to be achieved, helps in estimating funding requirements. Once the funding requirements are approved and project gets kicked off, it's important to keep tab on the actual expenses vis-a-vis projected expenses to ensure that project gets completed within the appropriate funding.

Understand your organizational North Star and the levers that contribute to it. Define the lever that you control directly using a metric. Then baseline that metric and set a realistic goal against it. If your contribution to the strategy cannot be quantified as clearly — if it’s a launch goal or a research goal for instance — then define your success accordingly. Regardless, ensure that what you are working on accrues to the organizations success and if you cannot, chances are you aren’t working on the right priority.

The vision and strategic priorities of the project owners is the main aspect to check before adding one cent in a project On the other side how this project will provide a different service in the marketplace

Unless a project propels the company objectives and strategy, it’s not a viable project. Ensure your executive sponsor has articulated the resulting value the project will produce at the very early stages. Remember, it’s not about the project. It’s about the expected outcome/benefit.

Ensure that the project's funding aligns with the overarching organizational strategy. Connect project goals with the broader strategic objectives to justify the financial investment and emphasize its contribution to the company's success. Example: Highlight how the project aligns with the company's mission and strategic priorities.

Experiment loop is an evidence-based decision tool that aims to align strategic goals with investment in the right things. Main steps are : 1.Identify desired outcomes and how to measure them. 2.Consider the smallest possible experiment to run. 3. Evaluate progress toward goals 4.Decide if the initiative is worth pursuing. To handle costs risks, consider quarterly funding rather than annual budgeting, and fixed cost by funding teams/ value streams instead of initiatives.

Lowest cost option ≠ best option. I can’t stress this enough. Do rigorous CBA to define your opportunity costs and articulate benefits using data.

Imagine planning a birthday party. To figure out how much you need, follow these steps: Plan the party: Decide on the guest list, activities, and food. Knowing what you want helps estimate costs. Make a budget: List everything you need, like decorations, cake, and games. Be realistic and consider unexpected costs like extra balloons. Check your budget: See if it fits your wallet. If not, adjust the party size or get creative (DIY decorations!). Explore options: Consider asking friends to chip in for a gift instead of individual presents, or borrowing equipment instead of buying. Be flexible: As the party gets closer, adjust your plans if needed.

Aligning your project budget with organizational strategy ensures it contributes to overarching goals. Justify funding by outlining expected benefits, value, and return on investment. Consider opportunity cost, acknowledging the value foregone by opting for your project over alternative choices. This strategic alignment enhances decision-making and reinforces the project's relevance within the organizational context.

Regularly review the project's financial status and adjust the budget as needed. Periodic reassessments allow for corrections based on changing circumstances, helping to maintain financial alignment with project goals. Example: Schedule quarterly budget reviews to assess spending, adjust allocations, and ensure financial alignment with project milestones.

Refine the funding requirements based on feedback and adjustments to the project scope, cost estimates, or other factors. Document the finalized project budget, including all cost estimates, funding sources, contingencies, and assumptions. Communicate the budget to relevant stakeholders to ensure transparency and accountability.

Once the project has been approved and funded, that is the only the beginning. It is even more important to monitor what the actual costs are and identify any cost overruns and present them to management as soon as they are identified. It is also important to review project costs with management regularly, you are more likely to gain support to either adjust the budget or receive additional funding to complete the project by bringing cost issues to management quickly.

This is critical in ensuring that projects are delivered on time and within budget, I cannot stress enough the importance of daily review of actual costs to budget and daily re-forecasting as this also allows you to be well prepared in advance for contingencies.

Seeking input from stakeholders such as sponsors, project Team members and experts throughout discussions on scope, requirements, risks and expected outcomes will aid in the analysis and calculation of appropriate level of funding.

Periodically reassess funding requirements as the project progresses and circumstances change. Be prepared to make adjustments to the funding plan based on updated information, lessons learned, and evolving business conditions.

Continous monitoring of project imeplementation and budget and adjusting accordingly. Checking also the viability of assumptions put in place at the beginning.

Reviewing and revising the project budget involves monitoring actual spending and performance. Compare actual costs with the plan, identify variances, and address issues. Update cost estimates and contingencies with new information. Communicate changes to stakeholders and strive to keep the project within the approved budget. Seek approval for any necessary adjustments. Regular scrutiny and adaptation ensure effective financial control and alignment with project objectives.

All project should have regular review and revise strategy this is how one keeps evaluating the project and also updating the change. Albeit communication of this should be integral part of all profile and negotiations.

During the project planning and budgeting stage, often discussions with the leaders of the company or the project will benefit the whole project process. Get few people who support the project and have deep understanding the history, human relationship in the project, and expectation of the project will benefit everyone.

There is no free lunch. For each type of funding you will have to give something back, it’s either your work, your focus or your share of the company. Measure the hidden cost beyond money and you will find the true value of what you’re giving in return.

Apart from all the above points you could also check and evaluate if a similar kind of project has already been implemented in the past and review its results. By scrutinizing the execution and outcomes of similar initiatives, organizations can gain invaluable insights that inform better decision-making, from identifying potential pitfalls to recognizing effective strategies that pave the way for smoother implementation and greater impact

You probably can’t yet. Next question? … the budget on day one is a prayer. Please Lord, make this work without my having to request an increase. There is nothing wrong with prayer, but call a psalm a psalm. Start adding an asterisk and cite pending updates to the estimate. Make change and evolution the expected norm, not the surprise nobody wants to deliver. And when someone tells you they KNOW what it will cost without the benefit of having done it before. In the same decade. With the same tech. And team. Run don’t walk. The humble project manager who shakes in their sketchers while telling you their estimate is probably low and likely to fluctuate within the first quarter deserves a raise for not jerking your chain. But you knew that. :)

Get market estimates of the high, medium and low scenarios through pre launch testing like conjoint analysis. Then you can scale up your funding as you see the value of the opportunity .

Get market estimates of the high, medium and low scenarios through pre launch testing like conjoint analysis. Then you can scale up your funding as you see the value of the opportunity .

You need to complete a comprehensive cost analysis, factoring in labor, materials, equipment, overhead and potential risks. In addition, review similar projects, if possible, to assist with the final completed budget. Constant communication with the project team to ensure the project is going to be completed timely and stay ahead of any potential risks.

It involves a thorough analysis of various factors: 1. Assess the scope & complexity of the project, including its objectives, deliverables, and timeline. 2. Conduct a detailed cost estimation, considering all expenses such as materials, labor, equipment & overhead costs. 3. Evaluate the potential risks & uncertainties associated with the project, including market volatility, regulatory changes & technological challenges. Additionally, consider the desired level of quality & performance standards to ensure adequate resources are allocated. Finally, take into account the availability of funding sources, such as internal capital, external investors, or loans & ensure alignment with the project's financial goals and constraints.

Return on Investment (ROI) should be the North Star metric. The project may seem well-aligned with the strategy and scope and may be prepared perfectly regarding the PM guidelines. On the other hand, executing a thing perfectly does not mean executing the perfect thing. So, the Manager should consider the outputs. Outputs have to overweigh the source investments, which include but are not limited to, people, time, production capacity, and money.