50+ SAMPLE Estimate Budget

What Is an Estimate Budget?

An estimated budget or budget estimate is a preliminary assessment tool for organizations that aid in projecting the availability of funds for a company, business, or project. The estimated amounts provide valuable information for planning procedures without finality. As more information pours in, staff and management can make the necessary adjustments and revisions to the document and determine whether these shifts in the budget are a cause for concern. The estimated budget can become available to the public only if the organization is a publicly funded agency or performs a publicly funded project. In cases of estimating available funds, a budget estimate comes from regional government agencies. The budget plan indicates and defines possible sources of funding, including government tax revenues, grants, or monies, and incomes from fines and fees. Staff members can review the estimated budget to learn more about the funding priorities and options that are available to an organization. The estimated budget also determines possible costs for a project or assignment. It gives a price breakdown of expenses, including operational permits, fees, labor, supplies, materials, machinery, and overhead costs. Budget estimates also determine a workable timeline and provide information on possible delays toward project completion.

According to an article entitled Why Budgeting Fails: One Management System Is Not Enough published by the Harvard Business School Publishing Corporation in 2004, senior managers spend about 10 to 20 percent of their time with financial plans and budget plans, spending 50 percent of their time on it. Yet a small percentage only considers the time well spent.

Types of Budget Estimates

There are various types of budget estimates available in the business setting. Depending on what the company needs to estimate for their budgets, the company can utilize one over the other or a combination of the two. The section below talks about the five different types of budget estimates that an organization can use for the business, including descriptions to help individuals understand the differences and advantages of each.

Revenue estimate: A revenue estimate defines the amount of money that the company can spend on a given project or assignment. The value that comes from the revenue estimate comes from the annual remunerations from the company, separate from any borrowed value or acquired assets.Cost estimate: Cost estimates are estimations of the probable capital that a project or program requires for its execution. When writing cost estimates, the accounting team must consider all the necessary elements towards the completion of the project and come up with a possible total value to develop the project from start to finish. Depending on the type of project, the estimate includes labor costs, material and equipment leases, and management expenses.Return estimate: In this type of budget estimate, the accounting team forecasts the possible revenue or income from the investment in a program or project. To get the figure for the return estimate, accountants subtract the estimated expenses from the revenue estimate. The visualization of the return estimate helps project contractors and developersĀ to choose and select between investments because projects with greater returns will always be more attractive to developers.Risk estimate: A risk estimate is a type of budget estimate that predicts the likelihood of risks occurring in a particular project and the possible consequences through a risk analysis. Accounting teams utilize the reference class forecasting technique for them to predict these risks. It involves using and analyzing the historical records and documents that list previously incurred risks of similar projects. The risk estimate is crucial for companies to financially prepare for the possibility of arising risks, indicating them in the budget. Companies can also decide against implementing high-risk projects and programs based on the estimate, especially if they are not capable of risk management.Cash flow estimate: The cash flow estimate refers to the approximate amount of funds that go in and out of a business project or program, based on expenses and revenue estimates. The cash flow estimate is vital to a company as it confirms the budget and funding from a company are adequate for a particular project.

Techniques to Make an Estimate Budget

Accountants use various methods and techniques to write budget estimates for business projects. The techniques that professionals utilize to create budget estimations bring advantages and disadvantages. It is essential to know their differences and their strengths to know which document is the best one to use, depending on a given project. The section below details the various techniques businesses can utilize to make budget estimates.

Analogous: Professionals utilize the analogous estimation technique on incurred expenses from similar past projects from the same company or organization or external sources. The analogous estimation process is a simple yet effective procedure. However, the results from the estimation are quite inaccurate. The inaccuracies are due to projects being distinct and unique, and the chances of any similarities in terms of costs are very small.Parametric: In this technique of estimation, experts use known parameters to determine expenses that are specific to a particular task in the project. It uses measurable factors from previous projects that show similarities to generate the required estimates. It is for this reason that parametric estimations are more accurate than analogous. However, it is difficult to find and research the needed data points for some activities since not all factors are scalable.Top-down: In the top-down technique of making budget estimates, a project manager utilizes the method during the earlier stages of the project, right after a rough estimate of the project expenses. The values of the estimated budget are then specified and distributed to the different tasks to determine the viability of a given project. Similar to the analogous technique, the top-down method is simple and shows inaccuracies.Bottom-down: The bottom-down approach involves dividing the entire project into specific and individual activities, allotting funds for each one, and summing up all the costs to have an estimation of the project budget. Out of the different techniques for budget estimations, the top-down approach is the most accurate. However, it is very time-consuming and gives room for possible price changes and fluctuations.Three-point estimation: The three-point estimation technique deal with finding the average of three values. These values are the summation of the cost estimates of a project in the best-case scenario, worst-case scenario, and the most probable value for budget estimation, dividing the values by three to get an average. The method is helpful to a company implementing a project as it considers the possible risks that can arise during the project implementation. The only downside of using the technique is that it is time-consuming.

How To Write an Estimate Budget

Creating an estimated budget for a project happens during the planning phase of a project management meeting and processing. When creating estimates for a project, make sure you consider different expenses, including employee salaries, research and development, travel expenses, operational costs, and profit margins. The section below helps you create a budget for a company project.

  • 1. Define the Scope of the Project

    Before making estimates of possible expenses for the project, you must be clear about the project scope, project timeline, and deliverables. Having a well-established project plan is a prerequisite for budgeting plans. Create a work breakdown structure for the project that details all the involved work, tasks, and activities to deliver a detailed project. After identifying the structure, it becomes much easier to identify the materials and resources you need to implement the project.

  • 2. Identify the Essential Resources

    After identifying the project scope, the next step is to determine the resources you need to complete the project. There are different resources common in many projects, including staffing, equipment, training, marketing and sales, and other miscellaneous materials. Staffing is one of the most expensive expenses a project incurs. The budget estimate must consider additional staff, payment schedules, and length of service. Equipment refers to machinery for excavation work, electronics for computer software, and other tools necessary to complete the project. Create an equipment list and indicate it in the estimated budget. Training is also another resource to consider when creating the budget. Organizational change management can happen, and employees require the necessary knowledge and skills to accomplish the project. Launching new products requires a degree of marketing and sales expenses, and advertising budgets become essential.

  • 3. Assign the Value to Resources

    From the list of resources you have, assign estimated values for them. In writing down amounts, conduct research by investigating previous budgets from similar projects. For some resources, like staffing, it is necessary to model out costs since not all employees receive similar salaries.

  • 4. Build the Budget Estimate

    After completing the list of possible expenses, you now have a budget estimate. When creating the budget estimate, make sure to indicate a contingency fund. The next step is to compile all the information into accounting software or an accounting spreadsheet to group related items into categories. When writing the budget, indicate where you came up with assumptions to understand where and why the budget did not reflect into reality. It is also necessary to include a variety of budget timelines to identify recurring costs. It is also critical to review the document with team members to get essential feedback to identify missing items or inaccuracies.

  • 5. Acquire Approval for the Budget and Implement

    When presenting the budget estimate to stakeholders, you must know to defend and assure them that the items and amounts are justifiable, explaining staffing models and other information. After approval, the project manager has the responsibility to oversee the procedures and processes in implementing the project. The project manager must also be aware of current costs to compensate for delays or requests for additional funding.


What is the difference between a budget and an estimate?

An estimate shows an approximate value for project costs, while budgets are what the company can spend for it. Estimates serve as a guideline, while budgets are more final.

What is cost analysis estimation?

Cost estimations forecast the financial expenses and other materials that the company needs to accomplish a project or program within the project scope.

What is budget variance?

Budget variance refers to the difference between the budget and the actual amounts or figures for an accounting item.

Budget estimates are necessary to make sure that companies do not overextend from their current spending power. Writing the estimated amount for the resources guarantees that all the items and resources are accounted for and are within the financial means of the company. In completing the document, make sure to go through the project plan, define the project’s scope, and consult with team members to ensure that there are no missing items. Develop estimated budgets for your next project by downloading theĀ 50+ SAMPLE Estimate Budget in PDF from the article above. Get yours when you visit Sample.net today!