From Traditional Project Budgeting to Agile Project Budgeting

Traditional project budgeting is a rigid process that brings much pain and toil. It applies a bottom-up budgeting approach that doesn’t allow project management teams to keep up with the rapid pace of change in an agile business world.

It has three main disadvantages:

1. It’s slow and complicated since many individual budgets (one from each silo function) must be established at first to create the project budget.

2. The project team is forced to make fine-grained decisions far too early since they have to identify all the tasks involved and estimate all of the resources needed for the whole project even before the project starts when there’re too many uncertainties and unknowns.

3. The project can’t flex to changes and delays because the budget and personnel are fixed for the project term; the result is an organization unable to adapt to changing business needs without the overhead of re-budgeting and reallocating personnel.