A budget is a key element of most proposals and serves as a blueprint for spending the project’s funds. An effective proposal budget outlines the proposed project in fiscal terms and helps reviewers to determine how the project will be conducted. Budget information about activities planned and personnel who will serve on the project provides reviewers with an in-depth picture of how the project will be structured and managed. Budget details usually reveal whether a proposed project has been carefully planned and may ultimately be feasible.
The proposed budget must give an accurate assessment of all cost items and cost amounts that are deemed necessary and reasonable. It should be complete; that is, it should include all the costs of any personnel, supplies, and activities required by the project. The project needs to be feasible within the budget presented. If major cost areas are omitted or underestimated, the project, as proposed, will not be considered feasible.
Over the course of the project, many different stakeholders are going to review the budget, and refer back to it. The decisions made now at the proposal stage will continue through the life of the project, and others will make decisions based on it at future stages. Therefore, it is time well spent to prepare a reasonable budget. A reasonable budget is one that is based upon actual costs when possible. The budget will become an integral part of the obligation to the sponsor/investor, particularly regarding time/effort commitments.
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