First, to develop a project for any firm in any country, there must be documentation stating the budget required for the developers to implement the project within cost. They will distribute these documents among all project stakeholders. The funds need to be allocated correctly to address all the known and unknown costs. After being confirmed by the majority of project stakeholders, the detailed budget plan consisting of available funds and those required to be raised by the shareholders as equity and loans from financial institutions or private investors as debt needs to pay by developers. In this report, the project funds necessary to address the cost of developing and operating the project must be sufficient to cover all the fixed and variable costs which may occur during the project development phase. The more variable costs exist in a project's development, the more the budget definition will need to be more complex. The project funds at the end need to be allocated to leave the shareholders a reasonable profit margin.
Secondly, we need to break down the costs for the project development, so the financial institutions easily track them. To analyze the amount of money spent on various aspects of the project, we can use project management software such as Primavera6 or Ms. project to manage costs. It is necessary to compare prices that occurred in real time for each activity with the projected costs allocated for each activity. The prices are expected based on our experience and current market fees.
Thirdly, we need to implement a system which will guide us through unexpected changes in the budget. The system must indicate the people responsible and those who need to react to budget conflicts which may occur for many reasons such as sudden market and price changes, natural disasters or changes in the policies of the business or host's respective governments.
Finally, funds should be requested and implemented within the predetermined time frame. The time required for the funds to be borrowed from financial institutions as debtor from private investors as selling bonds planned to avoid delays in project development. There might be a slight chance of loans not being disapproved by the financial institution or disagreement by the private investor on the amount of the interest and repayment schedule. The required time for funds as equity, mainly by selling shares of stocks in primary or secondary markets during IPOs might be alternate; this will affect the project start date. Due to a significant amount of money loaned by the business, the change in the duration of fundraising and a longer time frame leads to an increase in costs of the funds already borrowed. These costs are to the detriment of project stakeholders who will have to bear them.
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