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Project Risk Cost

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Preparing Project Budgets for Business Cases
Technical guide

The Secretary Department of Treasury and Finance 1 Treasury Place Melbourne Victoria 3002 Australia Telephone: +61 3 9651 5111 Facsimile: +61 3 9651 5298 www.dtf.vic.gov.au

Authorised by the Victorian Government 1 Treasury Place, Melbourne, 3002

© Copyright State of Victoria 2012 This book is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. ISBN 978-1-922045-92-8 Published August 2012.

If you would like to receive this publication in an accessible format please telephone 9651 0909 or email mailto:information@dtf.vic.gov.au

Contents

1. Background 1 1.1 Context 1 1.2 Purpose – developing and managing project budgets 2 1.3 Scope of application 2 1.4 Structure of this guide 3 1.5 Related guides and frameworks 3 1.6 The need for an accurate project budget 4

2. Elements of a project budget 5 2.1 The headline elements of a project budget 5 2.2 Successful financial planning 9 2.3 The need for a whole-of-life approach 10 2.4 ‘Poor project planning’ risks are not project risks! 10 2.5 Delivering to budget 11

3. Foundations for good project budgets 12 3.1 Better business cases and better project budgets 12 3.2 Preparing to develop a project budget 13 3.3 Developing a project budget 15 3.4 Culture, incentives and governance 17

4. Developing base cost estimates 19 4.1 Essential ingredients for an accurate base cost estimate 19 4.2 Clearly defined project scope 19 4.3 Competent, experienced estimators prepared to certify their work 21 4.4 A

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