As with the project scope and schedule, it is important to monitor the project budget on a regular basis. It is important to note that just because you may stay within the scope and timeline of a project, it does not mean that you are effectively managing your project finances. It may be very well that you are spending more to complete activities than originally planned. Regularly monitoring the budget of a project will enable you to react more effectively to deviations when they occur. This will allow you to get a budgetary issue under control before it affects the rest of the project. Furthermore, this monitoring will allow you to better forecast future project spending.
Often times alterations in the project budget means that another portion on the scope or project schedule is impacted. A worst case scenario is that a project will have to remove or limit project activities because of budgetary overruns. This reduced scope may impact the quality of the overall project. If the project budget has to be changed it is vital to determine what impact it will have on the planned project scope and schedule. Based on the nature of the funding, you may also need to receive the sponsor and/or institutional approval in advance of implementing such changes. If approved, the project plan must be updated to reflect the changes.