Most AI budgets focus on software and infrastructure while ignoring the massive human time investment that actually drives costs. Organizations underestimate by 30-40% because they do not count employee hours, integration work, productivity losses, and opportunity costs. Here is a framework for calculating the true total cost of AI implementation.
Traditional project budgeting assumes you know the outcome before you start. AI budgeting assumes you will discover the outcome through iteration. Here is a practical framework mid-size companies can actually use to budget for AI projects without setting money on fire or surprising your CFO.
Gartner projects 30 percent of generative AI projects will fail. When they do, most companies bury failures instead of extracting lessons. A structured post-mortem process paired with proper iteration budgeting transforms project failure into organizational knowledge that prevents repeating mistakes.