The Project Budget – Managing It

Posted by Brad Egeland

In the first installment in this four-part series (The Project Budget – Getting it Together), we discussed the concept of taking what’s available to you and putting together the best budget possible with which you can begin managing the engagement.  It will likely change a lot during the kickoff and planning phases as a lot of decisions are made, changes are incorporated, and requirements are finalized, but it’s the budget you initially take to the table.

I need to clarify something here.  I do understand that unfortunately project management is usually not involved in the sales process unless your organization subscribes to an Engagement Management model (I’m a big fan – contact me for more details and you can read my thoughts on this topic here and here).  So, while you can’t budge the price of the project yet – change orders may do that later on – you can put together what you feel are the real costs of the project.  Certainly your senior management and the customer are still going to hold you to the price the customer is paying as a budget for the project – no doubt about it.  But keep your ‘real’ number in your back pocket – or your senior manager’s pocket – and you will likely see change orders start to close that gap along the way.

Simple tools

I like Excel and I like to try to make things as simple as possible.  So I’m not into making the project budget overly difficult to manage.  I often just use an Excel spreadsheet like the one included below.

I include the weeks for the entire engagement, all the resources included in the engagement (top row, abbreviations), and if materials are involved I create a column for those as well.  Everything in the past becomes actuals (in bold) and the far right four columns are for analysis of the health of the project budget.  As you can see from the included example, Stage 1 of this sample engagement is currently forecasted to end $37,100 over budget with three weeks remaining (as indicated by the final three rows shown in regular type, not bold).  Which, as shown just below the red figures, is 107.5% of the project budget – or 7.5% over budget.

Again, it’s not rocket science.  The key – for me anyway – is to get the right information from accounting each week and keep this information meticulously updated.  And also to keep my project team informed of the status.  If they know you’re managing the project budget this closely and they see what you’re ‘expecting’ them to be charging each week to the project budget, then they’ll be careful not to recklessly add hours just to fill in their week.  I’m not saying we have those irresponsible project resources on our team – but they are out there and you know what I’m talking about.

If you have feedback on how you managing your project budget, let me know.  I’d appreciate hearing about better, different, or easier ways to do this.  And if you’d like my Excel template that I’ve used for this article, contact me.  Thanks.The

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One Comment to “The Project Budget – Managing It”

  • Brad…I completly agree with what you are saying. How do you deal with a rolling resource pool in your budgeting?

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