Originally published October 12, 2016 and updated on August 18, 2022
Your project budget doesn't just determine what you can do, it also measures your success. A project isn’t successful if it isn’t profitable. So, you must set a project budget that lets you deliver quality work to your clients within the time and scope that they expect without compromising profitability. But balancing client demands with project schedules, resource availability and agency costs is difficult. Failing to properly budget in any one area can throw your whole project off track, thereby jeopardizing your ability to complete it profitably. Here are 15 tools to help you keep your project budget on track:
1) Creative Brief
Defining your project’s scope is the first step toward creating a suitable budget. Solid creative briefs are an effective way to manage your agency’s project budget because they clarify your objectives as well as your strategies for obtaining them efficiently. When a client approves a brief, they agree that you are on track for solving their problem, thus establishing parameters for your budget.
2) Budget Template
Starting with what has worked in the past helps you realistically set a project budget. A budget template built upon a similar project or template will incorporate all of the appropriate spending categories into your new budget. You can then adjust your new budget so that you can avoid variances in line items where actual expenses previously varied significantly from budgeted amounts, either positively or negatively.
3) Work Breakdown Structure
Organizing your team’s work into manageable sections with a work breakdown structure (WBS) helps you track project budgets accurately because you can assign and manage individual responsibilities, thereby assessing the costs associated with each task. You can also create a schedule that allows you to complete the project in a reasonable period of time.
An outlined plan that covers essentials such as the initially budgeted revenue and estimated costs lets you track your project’s progress and calculate its eventual earned value. Establish guidelines so that you can know how much you can spend on any given aspect of your project.
5) Assign costs to resources
Be clear on what you plan to spend on what by separating your budget plan into resource categories, e.g. labor, materials, and equipment. The more detailed your budget plan is, the easier it will be to stay on top of, and the quicker you’ll be able to get things under control in case of cost overrun.
6) Cost control thresholds
When you have a clear idea of how much money should be spent on what, the next step is to create a cost threshold for each resource category. If, for example, it was decided that $1000 can be spent on the design aspect of a brochure, the cost threshold should be somewhat below $1000. Then, if this number is reached before the project is complete, action should be taken to regain control of the budget.
7) Allocate cost control roles
Put someone specific in charge of overseeing the project budget. This ensures that there is someone frequently checking that the project is staying within budget, and that employees know who to turn to if they run into budget-related issues.
Forecasting the number of resources required to work on a project at any given time and updating your outlook at least weekly will help you keep your budget under control. This also ensures that you utilize your resources efficiently. Resource management software helps you keep your team productive and engaged by allowing you to manage workloads and priorities in real time.
9) Budget Forecast
You must also update your project budget regularly, accounting for costs to date and anticipating expenses to come. This helps you continuously align the budget with the project’s anticipated completion date. Project management budgeting software can help you budget forecast easily by automating this process.
10) Under promise and over deliver
Besides being a fabulous technique in gaining client trust and likeability, under promising and over delivering on project scope puts you ahead of the budgeting game. If you have your budget worked out so that you can afford a little more than what your client is expecting, rather than promising exactly what you can afford, you’ll have some leeway in the project expenses. And in case you do run into budget trouble, you can always fall back on delivering less to your client–they’ll never know that you had under-promised and were actually planning to deliver more!
11) Change Order
Scope creep can put you over budget. Cover any unanticipated costs that result from a shift in the client’s expectations with a change order. Once approved by the client, the additional funding should cover the costs of the extra work.
12) Expect the Unexpected
When planning a project, think about potential scenarios that could disrupt the budget plan. Inflation, for example, is a common cause of budget overrun, especially for extensive projects that take some time. Other things that could throw your project budget off balance include world events, weather change, and natural disasters. Plan for these and plan how you will adjust your budget accordingly.
Integrate budget tracking and insights through project cost management software so that you can see how you are performing relative to your budget at any point. Project budgeting software can track time spent and set up alerts to notify you of possible cost overruns.
14) Status report
Run reports that show your performance and share them with your team and your clients. Discuss reasons for variances between budgeted amounts and actuals. This helps foster accountability all around. If you have project budget software, you’ll be able to run reports easily and show them to teams and clients through the same software.
Implement effective time tracking methods, like integrating schedules and timesheets through project budget management software. Enabling your team to easily capture even the smallest of time spent on a task will also help your creative project budget succeed.
Completing your project within budget is essential for ensuring profitability. In this day and age, it’s easy for agencies to stay on top of budget if they use project cost management software. On the other hand, agencies that have not yet integrated project management budgeting tools can easily slip over budget, and are often none the wiser when they have done so!
Workamajig is a project management software with budgeting tools included. At Workamajig, we believe in helping agencies not only stay within budget, but using our all–inclusive project management software, see every project to maximum success.
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