Project Budget Control: Are Your Sticking To The Plan?

Apollo 11 LaunchBusinesses can use their target profitability to put the project billing budget together. A budget should be as precise as possible: at least by project phase, ideally by activity. Creating a detailed project budget makes it easy to see if a phase or an activity on the project is running over budget, way before the entire project budget is out of control.

Doing a detailed budget also allows for better project estimates down the road. For example, historical information about the number of hours of support required for a specific type of project is essential in building more accurate quotes and improving profitability levels.

Budget for Project A

Task Budget
Hours     Amount
Work in process
Hours     Amount
Billed
Hours     Amount
Variance
Hours     Amount
Bookkeeping 60 6000.00 20 2000.00 10 1000.00 30 3000.00
Business Management 40 4000.00 5 500.00 10 1000.00 25 2500.00
Tax Planning 40 4000.00 0 0.00 10 1000.00 30 3000.00
Training 20 2000.00 0 0.00 0 0.00 20 2000.00
Support 10 0.00 15 0.00 0 0.00 (5) 0.00
Total 170 16 000.00 40 2500.00 30 3000.00 100 10 500.00

With a detailed budget as in the table above, we can see how far along we are for each activity in the project. It’s also easy to see that the support task, which is non-billable, is already over budget. We can hence plan a higher number of hours next time so as to improve our project profitability.

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