Learn about developing and managing project budgets.

Welcome to our Impactful Projects and Planning

Series.

I'm Jami Yazdani.

In today's session, we are going to talk about

how to develop and manage project budgets.

And so budgets, most folks don't enjoy developing

and managing them.

But it can be a critical part of a project

managers role.

Budgets are often part of our project initiation

activities.

And so a draft budget or estimated budget

may be required for a project approval or

funding approval.

And our projects budget at least that top

line number.

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Kathy, are you able to hear me now?

It looks like I'd fix the sound issue.

I appreciate the comments.

Yes.

Okay.

So you do have sound now.

Wonderful.

Okay.

So there is a bit of a delay, a streaming

delay, and so that often causes some challenges.

Okay.

So budgets are often part of our project initiation

activities, a draft budget, or estimated budget

may be required for project approval or funding

approval.

And our projects budget is often a key project

parameter.

And so we need to know our budget and any

funding use requirements before we move into

project planning.

So how do we create a project budget?

So developing a project or program budget

can be challenging, as we are often building

a budget based solely on what we plan to do,

rather than anything we have done in the past.

And so while we may look to similar past projects

for guidance, we often have limited information

to determine our anticipated expenses.

And so I am a fan of zero based budgeting

and with project budgets.

We are truly starting at zero Bro.

And so to help us build a budget from the

ground up, I recommend a pod approach to budget

creation.

And so our goal and using pod is to help us

think through all of the different types of

expenses for our project to get to a comprehensive

list of expenses.

And so a pod approach asks us to consider

needed expenses in three areas, people, operations,

and deliverables.

And so are people expenses are those related

to our project team and other key stakeholders.

These expenses might include salaries, or

wages for contractors or team members, or

volunteer stipends.

It might also include recruitment costs, or

professional or skills development expenses.

Our operations expenses are our overhead or

infrastructure expenses.

And so these are expenses related to managing

the project itself and the project team.

And so these expenses could include facilities

or utility costs could be IT equipment and

platforms like a laptop or a project management

tool, or this could be office supplies are

deliverable expenses are those specifically

needed to build, create or offer the project

deliverables.

So these expenses may be required for task

completion, such as technology, tools, equipment,

or supplies.

And so while our people and operations expenses

may be more similar across projects in our

organization, our deliverable expenses tend

to vary widely by project.

So for example, the expenses for a marketing

project, such as ad costs, or printing will

look very different from the expenses for

a project to implement a new technology system

with costs for the new platform or for training

on the new system.

And so when thinking about our deliverable

expenses, we want to be sure to think about

each deliverable, not just the primary or

largest deliverable.

And so for example, if we were creating a

budget for a project to implement a new tech

platform, we may right away think about the

cost of the platform itself, but not about

the smaller related costs, let's say for staff

training, which might include a tool to create

the online training or to get a transcript

of the training.

And so these would be some of our deliverable

expenses.

And so as we work through pod, we often encounter

expenses that could be listed in two different

areas.

And so maybe we have a zoom subscription that

we would, you know, kind of put under operations,

because we're using it for our project team

meetings.

But it could also go under deliverables, because

we may want to use it to host the online training

that's necessary to create one of our project

deliverables.

And while a need may fall in one or two areas

of pod, we would only list the expense once

in our budget.

Again, our goal and using pot is to help us

think through all of the different types of

expenses for our project, to get us to a comprehensive

list of expenses.

And so once we have listed our needed types

of expenses, we can get quotes or gather information

to help us estimate estimate costs for each

expense.

So we may want to anticipate higher costs

for longer projects, due to possible price

increases that may take place over the project

timeline, or due to changes in the deliverables

or project team.

We will also want to include costs we could

incur if there are delays to the project.

And so we want to connect our expenses to

the project timeline, meaning that we want

to document when we expect to fully spend

the money for each expense by identifying

a specific deadline or phase of the project.

So will the funds for an expense be completely

spent by the halfway point of a project?

Will it be in phase one or phase two of our

project?

Or will it be spread across the entire project

timeline?

We may need to wait until we have developed

our schedule to do this part.

And that's fine.

I'm going to come back to this connection

more in a moment.

And so by using the pod approach to consider

the types of expenses for our project, and

then estimating the cost of those expenses,

we can get to a draft project budget that

we can share with leadership or key team members

for feedback but for finalizing.

And so once we have a finalized budget, have

tied it to our timeline and start spending

money, we want to track our spending throughout

the project.

And so I recommend reviewing what we've spent

on the project monthly or at least quarterly,

and reconciling your budget with your actual

expenses.

And so careful tracking means looking beyond

the total amount left, or the total amount

we have to spend to making sure we understand

how much we have actually spent on each expense

or expense category.

And so regular tracking, of course, will let

you know how much you have left to spend.

But more careful tracking allows us to adjust

as our costs adjust.

So if we know what we have spent, we are in

a better position to make changes if costs

are more or less than we anticipated.

Moving funding around based on our needs,

we can also catch mistakes when there's still

time to fix them.

And so perhaps your project shares an expense

with another project or program.

You don't want to realize at the end of the

project or budget year that you've been charged

100% of the shared expense or that you haven't

been charged at all and spent that money elsewhere.

The only way we catch these mistakes is to

monitor our spending regularly.

And so I found that a lot of folks rely too

heavily on the expense reports that come out

of their financial systems and determining

what they have left to spend.

Now because these reports typically only show

what has been fully paid or expended and what

has been encumbered, meaning an invoice or

Bill has been set to pay, we may not see an

expense appear for several weeks or months.

So if we use a credit card to pay for an expense,

that amount often won't appear on a financial

report until the bill has been received from

the credit card company.

If a vendor is slow to invoice you after work

is completed.

Unless your organization has a purchase order

process that adds those expenses as encumbered

once a contract is signed, that expense won't

appear until the bill is received.

If staff only submit timesheets every two

weeks and aren't paid until two weeks after

that, the report may not be reflecting any

hours not yet submitted or set to pay.

And so the expense may not show up on the

report, but that money is not available to

be spent.

And so the bottom line here is that it's really

important to know how expenses are handled

in your organization.

And what's appearing on reports not appearing

on reports and how long it takes for things

to show up.

This may also mean that we need to track our

spending on our own and this really doesn't

have to be complicated.

So a simple spreadsheet with each expense,

an explanation, a budgeted amount, amount

spent amount remaining, and budget statuses

may be all that you need.

And so in an example, here, I've got three

expenses listed, an explanation that gives

more detail about what each expense is the

budgeted amount we expected to spend, the

amount that we've spent so far and the amount

remaining.

Now these may be very familiar to you from

managing other types of budgets.

I've also got an expected status and current

status here.

And this is particularly important for project

budgets, the expected status is a percentage

reflecting how much of the budget, I expect

we would have spent at this point in the project,

the current status is the percentage we have

actually spent.

And so this expected status comes from that

connection to our project schedule or timeline

that I mentioned earlier.

And so in the examples here.

What I have is that, you know, we're looking

at let's say we're about halfway through the

project.

And for the contractor wages at this point

in the project, I expected we would have spent

55% of our budget, and our current spend rate

is 50%.

And so we're actually in great shape there

for the other two expenses.

At this point in the project, I expected that

we would have spent 100% of our budget.

And so we may have spent that on the tool,

and we're in good shape on that line item.

But we have gone over on events and so I'm

gonna have to find that $200 somewhere else

in the budget.

And so beyond understanding how much we've

spent understanding when we've spent it and

whether we are on track in terms of the timeline

is really what's important and try tracking

and managing project budgets.

Now some project management tools have budget

or resource modules and features that make

this connection to the timeline easier, especially

for managing wage or people costs.

But if you aren't using a tool, or this isn't

a feature of the tool that's available to

a spreadsheet can be perfect.

And so that was a very, very quick introduction

to developing and managing project budgets,

you can use the pod approach to help you identify

all of your project expenses, you want to

connect your expenses to your project timeline,

and then track your spending boasts the how

much and when very carefully.

Before I take questions.

Because developing project budgets is often

part of a project approval process, you may

want to check out our project approval form

template, this free resource can help you

gather the information needed about proposed

projects, and is available at Yazdaniconsulting.com

resources.

And so if you need more hands on support leading

projects and teams, or creating project budgets,

visit our project solutions page at Yazdaniconsulting.com

projects to learn about how we can help.

Great, so I'm happy to take any questions

you have about project budgets, please please

add them in the comments.

Due to the slight streaming delay.

I'm going to give folks a few moments there

to add their questions.

If I'm not able to take your question live,

I'm happy to respond later in the comments.

You can also find all of the ways to contact

me at Yazdaniconsulting.com.

Contact, please reach out to me if you'd like

to talk about project budgets.

So a question that I often get is is do you

do I have any advice for creating budgets

for grant proposals?

And so, you know, the challenge with the grant

budgets is that they are so common and nonprofit

and mission driven environments.

And the the circumstances and needs often

change from when we've submitted the proposal

to when we actually get the funding and can

start the project.

And so plot Yeah, I see a question here.

Since I missed the beginning is pod a tool

pod is just an approach people operations

and deliverables for thinking about how, what

all of your expenses are.

And so you think through your people and I

had some examples at the at the beginning,

I did start over with the sound issue.

So I talked about pod a little bit, but I'm

happy to answer more questions about that.

So in terms of creating grant proposal budgets,

because of that change, it often boils down

to really focusing on deliverables.

And so when we're writing a grant proposal,

and we're thinking about our budget, we want

to really think about what it is we're creating,

not just about the problem that we're trying

to solve.

And so how much will creating those things

cost.

And so these are things that you probably

want to overestimate costs on if that is possible,

and you can still fit within the funding requirements.

Another thing that you can do to help here

is to get some time bound quotes from vendors.

We often ask for estimates based on doing

work now.

But if the work won't be done until next year,

asking a vendor for those costs, what those

costs will be and getting a quote for that

can help.

Alright, so I'm not seeing any additional

questions.

And so feel free to comment or reach out to

me with any additional questions or thoughts

that you have.

And so thank you for participating in our

Impactful Projects and Planning Series, visit

Yazdaniconsulting.com/IPP to view all of the

sessions in this series and learn about upcoming

trainings.

Thank you