The Secret to Managing a Project Budget: Track Project Expenses
4th October 2017
You and your team have worked hard over the past several months to prepare the project you’d now like to put into motion. All your “I’s” seem to be dotted and all your “T’s” crossed.
You walk into the conference room to make a pitch and explain your plan for the committee members. The committee listens to your presentation and then asks about your project budget.
Are you ready to wow them with a sure-fire project budget proposal?
Let’s take a look at why it’s vital to track your project expenses, the risks to not tracking accurately and the secret to presenting the best project budget possible.
Why Is Tracking My Project Expenses So Important?
When you’re responsible for overseeing a project budget, there are some things to keep in mind. First, this is not a job to go into half-heartedly. You need to be committed to maintaining a healthy budget and be prepared for what that entails.
Second, make sure you’re fully informed on how to create, monitor and revise a project budget.
Above all, you want to avoid project management disasters. This can be accomplished by tracking your project expenses accurately and appropriately. A few reasons why you should prioritize the tracking of your expenses include:
- Justifying tax write-offs for your expenses
- Having evidence for any investors to support project expenses
- Providing historical data to support upcoming resource planning on future project budgets (i.e., learning what works, what doesn’t and learning from mistakes)
- Accurately comparing cost and benefits for a given project
- Ensuring cost-control and needed adjustments through the project
What Are The Risks Of Not Accurately Tracking My Project Expenses?
The consequences for not effectively tracking your expenses range from poor documentation and evidence for future projects to having to make compromises on crucial expenses to a full-out budget crisis and unexpectedly running out of money.
When you track your expenses in a clear and concise way, you support not only your current project but also future ones. With each financial success comes more opportunities to tackle even bigger and more prestigious projects.
Having a sound tracking method also builds trust. When you’re able to tell an investor exactly where his/her money went, the investor is able to see that you’re responsible and worth investing in. Now and in the future.
What Steps Are Involved In Creating and Managing A Project Budget?
There are 7 primary steps to creating and implementing a successful project budget.
- Examine the project budgets of similar projects that came before yours, noting their strengths and growth areas
- Incorporate these results into your plan, implementing the successful elements and revising or eliminating the unsuccessful ones
- Seek expert guidance from mentors or others who’ve successfully implemented a project budget similar to yours
- Ensure accuracy in your budget
- Routinely update the budget based on expenses, adding or cutting costs where necessary
- Examine in real-time
- Stay on point throughout the project, adjusting regularly
The Secret To Managing Your Project Budget: Tracking Project Expenses
As the brilliant Stephen Covey states in his book 7 Habits of Highly Effective People, begin with the end in mind. This means when you invest time and energy into having a great start, you’ll naturally lead to a great finish.
A Smart Start Creates A Smooth Finish
When you’re managing a project budget, you want to make sure that everyone on your team is on the same page.
1. Clear Expectations At The Beginning of the Project
Make sure the people involved with you on the budget know exactly what’s expected of them. For instance, are they required to track actual costs and provide receipts for all their purchases?
Experiment with budget at the outset of the project to determine cost-effective estimates.
2. Effective Communication Throughout the Project
Routinely meet with those on your budgeting committee. Stay abreast of any questions or concerns about the budget and be available for correspondence via email or phone.
3. Thorough Feedback at the Conclusion of the Project
The key to developing a winning team is by being clear on what they did well and what they can improve upon.
The Method For Tracking Expenses
There are some guidelines to keep in mind as you monitor your project expenses:
- Put reliable systems in place for the beginning and throughout the life of the project
- Allow web access to the expenses
- Clearly identify expenses
- Design the budget
- Select a person to monitor the budget
- Track and adjust in real-time
Software For Tracking Project Expenses
When you’re managing a project budget, you’ll want to have an effective tracking tool for keeping up with your expenses. Whether on the computer or hand written, or better yet both, you want to have good records.
A good rule of thumb when tracking expenses is to know what you want to track and ensure you’re tracking what you want to track.
Know What You Want To Track
Make sure you have a clear idea of exactly what goes into this project and gather others’ input and budget items. Get all the information from all parties involved before creating your budget.
Get clear on the how, who, what, when and where of every budget item you’ve included. This may sound like a lot of work, but it actually saves you work when you don’t have to go back and remedy a mishap.
Remember, if it’s not documented, it didn’t happen.
Track What You Want to Track
Sometimes, extraneous information or poor reporting can skew your picture of how the budget is operating. Regularly revisit the items you’ve budgeted for and make sure you’re tracking what you want to track.
Ideally, everyone on your project budget team is forthright and accurate. Still, it’s in your best interest to watch for any potential rogue spenders.
Rogue spenders are those who add unnecessary expenses to your budget without your approval. Or they misrepresent how much an item costs or how it’s being used. Open, honest and direct communication can usually remedy a potential situation like this one. Simply stay alert.
Staying In the Know
You want the project to be a success. You now understand the importance and steps to tracking project expenses during the process.
If you’d like more information and support in some of the best ways to manage a project budget, check us out at Price&Cost today!
Filed under Project management