Professional service firms and their corporate counterparts have the interesting challenge of creating proposals, managing projects, and staying within budget, all without producing a physical product.
Client and project-based work is the bread and butter of consultants, accountants, financial advisers, project managers, and a myriad of other professionals. The silver bullet to managing these projects efficiently is stepping away from spreadsheets and utilizing business budgeting software.
How hard can it be?
I won’t sugar-coat it, your first service-based budget will be the hardest. Fortunately, after you’ve gone through that initial pain, you’ll be using that first budget as your model for all the rest, tweaking the tasks and values as needed. These adjustments help keep you on your toes and focused on the needs of each unique project.
Some Assembly Required
What’s it take to put a project budget together? It’s similar to an annual budget in many respects but there are nuances of course. I like to think of a project budget in terms of it initially being a cost-benefit analysis, which in many cases it is.
Consider these highlights when you create client and project-based budgets:
- Discovery – Start your project budget by sketching out what you want to accomplish. How can you reflect this in the budget plan you develop? What are the scope, expected timeline, and the result the client is looking for?
- People – Who are the stakeholders? Who is affected either by the project’s outcome or by participating or lending resources to it? Think of people in terms of time committed and dollars where appropriate.
- Direct costs – What materials, equipment, software, and labor are specific to this project? If this project didn’t occur, you wouldn’t incur these costs.
- Indirect Costs – Your overhead. You’ll allocate a portion of these costs to this project.
- Fixed and variable costs – Sub-categories within your budget are a good idea for these two types of costs. The variable costs will push you to identify the drivers that cause them to flux.
- Parallel budgets – A piece that is unique to service businesses is that you always need to keep in mind the use of the budget both from the standpoint of your firm and from that of your client. Keep things efficient by not tracking data in more than one place. The reports you define will flesh out the information you need to manage the project.
You’re the project lead at Orlando Consulting and PrismicPower, a Biotech company, is your new client. You use Budget Maestro and won’t get tangled up in the version control mess that spreadsheets bring. You’ll be confident (and maybe even a little cocky) that you don’t have to worry about formulas getting corrupted or calculations going awry.
You’ll help PrismicPower manage the tactical integration of a competitor they’ve just acquired. Assign your resources to each task over the 18-month span of the project to make certain you have the manpower when you need it. Travel and ancillary expenses receive the same treatment. Allocate the overhead in proportion to the draw on your pool of labor.
Monitor your progress as the execution of the plan unfolds by comparing your actuals to budget as you would in an annual plan. Reports and dashboards are great ways to help the readers understand and adhere to the approved budget. Put the time in upfront to ensure that your reports let you track the project and capture the information and stats you need to be successful.
Business budgeting software can’t prevent scope creep or budget shortfalls – but it will give you a leg up on detecting them.
How would your organization adapt to using a central software tool for managing your project-based budgets?
Businesses of every description rely on the Budget Maestro™ family of software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.