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Project Budgets and Cost Tracking
Quick Summary
Spreadsheet formats for documenting the projected costs of a project and for high-level cost tracking.
What this is
Spreadsheet formats for documenting the projected costs of a project and for high-level cost tracking. Two budget formats and three cost tracking formats are included, each on a separate sheet.
Why it's useful
Budgets are created in the planning phase of a project to estimate and communicate the costs of developing the requested features and requirements, and to enable cost-scope-time tradeoffs. The budget document should communicate the major components of the project's cost and how they are distributed across the major work breakdown of the project.
Some organizations will also want to do high-level cost tracking to help spot variances or possible trouble spots in the project. These formats are chosen to enable that kind of tracking without too much overhead, for example by using estimates based on reported time, or using rounded numbers supplied by participating project team members. These spreadsheets aren't for the kind of detailed tracking required if you're billing by the hour, for instance. Rather, they are for project managers and stakeholders reviewing progress on the project and assessing where it stands overall.
How to use it
- Use one of the two Budget Format sheets to create a high-level budget for your project. Guidelines:
Create draft budgets during the investigation phase while the team is investigating possible tradeoffs between scope, costs, and time before committing to what the project will accomplish. By the end of the investigation/planning phase, the budget will be considered a solid estimate.
Use at least the higher levels of your project's work breakdown in Column A. This will ensure that all the work of the project is considered, as well as costs such as travel, materials, training etc. that would be incurred as part of each element of work. Typical items that can be overlooked include license fees for required project tools; quality assurance hours for planning and debugging; documentation hours; material costs; and planning time.
- If desired, select a cost-tracking format that suits your needs and record the final, approved budget figures. Then use that sheet to record and report budget adjustments, costs to date, and anticipated costs to complete. The spreadsheet will calculate variance based on the values you enter.
Brief discussions of the various formats are included in the file. The spreadsheet includes two alternate budget formats and three alternate cost tracking formats, each on a separate sheet.
A note of caution: don't get mired in the mud. Consider what level of tracking you actually need in order to guarantee your project performance and spot trouble signs. It can be very easy to get so caught up in the details that team members (and PMs!) spend more time tracking tasks and costs than they do getting the actual work done. If you're going to collect meaningful actuals, make sure that the process is as painless as possible and no more accurate than it absolutely has to be to fulfill the requirements. This is one case where "good enough" IS good enough. Naturally, if your organization is looking to implement some form of Earned Value Management then some level of detailed actual cost tracking would be required. If it's more important just to get the work done, then it's up to you to decide what level of tracking is really needed.
If you truly do need highly detailed time/cost tracking -- if you're billing by the hour, for instance -- there are several proprietary software tools on the market. Many are very reasonably priced and fairly simple to use. The biggest challenge in that situation is in getting people to actually enter their time if the culture doesn't already exist. In order to overcome that obstacle, make sure everyone understands why it's important and what the critical metrics are, and make the process and documentation required incredibly easy and fast.
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