Project Budgets

Project budgets manage financial planning and cost tracking for projects. This guide covers creating budgets, tracking costs, and analyzing variances.

Overview

Budget management enables you to:

• Create project budgets
• Track actual costs
• Manage budget allocations
• Analyze variances
• Handle budget revisions
• Generate financial reports

Accessing Budgets

Navigate to Projects → [Project] → Budget or Projects → Budgets for overview.

Understanding Project Budgets

Budget Components

Component	Description	Examples
Labor	People costs	Salaries, contractors
Materials	Physical goods	Supplies, equipment
Services	External services	Consultants, vendors
Travel	Transportation	Flights, hotels, meals
Equipment	Capital items	Hardware, software
Overhead	Indirect costs	Facilities, admin
Contingency	Risk buffer	Unexpected costs

Budget Types

Type	Description
Top-Down	Total allocated, distributed
Bottom-Up	Tasks estimated, summed
Hybrid	Combination approach
Rolling	Updated periodically

Budget Status

Status	Description
Draft	Being prepared
Pending	Awaiting approval
Approved	Active budget
Revised	Updated version
Frozen	No changes allowed

Creating Budgets

Budget Setup

1. Open project
2. Go to Budget tab
3. Click Create Budget
4. Enter details:

Field	Description
Budget Name	Version identifier
Total Amount	Overall budget
Currency	Budget currency
Start Date	Budget period start
End Date	Budget period end
Contingency %	Reserve percentage

5. Add budget lines
6. Submit for approval

Budget Line Items

Add detailed breakdown:

Project Budget: Website Redesign
├── Labor: $50,000
│   ├── Project Manager: $15,000
│   ├── Developers: $25,000
│   └── Designer: $10,000
├── Services: $10,000
│   ├── Hosting: $2,000
│   └── Third-party APIs: $8,000
├── Equipment: $5,000
│   └── Software licenses: $5,000
├── Contingency: $5,000
└── Total: $70,000

How-To Guides

How to Create Project Budgets

Budget Creation Steps

1. Define Total Budget

   • Determine available funding
   • Consider constraints
   • Set contingency reserve

2. Break Down by Category

   • Labor costs
   • Materials and supplies
   • External services
   • Travel and expenses
   • Equipment needs

3. Estimate Line Items

   • Resource rates × hours
   • Unit costs × quantities
   • Fixed cost items
   • Vendor quotes

4. Add Contingency

   • Typically 5-15%
   • Based on risk level
   • Separate line item

5. Review and Approve

   • Validate totals
   • Get stakeholder buy-in
   • Document assumptions

How to Track Costs

Cost Entry Methods

Automatic Capture:

• Time entries → Labor cost
• Expense reports → Direct cost
• Purchase orders → Material cost
• Invoices → Service cost

Manual Entry:

• Ad-hoc costs
• Adjustments
• Accruals
• Transfers

Cost Tracking

Monitor costs:

1. Go to Project → Budget → Actuals
2. View:
   • Committed costs (POs, contracts)
   • Actual costs (invoiced, paid)
   • Forecast to complete
   • Estimated at complete

How to Manage Budget Allocations

Allocation by Phase

Distribute budget across phases:

Phase	Budget	%
Planning	$10,000	14%
Design	$15,000	21%
Development	$35,000	50%
Testing	$7,000	10%
Deployment	$3,000	5%
Total	$70,000	100%

Allocation by Resource

Assign budgets to team:

• Individual budgets
• Rate × planned hours
• Track per person
• Reallocation flexibility

Period Allocation

Spread across time:

• Monthly allocation
• Quarterly distribution
• Cash flow planning
• Phased release

How to Handle Budget Revisions

Revision Process

1. Identify Need

   • Scope change
   • Cost overrun
   • Funding change
   • Risk realization

2. Document Change

   • Reason for revision
   • Impact analysis
   • New amounts
   • Justification

3. Get Approval

   • Submit revision request
   • Review and discuss
   • Approve or reject
   • Update baseline

4. Update Budget

   • Create new version
   • Adjust line items
   • Update forecasts
   • Communicate changes

Version Control

Track budget history:

• Original budget (baseline)
• Revision 1, 2, etc.
• Current approved
• Variance to baseline

How to Analyze Variances

Variance Types

Variance	Calculation	Meaning
Budget	Planned - Actual	Spend vs plan
Schedule	Earned - Planned	Progress vs plan
Cost	Earned - Actual	Efficiency

Earned Value Metrics

Metric	Formula	Meaning
PV	Planned Value	Budgeted work scheduled
EV	Earned Value	Budgeted work completed
AC	Actual Cost	Actual spend
SV	EV - PV	Schedule variance
CV	EV - AC	Cost variance
SPI	EV / PV	Schedule performance
CPI	EV / AC	Cost performance

Variance Analysis

Analyze deviations:

1. Go to Project → Budget → Variance
2. Review:
   • By category
   • By phase
   • By period
   • By resource
3. Identify root causes
4. Take corrective action

How to Forecast Completion

Estimate at Completion (EAC)

Project final cost:

EAC = AC + (BAC - EV) / CPI

Where:
- AC = Actual Cost to date
- BAC = Budget at Completion
- EV = Earned Value
- CPI = Cost Performance Index

Forecast Methods

Method	Use When
Original	On track
Current Trend	Consistent performance
Bottom-Up	Major changes
Management	New estimate

Completion Reports

Generate forecasts:

• Estimate to complete
• Estimate at completion
• Variance at completion
• Confidence ranges

Advanced Features

Multi-Currency Budgets

Handle international projects:

• Budget in multiple currencies
• Exchange rate management
• Conversion tracking
• Currency risk

Budget Templates

Reusable budget patterns:

• Standard categories
• Typical allocations
• Common rates
• Quick setup

Budget Approval Workflow

Configure approvals:

• Approval levels
• Threshold amounts
• Routing rules
• Notifications

Cost Integration

Connect to other modules:

• Timesheet costs
• Expense claims
• Purchase orders
• Vendor invoices

Best Practices

📊 Planning

• Detailed estimation
• Historical data use
• Expert input
• Contingency inclusion

💰 Tracking

• Regular updates
• Timely entry
• Accurate coding
• Frequent review

📈 Analysis

• Weekly variance review
• Trend monitoring
• Root cause analysis
• Corrective actions

📋 Governance

• Clear approval process
• Change control
• Audit trail
• Documentation

Configuration

Budget Settings

Navigate to Settings → Projects → Budget:

• Categories - Cost categories
• Default Contingency - % reserve
• Approval Levels - Thresholds
• Variance Alerts - Warning levels

Rate Settings

• Labor Rates - Resource costs
• Overhead Rate - Indirect cost %
• Currency Rates - Exchange rates
• Escalation - Annual increases

Reporting Settings

• Period - Monthly/quarterly
• Metrics - KPIs to track
• Alerts - Notification triggers

Troubleshooting

Common Issues

Budget not balancing

• Check line item totals
• Verify calculations
• Review allocations
• Audit entries

Costs not appearing

• Check project coding
• Verify approval status
• Review date range
• Check integration

Variance incorrect

• Audit actuals
• Verify baseline
• Check earned value
• Review calculations

Cannot approve budget

• Check approval workflow
• Verify user role
• Review requirements
• Check thresholds

Next Steps

Learn about Project Billing to invoice clients and track revenue.