Community Champion
Guessing is not a strategy: How to build decision velocity with AI and real-time data
June 10, 2026 | Live Webinar
Project expenses aren’t always spread evenly throughout the life of a project. Understanding how costs are split is one way to make sure that your project budget is appropriately phased. For example, if you will incur more costs at the beginning, then you’ll need to factor that in to the budget. If you will pay out lots of money at the end, you need to factor that in as well, to make sure that you have some money left!
Here are 3 ways that costs can be linked to project activities.
Start of activity
Some projects incur the majority of their costs at the beginning. Examples would be:
- Buying hardware like servers so that the rest of the project can use them for development effort.
- Software licences that are required up front before you can start using the product.
- Buying equipment or heavy machinery that enables you to produce the output of a project, for example if you are making widgets.
- Buying a building for the project team to work in or a building for the project, such as a shop or work facility.
In this case, you’ll want to make sure that your project budget is available to you as soon as you start the project, and isn’t phased by quarter or reliant on some cash flow issue being resolved. You’ll need to spend a large chunk of your budget from day 1, so talk to your project sponsor or your project accountant and make sure that the provisions are available for you.
End of activity
Some projects incur costs at the end of the project. This could be, for example:
- Paying a contractor in one lump sum for the work they have done, on completion of that work.
- Paying for equipment retrospectively, if you have managed to negotiate a period of lease or free use until project completion.
In this situation, you’ll need to make sure that your project funds are still available to you at the end of the project. Finance teams often review budgets and if it looks as if you aren’t spending much of your project budget, they might ask for some of it back! It’s good to be able to justify why you need to hang on to the cash, so that you guarantee it is still available to you when you come to need it at the end.
Uniformly spread across activity
The third way that project costs can be linked to activities is through being spread evenly across the lifecycle of the project. Some examples of this are:
- Paying contractors monthly.
- Paying third parties monthly or regular service fees, such as for the provision of online project management software.
- Subscriptions.
- Property or machinery leases that require a regular payment, such as monthly or quarterly, in advance or in arrears.
This is probably the easiest type of split to manage. Regular payments for regular activities means that your budget will be consumed in an even way across the lifecycle of the project. You can quickly see if you are half way through the project then you should be about half way through your budget too.
Of course, one project could use all of these, as different activities could have different spreads of costs. You’ll have to take that into account when you plan how your budget is phased. If that is the case for you, you’ll also have to consider phasing per task/activity/item as well as what the overall profile looks like. That way you can build up a picture of how much money you’ll need when.
Which is the model that your project uses, or do you phase your project budget in a different way?
Posted on: October 21, 2012 07:39 AM |
Permalink