When you’re managing a project budget, there are some key dates you should know! These general accounting dates can be laid over your project schedule so you don’t miss any major financial milestones.
1. Year End
Financial year end could be any time in the calendar year. I’ve worked with businesses that align their financial year end to the tax year, to the end of the calendar year (i.e. December) or to the date of incorporation (in the case of my business, that’s May).
It doesn’t matter when year end falls for you, as long as you know when it is!
Year end is important because it marks the close of one financial period and the start of another. You may have to get involved with accrual calculations and budget carry overs. If you miss the deadlines, you might not get your project budget in the next financial year!
2. Project Phase Dates
Some businesses work by releasing project funds according to the stage of the project. In other words, you don’t get the full amount of the project budget on Day 1. As the project moves through the lifecycle, funding is released in chunks.
Normally the dates align to stage gates or project reviews, where the steering group will approve the project to move to the next phase. That then triggers the release of the funding required to do the next phase of work. Be ready! Especially if you need to change your original forecasted budget request based on what you have learned during the current phase.
Reporting dates relate to so many different areas of your project. They are important for project budgeting because you will need to prepare a short budget summary to go into the report. As you approach the reporting deadline day, make sure your financials are up to date so you can drop the most recent figures into your report template.
4. Tax Dates
Tax rates don’t change often, but I did once work on a project where the rate of VAT changed halfway through the work we were doing. It made budgeting very confusing!
If you know of upcoming changes to tax (typically linked to government announcements and budget cycles), then watch out for whatever impact that might have on your project and make sure you note the date the changes come in!
5. Project Closure
Yes, you surely know the project closure date – the target milestone you are working to for everything to be done!
It’s important for budgeting purposes because you may have to calculate budget at completion, or staff run rates, all of which need you to know when the final expenses on the project will be accounted for.
What other dates should project budget holders know about? Let us know in the comments below!
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It happens: your project budget won’t quite stretch to the full amount you are forecasting that’s required to complete the work.
But when you do have to ask for more money, how should you go about it? The conversation with your manager or sponsor can feel a bit awkward.
Here are the steps to take to ask for a budget increase (and get it).
1. Clarify why you want the extra
You’ll have to justify why you want the extra funding. Be clear about what it’s for and what has changed since your first project budget was put together. You might have a very good reason, such as a change to the project that has been approved – but is going to cost more.
Unfortunately, it’s often the case that the estimating wasn’t that great the first time round, so you simply got it wrong and need more budget to cover the existing work. Just be honest.
2. Define how much you want
So you know you need more. But how much more exactly?
Do your sums. If your estimating wasn’t up to much last time, use a different method for calculating what you need this time. Learn from your mistakes. Use your subject matter experts to help. Add contingency. Basically, get it right.
I know that’s tough, but take your time and get really clear on what additional funding you are asking for. This is important because it’s embarrassing to have to go back and ask for extra funds a second (or third or subsequent) time. If you’re going to have to ask for more money to deliver the project, let’s ask just the one time.
3. Put together a justification or options
You know what you need and you know why you need it. But so far, we haven’t explained that to anyone. Get your story clear. Justify why the additional funding is required.
If you are able to present options, do so. For example:
You’re presenting a menu of options for your project sponsor to choose from. They can choose to go forward with all of them, and will need to find the full allocation of funding you have asked for. Or they could pick and mix from the list, focusing on the changes and additional work that they feel will be most valuable for the project.
4. Talk to your sponsor
With that information in hand, it’s time to talk to your sponsor. Arrange a time when you’ll have the opportunity to discuss the options.
The conversation will be a mixture of presenting to an executive and also a general chat about the project. Be prepared to talk them through your justification, getting straight to the detail, but also for them to derail the conversation by talking about other aspects of the project that concern them. Make sure you get enough time talking about the funding issue.
They might not be in a position to make a decision straight away about how much additional funding you can have and for what. If there is a time-critical element to their decision making, let them know. For example, you might only be able to secure a special discount on a product until the end of the financial year, or something like that.
Be clear that you need them to make a decision.
5. Act on the decision
You’ve got the decision. You can either have the funding (hurray!) or not. Either way, you can now take steps to work on that basis. If you can increase your project budget, change your budget numbers (and record that the change was approved).
If you have been told that you can’t have the extra funding, you need to go back to the drawing board and review what you can achieve with your project. Maybe you need to deliver over a longer period of time, or release resources, or review what you can realistically complete with the money you have.
What tips do you have for requesting additional funding on a project? Let us know in the comments below!
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What spreadsheet package do you use? Personally I use Microsoft Excel, although I do have Numbers on my iPad I case I need to look at a spreadsheet while I’m out and about. I sometimes use Google Sheets for personal projects as well, but I’m not massively comfortable with it.
Regardless of what tool you use, spreadsheets are a huge part of life as a project manager. Whether you are exporting data from an enterprise project management tool, creating a budget forecast or using filterable lists as a way to manage tasks, risks or issues, spreadsheets have so many uses in project management.
Here are some tips to make using spreadsheets easier – all tried and tested by me and colleagues over the years!
1. Add Notes and Comments
Add notes to your spreadsheet so you know how the formulae work and what estimates were based on.
You can do this by adding a separate tab to record notes, if there are a lot of them. I record the way I formulated an estimate for the budget, and what the figure includes, plus any assumptions around resource time and so on.
For short notes, I add them as a comment on the relevant cell. This is the easiest way to note when a cell was updated, or to record what was in the cell before you changed the estimate to be something else.
2. Add Version Control
Learn how to do version control on your documents (where version control is not added automatically by your software). Then add a tab to the spreadsheet showing a table with version control numbers.
When version controlling a spreadsheet, don’t try to add an incremental version number every time you update something. That would be time consuming and not add any value. Instead, do a major version update every time something substantial changes, such as changing major formulae or rebaselining. You’ll get a feel for when it’s important to create a new version.
3. Freeze the Top Panes
Project management spreadsheets can get quite large. In Excel you can freeze the top and side rows so that you can scroll through the spreadsheet and the headers stay in place. It makes reading and moving around a big spreadsheet much easier because you don’t lose the column and row descriptors.
4. Lock Cells
Use the functionality of your software package to lock cells that you don’t want other people to update. For example, in a status tracking spreadsheet, you might have cells that you need to have populated with ‘Open, Closed, On Hold’ etc.
You can fix the spreadsheet so that only those options are permitted. You can also lock cells so they can’t be changed, which is helpful if you have a form and you only want to allow people to enter information in certain places.
5. Add Conditional Formatting
Conditional formatting means the cell colour (or whatever section you choose) updates based on a rule. For example, if the contents of the cell is a number less than 50%, make the cell turn red. This is achieved using a red background fill. You can change the text colour, or use other formatting rules.
This is helpful when you have a large data set and you want to instantly draw people’s attention to figures that are outside the acceptable norms. You can colour code information as red, amber and green by setting up conditional logic once, and adding that formatting.
What tips do you have for making it easier to use spreadsheets? Share your best advice in the comments below!
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When you’re planning how to deliver quality results, and what needs to go into your project schedule, it’s worth looking at what regulations and standards you need to adhere to.
In this article we’ll look at the difference between regulations and standards and what that means to you managing a project.
What is a regulation?
A regulation is a requirement for your project. You have to follow regulations.
Regulations include applicable laws.
For example, there are a range of regulations that can influence the way you approach your project and what you can and cannot do. Here are some areas affected by regulation:
Laws vary between countries, so check what is applicable to where you are based. Also note that in multinational projects, the laws and regulations might differ for people on your teams in different locations.
What is a standard?
A standard is a guideline. Your project should follow guidelines because they are there for a reason, but if you can justify why you need to approach something in a different way, then you don’t have to follow the standard.
For example, it might be the standard that no one in your office works on a bank (public) holiday. Let’s say it is normal for the office to close over the end of year period when many colleagues are celebrating Christmas. However, your project is to upgrade the telephony switches. Knowing that the call volumes will be low and no one will be around to answer calls anyway, you might decide that the Christmas period is the perfect time to do that project work. It’s not standard, but it’s the most appropriate solution for your project and least disruptive for the business.
Not all standards or regulations are going to affect every project. It’s important to have a view as to what is important for this project. It is something I would consider and resolve as part of project initiation, so that I can go into project planning with all the information needed.
How do standards and regulations affect projects?
Standards and regulations affect projects in a number of ways.
1. By affecting project scheduling
Any time legal compliance is required, you can bet you need to add extra time to the schedule to have the legal team check out what you are doing and ensure the project is ticking all the boxes. Build in enough time for regulation-related checks and work.
Equally, with resource-related regulations, you may have to constrain working time which will have an implication for the schedule. For example, you may not be able to use overtime hours, or you might have to factor in travel time to your schedule if your resources aren’t permitted to go over a certain amount of travel before taking a break.
Some of these constraints could be legislation affecting workers, others might be the way your company operates (or as PMI would define them, enterprise environmental factors). An example would be dictating that the standard working week is 40 hours. You would take that data and ensure your schedule reflects a 40-hour standard working week.
2. By affecting project quality
If you have to follow regulations or stick to standards, this could have an implication for project quality. You might have to do additional quality checks, or use particular materials. An example would be building control. In the UK, you need building control to sign off on construction work. You can’t simply carry on building or assume everything will be OK without having someone come round and inspect the site. That’s an external quality check you have to consider and plan for.
3. By affecting project budgets
If your project needs a building control check, you have to pay for that. The building controller will charge you for his or her time. That cost needs to go into your project budget forecast. Depending on what regulations and standards you have to abide by, your project costs will need to accommodate the related charges.
Once you understand the standards and regulations that affect your project, and how they are likely to affect the project, you are able to plan for them. Some might need mitigating factors and adding to the risk register. Others will be easy to manage, perhaps by adding a little extra time or an additional task to the schedule.
Do a bit of research at the start of your project and then incorporate what you need to so that your project, and your organisation, stay compliant with the relevant regulations and standards.
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So you’ve been given a project with a budget? Or you’ve been asked to create a project budget for the first time? Here’s what you should know.
The expected total
Even if you’ve been told to create a budget from scratch, the person who asked (your project sponsor) already has an idea in mind for what the “right” number is. Save yourself some time and ask them to tell you what their expectations are for the final figure.
Now you have to work out how close you can get to that number.
Breaking down the cost elements
You need to work out how much each individual element of the project is going to cost. This is called bottom up estimating.
Take your list of items and estimate a cost for each one. Involve any subject matter experts in this and make sure that you take into account any constraints and assumptions. The aim is to get a detailed and accurate (albeit estimated) take on how much each element costs.
Add the individual estimates together, and that’s your total expected spend. Hopefully, this matches the initial expectations of your manager or project sponsor.
Review against expectations
Once you’ve done some work on the budget, you’ll have an idea of whether you can hit the target they have in mind. If it looks like you’ll need more than that, you can start to position the scope of the project in a way that helps you get closer to the number. Here are some suggestions:
Or, of course, you could build a robust defence for why your project is going to cost more than your sponsor originally expected! Use data and facts to create the justification.
Next, you should talk to your sponsor about the other budget areas that should be considered before the budget is considered final.
Add management reserves and contingency
You can find out more about management reserves and contingency in this article, including how they fit into your overall budget.
Talk to your project sponsor about making sure there is adequate contingency for the project, and management reserves as required.
Add a risk management fund
If your project is relatively large and likely to be affected by significant risk, then it’s worth building in a risk management fund (more details on that here).
Basically, a risk management fund helps you pay for the activities required to mitigate, transfer or otherwise deal with risks. Instead of just tracking the risks, you can actually do something useful with your pot of money to offset the impact they might have on the project.
Finally, talk to your sponsor about budget tolerances. That basically means the boundaries within which you can act without going to them for further approval. On a budget of £1m, you don’t want to be asking them for sign off because you need to spend an extra £10. Set some limits with which you are both comfortable and that give you freedom of action but ensure some rigour.
Note: tolerances in this instance specifically relate to financial boundaries, but the concept of tolerance is useful for other areas of project management too, like setting boundaries for schedule and risk. Tolerances provide you with guidance around how you can act without escalating.
With all the calculations and discussions out of the way, you should be at a point now to agree the final budget. This figure is what you will work to and track against during the life cycle of the project. It’s the figure approved for your project, and you’re responsible for using the money wisely.
Report spending to the project board or steering committee and make sure you keep your numbers up to date. If you need help with tracking spend in a way that is considered appropriate by your company, start with the PMO. They probably have software or spreadsheets you can use to store all the financial figures. If you’re lucky, it might automatically create the information required for your financial reporting too!
Want more tips on creating a budget? Read this next: 5 Ways to Create a Budget
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