If your project budget is off track, then your projects can run into trouble. Managing efficiently and effectively your project expenses is key for the success of your projects. Not everyone is good at math, calculations, or spreadsheets but here are 6 best practices that you can apply to manage your project expenses better:
Put in place systems or methods
It is important to create some structure in managing project expenses by establishing some kind of systems or methods. If you are managing a small-scale project, then you can use Excel to manage your project expenses. But if you are managing a large-scale project then you need a dedicated project management software. In any case you need a dedicated and well refined system where you can pull all of the project expenses together and have some way to track the project expenses. It is equally important to decide how it’s going to be done, when it’s going to be done and who is going to do it.
Provide shared online access to budget data
To stay out of trouble and to avoid your project getting into trouble, you need to ensure transparency when talking about money. So, once you have a system in place, make sure it is accessible online so that all your project stakeholders can also track the project expenses.
Identify and list budget items
You need to identify and list the budget items that are going to be tracked. These may include – equipment expenses, resources, real estate, legal items, marketing…. etc. Think of including miscellaneous items such as travel or lunch breaks as these expenses can have an impact on the overall budget.
Create and approve a budget
Once you have identified all of the budget items and list it out in your system, whether it’s a project management software or Excel sheets, then you need to go through and make sure you have identified any fixed, variable or recurring costs or expenses. It should also consist an estimation of expenses over a specified future time period. For example, beside every item there should be a timeline of expenses or a specified date of expense. And, finally, once the budget is created it may require the validation of the financial services department.
If any team member or project stakeholder wants to make a purchase it is necessary to put in place templates or forms which he or she needs to fill and get it validated in order to authorize the purchase. This will ensure that all expenses will be in check. In the template you may include a box where the person filling out needs to mention the reasons and provide justifications for the expenses.
Assign a budget manager
If you can’t follow through the budget items to manage the project expenses, then it is better to assign a team member. As project managers we get caught in the ups and downs of project management. So, it is better to assign some other project stakeholders to track the budget in detail. Some organizations need to have an official signature of an accountant or senior management to validate the budget items. Make sure you get that signature or approval to avoid future problems.
Track and control in real time
Regularly track and control in real time your project expenses. By controlling in real time, you can find out if your expenses are off budget, if you have over spent or under spent and calibrate accordingly. To ensure the success of your projects it is necessary to monitor your budget regularly.