Managing Project Budgets: Beyond the Bottom Line
Most project managers in nonprofits and other mission-driven environments aren't excited by spreadsheets and financial reports. Developing a project budget is a start; diligently tracking and managing that budget is critical to successfully managing our projects.
Tips for Tracking Project Budgets
Elevate your project budget management and tracking and put those precious funds to their best possible use with these tips:
Review Regularly, Not Occasionally - Monthly or quarterly budget reviews are crucial. Don't wait until the end of the project to compare spending against what you planned – you might find missed charges, overcharges, or other surprises! Regular reviews let you adjust course if needed and avoid overspending.
Dig Deeper Than the Total - It's tempting to focus only on how much is left in your total project budget, but we want to ensure we track spending on each specific expense. Did the event supplies end up costing more than anticipated? Did you save on that consultant fee? Knowing these details empowers you to make adjustments to the ways you are spending those remaining funds.
Avoid the Financial Report Delay Trap - Reports from your organization's financial systems are wonderful, but they can lag behind real-time spending. Purchases on credit cards, delayed vendor billing, slow staff reimbursement, and paycheck processes can all mean those reports don't accurately show your current spending. Even if your report says the money is available, those funds have already been spent.
Setting up your Budget Tracking Spreadsheet
Some project management tools have built-in budgeting features, making planning and tracking easier. If fancy project budget tools aren't accessible for your organization, a simple spreadsheet can work just as well.
For every project expense, list the following:
Brief Description of the expense (ex. Consultant for 20 hours at $200/hr)
Budgeted amount
Amount spent to date
Amount remaining to spend
Expected status (percentage spent aligning with project progress)
Current status (actual percentage spent to date)
The "Expected status" and "Current status" columns on your budget spreadsheet are critical tools to understand if your project spending aligns with your planned timeline. The "Expected status" is a percentage representing the portion of the budget you anticipated spending at this point in the project timeline. For example, midway through the project, you might have expected to spend 50% of the budget for consultant fees. The "Current status" is the actual percentage spent on that expense to date. Comparing these percentages lets you quickly see if you're on track, spending faster than anticipated (which could lead to running out of funds), or slower than expected (which might mean wiggle room to shift funds around).
The Bottom Line on Project Budget Management
Proactive budget management is like a compass for your project's financial health. It safeguards your nonprofit's resources while ensuring you're making the progress you promised to your funders and stakeholders.
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