Project budgets are notoriously difficult creatures. Even if you’ve created a solid budget estimate, you still need to scrupulously manage its spend to ensure your project stays profitable. Without tracking project budgets, you can’t ensure your team spends the right amount of resource on each task—without over- or under-committing to a client. It can make the difference between catching miscommunications and scope creep early, and dealing with an expensive clean-up job. Thankfully, there's now a ton of software to help you streamline the whole budget management process—providing a precise, live overview of project spend without requiring a ton of additional effort from you.
The importance of tracking a project budget
Overseeing a project budget is a pretty big responsibility—you’re not only coordinating costs and managing risk, but making sure the rate at which you spend your budget is “healthy”. It almost goes without saying, but if you don’t track your costs, you risk facing one of the worst scenarios of all: overspending or running out of money halfway through a project. By making a habit of checking budget spend, you can help keep your team on-track, update stakeholders with key milestones, and calculate the profitability of each stage of the project—all while avoiding disasters.
Tracking a project budget also lets you see exactly how different project phases absorb your budget, and you can drill down to individual project tasks—like scoping, iteration, building and QA. The latter is especially useful for managing all the non-billable project work that can drink your profits, which includes project communication and project management itself.
The benefits of project budget tracking
Accurate project budget tracking makes a whole lot of sense when it comes to managing expectations, strengthening relationships and staying accountable. It helps you build transparency with stakeholders, but showing exactly how retainers and team resources are being used.
Tracking a project budget also makes it easier to feed back process or communicational improvements to clients themselves, by breaking down the cost and time implications of dramatic directional changes, protracted iterations and unclear briefs. You’ll be able to align better on “meaningful budgeting”—especially when it comes to clients appreciating just how much things actually cost. In the end, that understanding makes for better quality, more cost-efficient products.
Obviously, budget tracking can also help increase your profitability. It highlights project risks, qualifies the true cost of different tasks, and surfaces all the internal work that goes into planning, organizing and delivering projects. With these insights, you can set more competitive project rates, ensure all your costs are covered, and improve estimates for future work.
How to track a project budget
There are two main ways to go about tracking a project budget: the manual way and the automatic way.
Track a project budget manually
This is your standard approach to budget tracking using a spreadsheet tool like Excel to enter and crunch numbers—either by adding them manually, row by row, or importing them from all your project management apps. If you have the time, this is definitely the cheaper approach.
However, manual data entry comes with huge and expensive potential for human error, which can completely undermine the whole endeavour of accurate project budget tracking. Tracking a project budget manually can also be a painstaking process, and requires a heroic amount of patience and precision. While Excel templates are available, they require a lot of customization to reflect the way your team actually works. If you’re looking to integrate project tool data, be prepared to hash around with different file types, formats and formulas.
Track a project budget automatically
This is the high-tech solution to project budget tracking, which essentially outsources the entire task to automatic time tracking software. You just assign your project a time or money budget, and your tool will automatically update as your team logs their project work.
Using Timely as an example, you can break down budget spend by individual task, project phase and even employee. Employees themselves can have a blanket hourly rate, or a specific project rate—making it easy to account for any external contractors you bring into your team. For longer projects and retainers, there’s also the option to track recurring budgets.
How project budget tracking works in Timely
Budget tracking tools: key features to look for
A quick Google reveals there's a lot of project time management software out there. But different tools have different specialisms, depending on which aspect of the project management lifecycle you want to focus on. Not everyone can afford heavy-weight project management software, and their sheer feature set can make them difficult to use. When looking for project tracking software, you only really need to ensure they include these staple features:
Dashboards
Intuitive project management dashboards that break down your most important project data are essential. You don’t want to have to dig for information every time you need to quickly update a stakeholder. They also make a huge amount of sense if you’re managing multiple projects at once – providing a panopticon overview of all project performance from one clean space.
Tagging
Tagging is a no-brainer if you’re looking to break down budget consumption by project task or individual employee. You can also use them to categorize project work under phases, which provides a useful overview of budget requirements across resources and skills.
Notifications
The best budget tracking tools are proactive, not reactive—they reach out to you with important real-time budget information, like when budget spend hits a particular milestone. Thoughtful budget notifications ensure you don’t have to be in the tool all the time to stay in the loop. You should be able to tailor them to your devices and communication preferences—be it a mobile push, email or desktop notification.
