How to Keep Track of Project Budget
Keeping track of your project budget is key to ensuring that you stay on track and hit your goals. However, it can be a daunting task in itself. Thankfully, there are some simple tools available to help you keep tabs on your budget and stay organized. Here’s how to use them!
How to Keep Track of Project Budget
As a Project Manager (PM), you already know that ensuring the success of your projects is a primary concern. But this can be a tough task. Even if the project is creatively brilliant and delivered on time, a project that goes over-budget can cause a catastrophe.
To help control your project budget—and prevent costly mistakes—refer to the following five tips:
1. Create a Baseline
After you’ve created your project’s schedule, it’s important to implement a baseline that can be used to track your tasks and project performance. Baselines provide PMs with a set of stored values for your project, including:
- Original Scheduled Start and Finish Dates
- Planned Efforts
- Estimated Costs
- Budgeted Revenue
Having an outlined plan helps provide accurate comparisons between your initial schedule and the actual progress of your work and your project’s earned value calculation.
2. Forecast the Budget
Accurate budget management, including consistent reforecasting, helps keep projects on track. Project costs and project budgets are two different entities. With this in mind, it’s important to identify your project costs and outline potential risks.
Revisiting your budget prevents things from getting too far out of hand. Revenue forecasting software can help monitor financial budgets, as well as streamline the process by automatically creating and updating budget forecasts.
3. Outline Resource Usage
Much like your budget, it’s important to constantly monitor your resource usage—after all, the people working on your team contribute to the overall cost. It’s crucial to review the number of people working on your project on a weekly basis to ensure that you are utilizing your resources. Consistently revisiting your resource usage helps give you an accurate status of your schedule and budget.
4. Monitor Your Schedule
Monitoring the project’s schedule performance provides PMs with indications of activity-coordination problems, resource conflicts and cost overruns. Consider implementing a work breakdown structure (WBS) to organize your team’s work into manageable sections. The WBS deliverable is designed to break down a project into manageable chunks that can be estimated and supervised, making it simpler for PMs to assign and manage individual responsibilities.
5. Manage Scope
Scope creep—uncontrolled changes or growth in the scope of a project—is one of the leading causes of project overruns. This typically occurs when the scope of a project is not accurately defined, documented or monitored.Here are some tips on controlling scope creep:
- Make sure you understand the project’s vision—and that all project drivers and stakeholders are on the same page.
- Understand your priorities and outline your budget, deadlines, delivery, client satisfaction and employee satisfaction.
- Define your deliverables.
- Assign resources and determine a critical path using project evaluation and review techniques (such as the aforementioned WBS).
- Plan for scope creep—but implement methods to respond to potential risks.
By monitoring scope, PMs can ensure that they are controlling their projects, instead of the projects controlling them.
Project Management Budget Tracking Tools
Best for customization capabilities
monday.com is a project management software with time tracking features that has done away with a lot of the trimmings of typical management tools and focused on simple, visually intuitive layouts that help clarify the sequence of work.
monday.com features for managing projects include resource and project management, time tracking software, collaboration, and reporting features. For example, users can upload and attach files to cards, make comments, mention teammates, and more. It also offers a great project reporting dashboard that can collect data from multiple boards, allowing better tracking abilities of progress.
And while monday.com doesn’t offer a complete set of tools for project accounting and invoicing solution as other tools, you can use monday.com to track every billable hour, employee productivity, and invoices. More than being a time tracking solution, you can also use it for your employee productivity needs. Easily assign owners to new tasks, prioritize each item, set due dates and know exactly how every work hour is spent on each project and task. You can also keep track of time on their mobile app.
monday.com’s integrations include business apps like Slack, Google Drive, Gmail, Google Calendar, Jira, GitHub, Trello, Dropbox, Typeform, and many more, accessible via Zapier.
monday.com costs from $6/user/month and comes with a free 14-day trial. They offer a free plan for up to 2 users.
2 Resource Management by Smartsheet
Best for mobile time tracking
Resource Management by Smartsheet, a high-level project and resource management software, helps modern teams make confident decisions about project planning, team capacity, budget forecasting, team utilization, and hiring needs in real time.
Its built-in timesheets, mobile time tracking, and expense tracking features, enable you to create rich project reports by filtering project data with just a few clicks, making it the best time tracking solution for a workforce with diverse operational setups. Get a detailed report that can give insight into historical data or offer a forecasted view of team utilization, actual vs. planned time reports, budget tracking, expense reports, and projects in the pipeline.
Over 1,000 of the most innovative companies in the world rely on Resource Management by Smartsheet, from 10-person shops and 100-person teams within global brands to 1,000+ person professional services firms. Resource Management by Smartsheet has been recognized for its design excellence with awards from FastCo, SXSW, IxDA + IDSA.
Resource Management by Smartsheet easily integrates with a variety of internal workflows and software suites. Additionally, it provides a flexible API and Zapier integration that can connect with top operational tools for analytics, communications, PM, ERP, and finance.
With a unique project and resource matching feature, Resource Management by Smartsheet helps match team members to the project’s requirements according to different criteria like disciplines, skills, availability, and more.
30 days free trial
3 Buddy Punch
Best online time clock for GPS and image tracking
Buddy Punch is a web-based time clock software. Its interface is fully customizable. You will be able to integrate the Buddy Punch with most of the payroll management products. It will help you with managing the projects by recording the time for a specific project and job codes.
Buddy Punch has a functionality of automatically splitting of calculated time into categories like regular time, overtime, and double time. The tool can also provide the flexible, reliable, and easy-to-use employee management, Buddy Punch will let you set up a unique overtime rule on a per-employee basis. Additional features include automatic breaks, vacation tracking, GPS tracking, and other time and attendance solutions.
Buddy Punch integrates with QuickBooks, ADP, Gusto, Paychex, Paylocity, PayPlus, SurePayroll, and Workday. A paid Zapier account can get you access to hundreds of other tool connections.
Buddy Punch costs from $25.99/month for basic time and attendance solutions (billed annually). They offer a 30-day free trial. You can contact the company directly for the requirement of more than 200 employees.
Best for managing employee time off
Timesheets.com is a fully-featured time tracking software tool, complete with hourly time clock, project time, mileage and expense tracking, time off / vacation, and stacks of powerful HR functionality to support managing your team. Timesheets.com is easy to use and they offer the option to brand the service with your logo.
Timesheets.com integrates fully with projects and tasks and they offer flexible entry options with tracking projects in real-time using timers feature, single project entries daily, or fill in their timesheet at the end of the week. Budgets are easily managed and reporting is simple with the ability to use live, up to the minute data to drill down to separate out specific employees, projects, and dates.
Timesheets.com has some pretty powerful HR tools if you’re looking for a more complete HR time tracking software solution that does more than just track time and expenses. The HR functionality includes powerful time off management with the ability to review accrued balances for vacation, and request approval for vacation time to manage and review the agency’s time off in a single view on a calendar. The HR functionality also includes a suite of standardized employee documentation including employee training manuals, performance reviews, staff communication, employee files, and notes.
Timesheets.com has a QuickBooks integration and the data can easily be exported for other accounting software.
Timesheets has a 15-day free trial for all users. Once activated, pricing starts at $4.50/user/month and $3.60/user/month for nonprofit organizations.
Best free time tracking tool
If you’re looking for a simple and free time tracking software, Toggl is a great place to start. It’s beautifully designed and incredibly easy to use. If you’re looking for a solution to get started today and to simply track time against different projects and clients, then Toggl is great.
Toggl allows you to create projects, tasks and track hours using your browser, Chrome extension, mobile, or desktop apps. While it allows tracking of accruals, there’s no way to set budgets and track against them. If you want to track against an estimate or create an invoice, you’d need to use a 3rd party tool.
Toggl has some good functionality to support helping people do their time tracking properly with automated reminders to keep people on track, and you can create required fields for time entries, to ensure people always add comments or tags to their timesheet entries. You can also enable auditing tools where you can trigger alerts for suspicious-looking timesheet entries, like if someone claims to have worked 10 hrs straight on a single task!
Toggl has some good out the box, which make it one of the best free time tracking software options available with integrations for Jira, Asana, Basecamp, Freshbooks, GitHub, and Teamweek among many others. So even though it’s lacking in some of the budget tracking and invoicing functionalities, you can easily tie it in with other tools that specialize in reporting and invoicing.
Toggl is a free time tracking software tool although paid versions cost from $9/user/month.
Bill4time is the full package – a full-featured time tracking software tool with time tracking, expense tracking, billing & invoicing, invoice templates, and online payments supported by a client portal, it’s more than just time tracking but billing software too.
Bill4time has created some well-designed and good looking tools with mobile and desktop apps to enable some pretty flexible and powerful time tracking; you can simultaneously run timers, record multiple time entries in one screen and automatically convert appointments into time entries. All of this makes time tracking easy.
What’s really unique about Bill4time is really the powerful back-end management functionality that allows you to keep better track of users, projects, clients, and accounting. Using the rich data and dashboards you can easily track financial performance, identify trends, review payment history, productivity, and more so you can more easily optimize performance. Reporting is powerful and flexible so you can be sure to stay on top of the productivity and financial status of your clients and projects.
Bill4time doesn’t have a large back-catalog of integrations but they do have the essentials; Quickbooks, PayPal, and Stripe, so if you’re using those systems, you’re in luck.
Bill4time offers a free 14-day trial and costs from $29/user/month.
Best for integration options
TimeCamp is a great free time tracking software tool (with freemium upgrades) that includes manual and automatic timesheets, a time diary, and automatic task detection capabilities. It’s well designed and easy to use with a clean and fresh design.
TimeCamp is based around projects and tasks, and you can set budgets for either so that you can easily track accumulated hours against projects and tasks. Vacation tracking and accrual tracking are supported with attendance and absence analysis so you can track who is in and who is out at any given time, see when they start and finish work and track their holidays.
Timecamp integrates well with invoicing and is able to automatically (or not) produce invoices based on billable hours with worked generated in TimeCamp. There is an integrated payment gateway and helpfully you can get a notification when a client views an invoice.
A great feature within TimeCamp is their pretty unique time management tools which give some great insights on what are people are actually doing; the most time-consuming websites and applications they’re using, with productivity analysis and detailed history on how people spend their time by using automatic computer usage tracking – this also enables you to evaluate time spent on documents, even tracking offline activity and the ability to approve or reject timesheets.
TimeCamp has got stacks of powerful integrations which make it a very flexible time tracking software tool. Integrations include project management favorites including, Jira, Wrike, Trello, Podio, Basecamp, and Asana – invoicing including Xero, Quickbooks, and Free Agent, as well as Insightly, Wunderlist, and Zapier.
TimeCamp is free time tracking software although paid versions cost from $6/user/month.
Best for agencies
Harvest is a very popular agency time tracking software tool used by thousands of agencies as their time tracking software solution. Its functionality covers everything from timesheets, invoicing, expenses, project budgeting, budget tracking, and reporting.
Harvest is popular because it’s easy to use and it’s been very well designed with a beautiful and intuitive interface that works across desktop and mobile. Harvest covers time tracking with clients, projects, and task tracking which power some powerful reporting so you can easily analyze your data including billable and non-billable time for specific staff, tasks, clients, and projects.
Helpfully, for complete budget tracking solution, Harvest supports expense tracking, invoicing, and timesheet approval; it’s a fully baked product covering the essential time tracking software tool functionality and stacks more. Harvest also has a sister product, Harvest Forecast, which has resourcing management features so you can schedule a team on projects, know who’s working on what and when and then easily compare estimates vs actuals and know exactly when a project hit its budget.
Harvest really excels at its integrations, offering more than 70+ integrations across project management with Jira, Asana, and Basecamp, accounting with Quickbooks, Xero, and Stripe as well as many others across issue tracking, CRM, productivity, communication, contracts and proposals, developer tools, and analytics and reporting. If you’re using industry-standard tools, you’re very likely to be able to plug in the Harvest add-ons to track time across your project workflow.
Harvest offers a 30-day trial and is a free time tracking software tool, although paid versions cost from $12/user/month.
Native time tracking feature built into all plans, free included.
ClickUp knows that time tracking is crucial for any business. This is why their native time tracking is available in all of their plans, including the free one! Tracking can be done within a specific task, or from any screen using the command center.
You can access the command center by going to the left menu and clicking on the lightning icon next to the search bar. Once you are ready to see time tracking reports though, you will have to upgrade your plan as the time sheet dashboards are part of the business and unlimited plans.
Note: you can still see time tracked in each task by looking at the activity log.
ClickUp offers native integrations with Slack, G Suite, Dropbox, and many more tools, as well as over 1,000+ integrations through Zapier.
ClickUp is free with limited storage for an unlimited number of users. Paid plans start at $5/user/month and offer a free-trial.
Budget Tracking for Project Management
A project budget outlines the expected income, expenses, and profit for your project. Project budget tracking enables you to monitor how much of your budget has been spent over time, to see how much is remaining and course-correct when necessary.
For example, imagine one of your project tasks took much longer than budgeted. If you didn’t realize this until the end, it could result in the project being over budget. But, if you’re tracking your costs and notice this when it occurs, you can try to offset those extra costs somewhere else in the project.
How to make a project budget
The income side of your budget is typically straightforward. There tend to be three primary types of project income:
- Zero income: If you’re running an internal project for your company, there is likely no income to track.
- Fixed income: In this scenario, the project has a set price. It may be paid in installments over the life of the project or in one lump sum.
- Cost-plus: These projects typically pay you for your costs plus a fixed markup for profit. This is most common for new or unusual projects where it’s difficult to estimate costs accurately. However, you will likely still have targets you’re expected to hit.
In a cost-plus scenario, your budget is more fluid, but it’s even more important to accurately track and report costs as the client will expect to see hours and dollars spent. If a task has what seems like a high cost, they may require more detail or even dispute the charge.
Therefore, even in cost-plus or zero income scenarios where you’re not worried about profit margin, it’s still important to create and track your project budget.
Types of project costs
Costs typically fall into two broad categories: fixed and variable costs.
Fixed costs are set for the project and will not change. For example, if you have a guaranteed quote for material, it’s a fixed cost.
Variable costs, on the other hand, change based on activity. Labor hours and subcontractor hours are two examples of variable costs. If they need to spend more time on the project than expected, the cost will go up.
It’s important to put all expected costs in your budget tracking tool and note which ones are variable, as these costs need the most monitoring.
You’ll need to see your costs as a meaningful level of detail. For most projects, this is at the task level. However, in some situations, you may prefer monitoring costs at a higher level, such as by employee group.
You will also want to lay out your budget over time to help track your progress. For instance, you may know your project takes 100 hours of design work. But if that’s 100 hours over three months, you may want to break it down into a monthly or even weekly budget. This way, it’s easier to spot variances early on.
Managing a project budget
Managing the project budget is one of the most difficult parts of project management, yet it’s a huge factor in determining its success.
The goal is to keep your budget in line throughout the course of the project so you can avoid falling into emergency mode at any point. This could include incurring a huge budget overrun that you have to fix or you may find yourself at the brink of project shutdown.
The following three processes are extremely helpful in keeping project budgets in check:
- Review the project budget at least weekly: It’s crucial to stay on top of the budget. It’s much easier to fix a 10% budget overrun now than a 40% budget overrun a month from now.
- Make your project budget high-profile: Make sure your team members know you’re closely tracking the project budget in detail. This will reduce the likelihood of non-project hours being incorrectly charged to your project.
- Manage project scope closely: It’s very easy for the customer to make a small request that unintentionally results in hundreds or thousands of extra dollars being added to your project. Remind your team that any “extras” need to be properly assessed for impact before they’re added to the project.
Why project management software with budget tracking is important
Your project cost is a key performance indicator (KPI). If you’re not actively tracking your budget, you may miss signs that your project is going off track until it’s too late.
Project management software with budget tracking allows you to automatically and continuously monitor your budget throughout the project so you’re aware of any budget variances in time to properly manage their impact.
Unfortunately, in many industries (such as construction), going over budget is the number one issue for most related jobs. Of course, poor budget tracking is not the only reason for cost overruns. Other issues may be:
- Missed project scope or scope creep
- Poor or inaccurate estimates
- Using the wrong resources
But budget tracking helps you identify problems as they begin to crop up. For instance, imagine you have a budget of 20 hours for a designer to complete an ad. But when you check on progress, you see that 10 hours have been spent, yet the ad is not half done. Maybe after investigating the cause, you discover that this designer is new so it’s taking much longer than it would for an experienced designer.
Now you have time to decide whether you replace the designer with someone more senior to try to recoup time, allow the overage and make it up somewhere else on the project, or find another way to stay within your total budget.
Let’s look at another example. Imagine that a task was budgeted at 15 hours, and your tracking shows it’s now at 15 hours, but not marked as complete. You check with your team and they tell you that the task is done, but the client has asked for additional work before it’s accepted. You can now tell your team to mark the task as complete and let the client know that what they’re asking for is additional scope, which means it needs to be created as a separate task with its own timeline and cost.
Not only does this help you avoid overspend, but it also avoids scope creep and keeps you on schedule.
If you couldn’t track spending in real-time, you wouldn’t have caught either of these scenarios early enough to properly manage them. That’s why it’s important to have your budget tracking somewhere visible — such as within your project dashboard — so you can easily stay on top of it at all times.
The right project management software is one of the best ways to prevent out-of-control spending and overrun costs. With budget tracking, you’ll always know exactly where your work stands and how much money and time has been spent, and you’ll be able to more accurately predict the cost and timeline for the entire project.
What is Budget Tracking
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.
Tracking your project cash flow can help you make informed financial decisions and optimize your project progress. By keeping a regular project cash flow report and using project cash flow to make decisions about investment, you can keep your business on the right track.