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ITS PROJECT OFFICE

Project Budget Forecasting and Tracking

@ Monash

A guide to Project Budget Forecasting and Tracking

IT projects at Monash



ITS Project Office Project Budget Forecasting and Tracking @ Monash

Revision History

Version

No

Issue Date Nature of Amendment

1.0 13 December 2006

Original Version

2.0 1 February 2008 Updates and revisions to reflect updatedtemplate



Table of Contents

1.Introduction ............................................................................................1

About Budget Tracking..............................................................................1

Initial Planning...........................................................................................1

Updating Progress......................................................................................1

A Final Word..............................................................................................2

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ITS Project Office Project Budget Forecasting and Tracking @Monash

1. Introduction

This guide accompanies the file, “project-budget-tracking.xls”, and describes the use of thistemplate. The accompanying file, “project-budget-tracking-sample.xls”, is also a useful

reference to see sample information for a project in progress.

A budget tracking process should be put in place for all projects.

About Budget Tracking

Planning budget expenditure is integral to the broader project planning process. In order toplan spending ahead of time, we must first have an understanding of the project scope,project timelines, resource requirements and an understanding of the procurement processand policies of the university.

Budget tracking encompasses planning expenditure early in the project and monitoring / re-forecasting on a regular basis.

Re-forecasting regularly enables project managers and portfolio managers to understand thestatus of project budgets (and the larger portfolio) and therefore we are always in a positionto make informed decisions on spending and re-allocation of funds.

Initial Planning

Put known information into the Salaried Staff section estimating HEW levels and steps if notknown. By default the template will put monthly salary forecasts into all 12 months, if youknow this is not the case then adjust the forecast accordingly. If for example, staff need to be

hired and will start in April, then delete the formulas in the forecast section from January toMarch.

Put Non Staff Costs in including an estimate of in which month the expenditure will occur. If it provides extra clarity create sub headings and leave blank rows between groups.

At the end of this forecasting process the template will provide an End of Year Forecastfigure and a ‘Variance’ figure indicating a forecast over or under the Allocated Budget.

The ‘Actual to Date’ column remains empty at this point.

As an optional step, the forecast amounts for each month can be copied to the ‘Original CostEstimate’ column on the Tracking sheet. This enables a later comparison of actualexpenditure against the initial estimate.

Updating Progress

On the Forecast sheet, enter actual expenditure only as indicated by SAP into the Actual toDate column. If forecast expenditure has not occurred, it needs to be ‘pushed’ into a later month or revised accordingly.

At this point it is important to be realistic about what is likely to happen. For example, if software was to be purchased in May but gets delayed it is likely that it can be purchased in alater month with no problems.

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ITS Project Office Project Budget Forecasting and Tracking @Monash

If however, hardware purchasing was forecast for July, and gets delayed until December, it isunlikely that the hardware will be ordered and goods receipted in time. This expense willmost likely be incurred in the next financial year. Similarly if contractor expenses wereinitially forecast at $20,000 per month for July to December, but no expenses have been

incurred by October, it is usually not feasible to spend $40,000 per month for the last 3months of the year (or $60,000 per month for the last 2 months, etc.). In most cases it will benecessary to adjust the total forecast amount downwards.

As a final step, ensure that there are no values in the month columns prior to your reportingdate. For example, if you are updating at the end of March, there should be no values in thecost estimate section for January, February or March, this includes the Staff Cost section.These previously forecasted values need to either be represented in the Actual to Datecolumn, moved to a future month or removed altogether from the sheet.

As an optional step, update the Tracking sheet with Actuals and Commitments from SAP.

This will allow a comparison of actual financial progress against the estimates in the initialplanning stage.

A Final Word

Accurate financial forecasting and tracking adds significantly to the chances of success for your project. Significant overspends on any project are a cause for concern and importantly,ending the project with funds unspent should not be considered a positive. A well run projectwill be able to forecast expenditure being less than allocated, these funds can then beredistributed within the project or within a wider portfolio to produce business benefits.

The forecasting spreadsheet can look initially like an overhead that brings no benefit, but

being in control of your project budget not only brings benefit to the wider organisation itcan bring benefit to your project.

And if it all gets too much, contact the ITS Project Office and we will do our best to assistyou.

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