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Budget planning example3/21/2023 ![]() ![]() Compare Billable and Non-Billable Time Entries to monitor Utilization Rate.Record and track all time logs and expenses.Compare Actual Project Cost, EAC Cost, and Estimated to Complete (ETC) Cost with the overall Project Billing.Set a 30% Profit Margin as a target to track.Add all labor-based payments to 3rd parties as non-billable expenses as well.Add them as fixed-fee activity billing costs with an extra 15% markup.Add them as actual non-billable expenses.For all fixed cost activities performed by 3rd parties:.Specify hourly billing rates for activities that should be billed based on time (both for internal team and 3rd-party contractors).Set Project Billing Type as Time and Material and choose ∺ctivity Rate as a billing preference.Monitor billable hours compared to total available hours to maintain at least 75% Utilization rate.Monitor overall internal project costs and maintain a 30% profit margin.Add a 15% billing markup for all jobs performed by vendors and contractors.Set different billing rates based on the type of activity performed (hourly or fixed cost).Different billing rates and fixed billing amounts need to be applied based on the type of activity performed. An in-house team, as well as 3rd-party contractors, will be involved. Scenario: A time and material contract has been signed for an IT Support project. Time & Material Engagement with a Profit Margin Goal Time & Material Engagement with a Profit Margin Goal 3. Record and track all received payments.Compare Actual Project Cost, EAC Cost and Estimated to Complete (ETC) Cost with the overall Project Budget.For high-risk activities, monitor and compare their Activity Actual cost with Activity Budget.Setup agreed upon payment schedule, i.e., 25% prepayment, 20% when the initial platform configuration is done, 35% when the training is completed, 20% when User Acceptance Testing is completed. ![]() Calculate Project Flat Fee based the desired 30% Profit Margin.Calculate Estimate at Completion (EAC) Project Cost: Labor Cost ($7,000) + Additional Project Budget ($1,000) = $8,000.Add the budget for all activities that have a previous demonstrated history of potentially exceeding estimated costs.Make sure all resources involved in the project have their internal rates specified.Specify estimated hours for all tasks (activities).Bill customer and track payments according to the agreed schedule.Make sure certain high-risk activities do not exceed their budgets.Determine the value of the contract using a 30% profit margin requirement.This project will only involve labor costs, with no expenses to occur. Implementation will be sold as a fixed cost contract. Scenario: The Customer Success team needs to implement and deploy a software platform for a customer. As the project progresses, compare the Actual Project Cost and Estimate at Completion (EAC) Project Cost with Project Budget to make sure youre staying on track.Your total project budgeted cost comes to $24,300.Combine estimated labor cost (24 hours * $50/hr = $1,200), additional contingency project budget ($4,500), and all planned expenses ($18,600).Set aside an additional budget for unexpected expenses and force majeure.Add planned expenses for each task in the plan that has any costs associated with it ( for example, accommodation booking, catering, canoe rental, etc.).Specify estimated hours for the tasks, where internal labor costs are expected ( for example, Marketing department acting as a profit center and charging internally for its work on the retreat signage).Monitor costs as the preparation goes on.Scenario: You need to organize a company retreat. Managing the budget for an internal project Managing the budget for an internal project 1. ![]()
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