Budgeting for IT Projects involves the collection of a lot of data and requires many updates to properly track expenditures. There are many items that need to be included in a budget for an IT project. Once all of the data is collected and put together in a workbook or tracking software it can be approved by the business’ financial leaders. The approved budget then becomes a working document or baseline that can be referenced for quarterly reforecasts. At regular intervals, the information is updated with amounts applied to the budget to date and the remaining balances. This information should be reported back to management so that they are aware of any costs that are in danger of becoming over budget.
Gathering your Costs
A list of all possible costs should be created. Estimates need to be obtained from vendors. All hardware, software and implementation costs must be quoted. The quotes should include at least the first year’s operations and maintenance expenses. Implementation costs should include details of the vendors travel expenses, end user training, admin training, professional services fees and any licensing costs involved.
Salaries of internal employees or contractors involved in the project need to be captured along with the percentage of time they will work on the project. Internal costs for environmental services must be obtained. If you are adding new hardware, determine the amount of electricity it will use and any impacts to heating and cooling systems. If the system is mission critical, obtain costs for adding the hardware to an uninterruptable power source. Depreciation costs for hardware, land, buildings and other equipment must be calculated and maintained. Any other indirect costs such as administrative fees, legal fees or creative services charges should be estimated as well. SME accounting Singapore can also be helpful for your project. It is understandable that hiring your own accountant for your business can be costly on your end. Hence, it is advisable top just outsource accounting service. You will get a lot of benefits from doing so.
Many projects benefit multiple business units. If costs must be shared across different teams or businesses an allocation worksheet should be completed. It should identify the percentage of the costs that should be charged back to each appropriate business unit.
The intent of a budget is to track and control project costs. It can be done as frequently as required by the company. Depending on the size or timeframe of the project a monthly forecast may be required or a quarterly reforecast may suffice. It is important to keep track of variances between what was budgeted and what has been spent so far. If you start to have scope creep from other projects, your hours spent by project members may greatly increase. If all necessary pieces of hardware or labor weren’t identified at the start, unexpected costs can derail a project. Even if all else goes well, a project that comes in over budget can be seen as a failure.
The best way to track your costs is to keep updating the amounts spent year to date and the amount remaining for the year. You can use these numbers from the last reforecast of the year to help predict the next year’s budget dollars.
Your project may go smoothly for end users and you may install or upgrade a great product, but if you are over budget it doesn’t look good. A project that comes in at budget or slightly under budget will be viewed as much more successful even if it has a few hiccups. As long as management is kept informed of variances and all costs are accurately maintained it will be a much more successful project. Using spreadsheet software or any other budgeting software will help keep your project budget on track and help keep end users informed. Having the proper controls in place to review your project budgets will help you have a highly regarded project team.