Expenses are an essential part of any project. In this video, Jennifer Bridges, PMP, explains how to better manage and track your project expenses.
In Review: How to Track Expenses
The last thing you want is to have your pay or bonus cut because you didn’t keep to the project budget, as Jennifer learned from experience. To avoid that, she discussed six ways to track your projects expenses:
- Establish systems
- Provide online access
- Identify budget items
- Create budget
- Assign someone to track
- Track and control in real time
These are the critical items that you have to set in place if you want to track your budget. Use a template and don’t neglect to be very detailed-oriented. If you overlook something it’s you who is going to have to pay for it.
Pro-Tip: The use of a project management software tool or spreadsheet where you can note and track expenses is, of course, key. Also, know what has to be done, when it’s going to be done and who is doing it. If you have a system in place you can stop a fiscal leak before it becomes a deluge.
Take it further: Check out Debbie Madden’s article in the Harvard Business Review, Your Agile Project Needs a Budget, Not an Estimate.
Thanks for watching!
Hello. I’m Jennifer Bridges, Director of ProjectManager.com. Well, welcome today to our whiteboard session on “Expense Tracking for Dummies.
Have you ever had your pay or bonus cut because your project budget was off track?
Well, I have. So, these are the tips that I created for the biggest dummy: me.
It’s a topic that we all pretty much – I don’t know – don’t really like. In my world, I used to have a department who managed the expenses for me. So, my biggest lesson learned is when I had to plan my projects on my own and I couldn’t rely on the organization. So after my pay was docked then I learned this quickly.
I actually made it harder than it really is, so we boiled it down to dummy terms. There are six steps that I think are important. Number one is establishing a system. By using some kind of project management software or Excel, somewhere that you can pull all of the expenses together and have some way to track it by some system and some method of how it’s going to be done, when it’s going to be done, who it’s going to be done by. So, it’s critical to have a system in place.
Number two, provide online access, not only for yourself if you’re a traveler. I mean, for me I travel a lot so I’m out of the office so I need to be able to access the expense items and the budget online, as well as my team members.
Number three, identify the budget items. So, it’s important to think through all of the budget items or the expense items that are going to be tracked on your project. You have to sit down and think about what equipment – because that’s an expense item – what people, what real estate. Are you buying a building? Are you leasing a building? Are you renting a building? Any kind of legal items, is this a marketing or this is where you have intellectual property? Something where you have contracts where you have to have legal expenses?
Then there’s travel. Those are some of the things that we forget about. When we have people on our team who travel. They’re in meetings. So, those are some of the little items that we tend to forget when we are creating our budget items.
So then, once we have identified all of the budget items and we put it in our system, whether it’s our project management software or Excel, then we go through and we make sure we’ve identified any and all fixed costs or fixed expense items or variable costs and expense items. Know, realize, which ones may vary depending upon certain things and identify those and create the budget.
Once the budget is created it has to be approved by certain parties, whether it’s your change control board, your stakeholders. Whoever has the authority in your group or organization to approve that and make sure that the budget or expense items that you plan to track or utilize on your project actually are approved.
Then, assign someone. A lot of times I’ve found where myself or different groups or teams have problems is there’s really no one assigned to track the expense items. Or if someone has ordered equipment or are responsible for real estate or the legal, there’s no one there to track that. So, it needs someone’s name, a person’s name, not just a group or organization, but an individual who’s going to be accountable for tracking those expense items.
Number six, track and control in real-time, so by providing online access to not only yourself but your team members and the people who are responsible or assigned to tracking certain expense items. Then by tracking them real-time, and then once you find something is way off budget, you’ve either over spent or you’ve under spent, then you have some way of controlling that and escalating it in a timely manner.
So, those are six of the items that I feel like are critical. Again, sometimes we can make it harder than it really is. So, if we boil it down to dummy terms it’s not really that hard. But the thing that also is helpful is to use templates and pay attention to details, details, details. The devil truly is in the details. So, if we overlook certain items then we might find ourselves, or you may find yourself like I did of being docked in your pay or your bonus, and we don’t want that to happen.
I certainly don’t want it to happen you and I don’t ever want it to happen to me again. At ProjectManager.com, we’ve tried to incorporate some of the best practices and tips for dummies for expense tracking. So, if you need any tips, tools, or techniques to help manage your expense and track your expenses then visit us at ProjectManager.com.