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 Issue Date Nature of Amendment
No

1.0 13 December Original Version

2006

2.0 1 February 2008 Updates and revisions to reflect updated

template
 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 this
template. 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 to
plan spending ahead of time, we must first have an understanding of the project scope,
project timelines, resource requirements and an understanding of the procurement process
and 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 the
status of project budgets (and the larger portfolio) and therefore we are always in a position
to 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 not
known. By default the template will put monthly salary forecasts into all 12 months, if you
know 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 to
March.

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 Forecast
figure 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 Cost
Estimate’ column on the Tracking sheet. This enables a later comparison of actual
expenditure against the initial estimate.

Updating Progress
On the Forecast sheet, enter actual expenditure only as indicated by SAP into the Actual to
Date 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 a
later 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 is
unlikely that the hardware will be ordered and goods receipted in time. This expense will
most likely be incurred in the next financial year. Similarly if contractor expenses were
initially 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 3
months of the year (or $60,000 per month for the last 2 months, etc.). In most cases it will be
necessary to adjust the total forecast amount downwards.

As a final step, ensure that there are no values in the month columns prior to your reporting
date. For example, if you are updating at the end of March, there should be no values in the
cost 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 Date
column, 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 initial
planning 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 project
will be able to forecast expenditure being less than allocated, these funds can then be
redistributed 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 it
can bring benefit to your project.

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