Project Budget:Overview

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Introduction

Managing the project budget is a critical factor in successful project delivery. A well-planned budget helps project managers control costs, reduce overruns, and ensure optimal resource utilization. Zoho Projects offers robust budgeting tools that allow real-time tracking of planned versus actual costs, multi-currency support, and seamless integration with accounting software like Zoho Invoice and Zoho Books.

Step-by-Step Instructions

 

Why Project Budgeting Matters
Project budgeting enables managers to:

  • Track costs accurately and keep spending on target.
  • Identify cost variances early to avoid overruns.
  • Generate invoices based on real-time project data.
  • Manage projects across different countries using multiple currencies.

Use Cases

  • Construction: For a mid-rise apartment project, budgets are set between $180 to $270 per square foot. Managers track expenses to avoid overspending.
  • Apartment Maintenance: Maintenance teams calculate expenses from residents’ charges and ensure monthly costs stay within the budget.
  • Software Development / IT: A project manager overseeing a $1 million application development can monitor expenses against the set budget to prevent overspending.

Benefits of Using Project Budget in Zoho Projects

 

  • Monitor project budgets and keep them on track.
  • Compare planned costs against actual expenditures with intuitive reports.
  • Bill clients based on staff hours, fixed costs, or logged task and issue hours.
  • Enable real-time budget alerts and notifications.

Budget Types Supported


Zoho Projects supports multiple budget types to fit diverse project needs:

  • Based on Project: Set fixed cost and budgeted hours for the entire project, including a revenue budget.
  • Based on Phase: Set cost, revenue, and hours budgets per project phase; overall project budget aggregates all phases.
  • Based on Task: Allocate budgets and hours for individual tasks; project budget sums all tasks.
  • Based on User: Assign cost, revenue, and hours budgets per user, editable during user addition or later.

Billing Methods in Zoho Projects


Zoho Projects offers flexible billing methods for accurate budget tracking and invoicing:

  • Based on Staff Hours: User-specific rates determine project billing.
  • Based on Project Hours: A fixed project rate multiplied by total hours logged.
  • Fixed Price for Project: Clients are invoiced a fixed amount; requires Zoho Invoice/Books integration.
  • Based on Task/Issue Hours: Billing is per hour rate set for each task or issue, suitable for projects with varied service rates.

Enabling and Configuring Project Budget


1. Click the settings icon in the top right corner.
2. Select Project & Budget under Portal Configuration.
3. In Budget Settings, toggle Enable Project Budget.

 

Note: Project budget is enabled by default for admins. Other users may require permission adjustments.

Budget Threshold and Overrun Notifications


You can receive email alerts when the actual cost exceeds specified thresholds:

  • Toggle Budget Threshold Email and Budget Overrun Email in Budget Settings.
  • Customize email templates if needed.
  • Save your settings.

Setting a Budget for Your Project


1. Navigate to Projects and click New Project.
2. Enter project details and select currency.
3. Choose Based on Project or other budget types as needed.
4. Enter budgeted hours, cost budget, and threshold limits.
5. Select a billing method and fill in the required rate or cost information.
6. Click Add to create the project with budget settings.

Understanding Budget Calculations and Forecasting


Planned Hours: Total work hours scheduled.

  • Actual Hours: Total billable logged hours.
  • Planned Cost: Planned hours × Cost per hour.
  • Actual Cost: Actual hours × Cost per hour.
  • Cost Variance: Difference between planned and actual costs.

Forecasting


Forecasted costs and hours predict the project’s completion cost based on current progress and actuals:
– Forecasted Cost = (((100 – % completion) × planned cost) / 100) + actual cost
– Forecasted Hours = (((100 – % completion) × planned hours) / 100) + actual hours

Viewing and Tracking Budgets


You can view project budget details in multiple locations within Zoho Projects:
– Project list page (consolidated view).
– Task and phase list views.
– Detailed task views.
– Budget Status graph on the project dashboard.

Budget Status Tags


– At Risk: Actual < Budget but forecasted cost/hours > Budget
– Overrun: Actual cost/hours exceed budget
– Surplus: Forecasted cost/hours are within budget

These tags help quickly identify project financial health and are visible in dashboards and filters.

Managing Budget Overruns
To manage budget overruns:


– Navigate to Tasks or Phases.
– Filter by Overrun in the budget field.
– Approve or reject timesheet entries to ensure accurate billing.
– Billable hours update actual costs automatically in real time.

Editing Project Budgets


Budgets can be modified anytime by:
1. Navigating to Projects.
2. Hovering over the project and selecting Edit Project.
3. Adjusting budget details as required.

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