How to Manage Your Project Budget
Written by Christina Poulton
Approximate reading time: six minutes
Is there anything better than a beautifully organised budget spreadsheet? If you’re not a fan, try to at least make friends with your budget and think of it as your best project planning tool; a shopping list of what you need for your project (your expenditure) and where the money is coming from to pay for it (your income).
Putting together your budget
If you’re managing a project budget on behalf of an organisation you still need to own it:
Go through line by line, ask lots of questions and make sure everything makes sense.
Check all calculations and things like the number of days people are being paid for- so often there are mistakes and they’ll bite you in the bum later if you don’t catch them early.
It may be that the project has changed since the budget was drawn up, make sure it’s updated.
If you’re creating your own budget from scratch, go through the whole project timeline and make sure it’s reflected in the budget, not just the main activity. For example, if you’re doing information sessions before it starts do you need to budget for venue hire, captioning or materials? If you’re involving participants in the evaluation, do you need to budget for their time or travel.
In order to ensure an accurate budget which is easy to manage:
Be generous with your expenditure figures- if you think you might need £100 for printing, you could round it up to £150 to be on the safe side
Be cautious with your income projections- it’s easy to be overly optimistic with ticket income for example. Put your pessimist pants on and include income targets which feel manageable not stressful. There's a box office split calculator you can download here, to help work out your possible income (if that's applicable to your project).
Get quotes to give accurate figures wherever possible
Talk to the project team about how much time is actually needed for them to do the job. Often people guesstimate and then end up in tricky situations when they only have budget for 2 days of a designer’s time and actually they need 6 to do what’s required.
Talk to the project team about expectations of payment for prep time, meetings, travel time, subsistence, materials etc. Get advice from experienced freelancers. Independent Theatre Council, Musicians’ Union and Writers’ Guild of Great Britain, share union recommended minimum rates on their websites.
Talk to people who have done similar projects. Can they share their budget for ideas and what do they wish they had included?
Getting organised
You’ll need a system for keeping track of all money coming in and out, particularly if you need to report back to a funder. There’s also often a requirement to keep records for several years so you want to avoid scrabbling around for paper receipts down the back of a drawer! Try something like this:
Have one central budget that you keep updated. Avoid multiple files called “Real final final budget with updates(2)”- it’s a recipe for chaos!
A separate bank account for the project can be useful, but otherwise use a reference on all transactions for your project so you can pick out the relevant ones on your statements
Download your bank transactions regularly to update your budget based on actual spend
Keep a digital record of all invoices, receipts and online purchases, with a numbering system. Rename the files to start with this number and include the name of the person it’s from and the date it was paid. Your future self will love you forever when you’re trying to find things.
Set clear expectations for the project team, including payment schedules in contracts. Make sure they know when you need invoices and how often payments are made.
If you have team members who need to make purchases, agree the budget with them in advance and decide if you’re providing petty cash (they’ll need to keep records and receipts for everything) or if you’ll give them a pre-paid payment card.
What if you don’t have enough budget?
However carefully you plan, you’re probably not psychic and there are always unforeseen costs. Some things costing more can often be balanced by others costing less, and is fine with most funders as long as it’s not wildly different (check individual funder guidance).
Build a contingency into every budget; it’s your just-in-case money. Most people use somewhere between a 5% and 20% contingency depending on how unknown or complicated the project is. If you still don’t have enough money:
Is it life or death? The role of the artists/designers in the project team is to make the best creative work and this will often involve campaigning to the project manager for more budget. It’s a difficult part of the role but sometimes you have to say no. Make sure the team knows any overspend needs to be approved by you in advance.
Can you adapt something or cut something? If you’re short on budget for a workshop would it save on costs for it to be online rather than live, for example? Do you need to reduce project activity? If you need to make difficult choices, prioritise protecting the budget for paying people properly.
Cash flow can be an issue on projects- which basically means how much cash you have at any given time. If you’re relying on ticket income coming in at the end of the project, or a funder releasing a % of the money after the project has finished, even if on paper the budget balances, you may find the project short on cash. For bigger projects you may want to create a cash flow document before you start and adjust payment schedules and invoice dates accordingly. There are lots of great online tutorials for how to do this.
Keep a list of what was missing or under-budgeted to help with future project budgets.
Don’t forget
Finally, here’s a list of things that commonly get missed from project budgets. Check against your budget and best wishes with your project!
Room hire, refreshments and materials for consultation or project meetings
Design and distribution costs, not just print
Fuel, van hire and taxis to transport people or materials
Storage before or after the project
Evaluation costs- materials, software or someone’s time
Film and photography
VAT- if you get hire quotes they will usually tell you the net price and then when the invoice turns up there’s an extra 20% on top. Always always ask if the price includes VAT. If a venue is running a box office for you, they will normally take VAT off the ticket income before they pay it out to you- again always check.
Access costs- captioning, interpretation, translation or support workers
Environmental costs- people power to recycle or re-sell materials afterwards or to record and calculate carbon impact
Training, consultancy or mentoring for the project team