How do I create a budget that fits my project’s needs, and manage it tightly?

Before starting a project, you need to get a proper budget in place. But what type of budget is right for you? And how do you create estimates that will not come back to haunt you?

The first thing that you need to understand is that different businesses need different budgets. A freelance developer can have a very straightforward budget – X hours for a fixed rate – while a film crew may work by the day, including several fixed expenses. Then there are ad agencies, who may describe their budget in a combination of money, expenses and hours.

If you’re using a software solution to track your hours, it is mandatory to pick one that can actually handle these different scenarios, as many tools will not allow you to express your budget in both time and money.

Another question that will vex the most experienced project manager is that of budgeting realistic estimates. So, how do you do that? The reality is that humans are terrible at predicting the future, and will generally underestimate project duration if the job at hand is just a little complex. The easy solution is to double any seemingly realistic estimate beforehand, but that is a crude tool; the future is inherently unpredictable, and in general it’s better to chop down projects in smaller chunks and manage expectations at any junction, adjusting budget and planning to account for recent developments.

As far as we know, the only time tracking solution out there that allows you to do both flexible budgeting and continuous expectations management is Yanomo, a tool that was initially developed for General Electric. And we’ve looked around: has one field for rate and one for hours, and doesn’t let you add multiple rates to one project. Harvest lets you define if the budget is in hours or in money, but you can’t have both. Let’s Freckle lets you use hours – and you can only enter rates when it’s time to send the invoice. Embedded data.

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