What are some common budget analysis methods and how do you choose the most appropriate one for your program?

2 Cost-benefit analysis

Cost-benefit analysis is a method of comparing the costs and benefits of different alternatives for your program, and selecting the one that maximizes the net benefit. It helps you justify your program, and ensure that it is aligned with the strategic goals of your organization. To conduct a cost-benefit analysis, you need to identify and quantify the costs and benefits of each alternative, and discount them to their present values. You can use a formula or a software tool to calculate the net present value, the benefit-cost ratio, or the internal rate of return of each alternative. You should also consider the non-monetary and intangible factors, such as the social and environmental impacts, and the risks and uncertainties. Based on your analysis, you can rank the alternatives, and select the one that best suits your program.

3 Earned value analysis

Earned value analysis is a method of measuring the progress and performance of your program, and forecasting its future outcomes. It helps you assess the scope, schedule, and cost of your program, and identify any deviations or issues. To conduct an earned value analysis, you need to define the work breakdown structure, the baseline plan, and the performance indicators of your program. You can use a software tool to track and record the actual work done, the actual cost incurred, and the earned value of your program. You can then calculate the variances and the indexes for each performance indicator, and compare them with the thresholds. You should also analyze the trends and the projections, and estimate the completion time and cost of your program. Based on your analysis, you can report the status, and take corrective actions if needed.

4 Budget analysis tools

Budget analysis tools are software applications that simplify and automate the budgeting process, providing useful features and functions. Microsoft Excel is a widely used spreadsheet program that allows you to create and edit budget templates, perform calculations and formulas, and generate charts and graphs. Microsoft Project is a project management program that allows you to plan, schedule, and monitor your program activities, resources, and costs. QuickBooks is an accounting program that allows you to record and track your program income and expenses, and generate financial reports and statements. Smartsheet is a cloud-based collaboration program that allows you to create and share budget worksheets, dashboards, and reports. All of these tools can be used to conduct budget variance analysis, cost-benefit analysis, and earned value analysis, by using their built-in functions or add-ins.

5 How to choose the best method and tool

When it comes to budget analysis, there is no one-size-fits-all solution. The best method and tool for your program depends on various factors, such as the size, complexity, and duration of your program, the availability and reliability of the data and information, the purpose and scope of the analysis, the preferences and expectations of your stakeholders, the resources and skills of your team, and the cost and feasibility of the method and tool. It is important to consider these factors carefully, weigh the pros and cons of each option, and consult with your team, sponsor, and clients to solicit their feedback and input. Ultimately, you should choose the method and tool that best meets your program needs and provides accurate, timely, and relevant information.