Making Project Budgets Realistic And Actionable

At a glance

• The genesis of unactionable project budgets.
• Persistent cost overruns, unrealistic estimations, and lack of accountability.
• End-to-end digitization of opportunity-to-cash cycle provides a neat solution.

Do you know that your actual project costs overshot their respective budgets only after projects are closed? Are your managers left with analyzing historical costs without any opportunity to prevent cost overshoots? If your answer is 'yes' to both the questions, read on.?

Your project budgets consist of costs of people, hardware, software, travel, overheads, etc. However, once a project is underway, all its expenses are usually incurred without any reference to their respective budgets. The project manager can know the actual costs only after a monthly closing report is available.?

Information silos in finance, project teams, HR, and other departments make your project budgets unactionable.

Project budgets are essential for finance people.

When individual project costs are added and rolled up to business units, locations, and enterprise levels, the finance department uses them to prepare the company's funding needs.

Finance people use project budgets to estimate profitability at various levels.

Project budgets serve other critical purposes too.

Let's go back to the opportunity stage. At this point, your sales and project teams estimate project costs and fix the project sales price. Once you receive the project purchase order, the estimated project cost becomes your project's budget.?

Once your project team starts working on the project, the team and finance people go on separate tracks. Their tracks intersect only at the time of monthly closing when actual cost reports are ready and after the project is closed. Post-facto analysis of cost overruns can occur, but costs are real, and you can do nothing retrospectively.?

There is neither any possibility of pre-emptive cost management actions nor any incentive for realistically estimating project costs.

Kytes incentivizes realistic project cost estimation and makes your budgets actionable.

Kytes is a professional services automation (PSA) software that does end-to-end digitization of your opportunity-to-cash business cycles. Your finance department maintains and updates databases of all unit costs and prescribes factors for apportioning indirect expenses. You can prepare cost budgets in local currency and factor in people's costs depending on their pay grade, skillsets, and locations. Kytes will apply necessary unit costs considering local laws. Kytes ensures uniformity in the way your people estimate project costs.

Once the project PO comes, the estimated cost becomes the as-sold project budget. From this point on, Kytes updates project costs as they happen. The PSA uses data from timesheets and data like travel costs per project and overhead expenses available in the finance system. Your managers can see the actual monthly and total project costs on Kytes dashboards. They can also see the remaining projected costs.?

Kytes makes current and future budget vs actual variance instantly visible. Your managers can quickly drill down, discover contributing factors, and act on them. For example,? projected cost overruns prompt the concerned project manager to review resource allocations and see if low-cost resources can be used.

Kytes brings your project and finance tracks closer.

With Kytes, your project teams continuously work with a complete picture of budget vs. actual cost. If your project cost estimation when submitting the proposal was wrong, it becomes evident now. Such visibility makes people estimate expenses more granularly to make them realistic.?

Kytes removes those invisible barriers between project cost budgeting, reporting, and management. Don't you need all that?

Do you wish to know more? Need a demo? Reach us at [email protected]