How to Keep Track of Projects Accurately When They Go Over Budget

| September 23rd, 2014 | , , , ,

How to keep track of projects that go over budget

Nobody wants a project to go over budget. But, despite our best efforts at project management budget planning, some projects do require more time and money than we had originally estimated. Our first priority is to complete the project. But once the dust has settled, we’ll want to go back and see what went wrong.

To figure out exactly why a project went over budget, we first need to make sure we are tracking our tasks and time properly from the beginning of the project. Secondly, we need to differentiate the budgeted work from the work that was done out of scope. Fortunately, Intervals makes it easy to differentiate the two scopes of work. In fact, Intervals provides two different ways to keep track of projects when they go over budget — to help inform how to track projects, manage and bill for overages.

Tracking overages using modules

Tracking tasks with the Out of Scope module

Intervals has a feature called Modules that allow you to create categories and assign tasks and time to them. This feature is most useful for segmenting your data into meaningful categories unique to your agency. Modules make it really easy to manage tasks and run detailed reports by segment.

To use this method, create a module named “Out of Scope” and assign to it any task that contributed to the project going over budget. These tasks and any time added to them will now be segmented. With just a few clicks we can find out where the overages occurred and how much time was spent.

For example, we can filter the task list using the “Out of Scope” module to find out which tasks are still lingering. And we can filter any of the reports by this module to see how much time has been spent on overages.

Tracking overages as unbillable time

Tracking unbillable time

Another method, ideal for agencies already using Modules for another purpose, is to simply mark the out of scope time as unbillable. Intervals differentiates billable time from unbillable time for this exact purpose. If you are spending time on a project, but don’t plan on billing for it. track that time as unbillable.

Unbillable time will still show up on reports, but it won’t count against the overall project total. If you do decide to bill for this time, you can run a report separately, or edit the time and set it back to billable. You have complete flexibility in what you do with the data. The important thing is to have it in the first place.

Tracking the time you don’t intend to bill has its advantages. It creates more transparency between you and your client. The data reassures the client that you are tracking their project accurately and responsibly, resulting in more trust.

What to do with the data?

Both methods presented above are practical ways to keep track of a project when it goes over budget. When adopting any new methodology, it really depends on which one best suits your workflow.

The bigger challenge you will have to address is how to bill for the overages. If you are working on a value-based pricing model you probably won’t be able to recoup the outstanding balance. But, it’s still important to track this data so you can make better decisions on the next project to keep it too from going over budget.

If you are billing your client by the hour, keeping track of out of scope tasks and time will give you more than enough data to report and bill the overages.

Photo credit: darkbuffet

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John Reeve

John is a co-founder, web designer and developer at Pelago. His blog posts are inspired by everyday encounters with designers, developers, creatives and small businesses in general. John is an avid reader and road cyclist.
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Michael Payne

Michael is a co-founder and product architect at Pelago. His contributions stem from experiences managing the development process behind web sites and web-based applications such as Intervals. Michael drives a 1990 Volkswagen Carat with a rebuilt 2.4 liter engine from GoWesty.
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