The Watt Studio

Budgeting has consistently been a task sandwiched between my daily responsibilities. With a background in engineering, my typical workdays revolved around collaborating with teams to solve problems or tackling technical issues solo. Occasionally, a project would emerge, whether in its feasibility and review phase or during development and initiation, requiring high-level or detailed budgets for cost assessment. Thus, I’d set aside a few hours that day to craft, format, and review the budget.

While there may be an extensive theory behind budgeting, I won’t delve into it in this post. Instead, I’d like to share key elements I’ve identified as crucial in the budgeting process based on my past experiences.

Familiarize Yourself with Software

While many use Excel or Google Sheets for budgeting, it’s essential to recognize that other software options exist. Excel, though unparalleled in budgeting tasks, may not be the best choice for every scenario. For instance, dealing with large spreadsheets or horizontal-shaped timetables might pose challenges. Using alternative software, such as Python modules, can offer advantages in terms of compact visuals and faster processing, especially with MB-sized files. Despite these considerations, Excel remains the go-to software for most budgeting needs.

In general, I am of the strong opinion that introductory courses on Excel’s usage should be integrated into school curricula due to its widespread applicability in various aspects of life, irrespective of one’s technical background.

Specify Project Start and Operation Dates

When creating budgets, it’s crucial to use numbers and financial indicators relevant to implementation dates. For instance, if products are part of the budget, costs at delivery should be considered rather than current costs or costs at the order stage. Operational costs should align with the time period under consideration.

Time Discount and Related Factors

When budgeting over a project’s lifespan, factors like inflation, taxation schemes, asset depreciation, and labor cost fluctuations over extended periods must be taken into account. Understanding how these variables impact the budget’s profitability outcome is essential.

Consider Hidden Factors

You should always consulting with the resident CFO or their team regarding any hidden costs that should be considered during the budgeting process. Expenses related to permitting, documentation, development, regulatory applications, legal fees, and more might appear insignificant individually but can accumulate over extended project durations, constituting a significant percentage of the overall budget.

I end by saying that project budgeting has been a welcome break from daily activities for me. Exploring new tools and visuals offered by various software has not only enhanced my skills but also streamlined the entire process, ultimately saving time for future budgeting endeavors.