Project budgeting. Types and purpose of the budget. Project stage

Project budgeting should be understood as the definition of the cost of those works that are implemented within a certain scheme. In addition, we are talking about the process of forming a budget on this basis, which contains the established distribution of costs according to cost items, types of work, the time of their completion or other items.

Budget structure

How is the preliminary budget of the project? The structure of this is identified through the chart of accounts of the cost of a particular program. As a rule, in order to determine it, it is enough to have a traditional accounting estimate.

Budgeting is considered a cost plan or cost bookmark. This means that after preliminary planning you need to understand how much, when and for what exactly the money will be paid. Therefore, in this case, it is possible to use any methods of representing losses. However, it should be remembered that they must meet the practical requirements of stakeholders interested in them, as well as established standards. In addition, they should answer those questions that interest project investors.

Budget Presentation Forms

Both the planned and the actual budget have certain forms of presentation. So, among them it is important to note the following:

• Schedules, which are a kind of cost plans;
• loss distribution matrix;
• bar graphs of expenses;
• similar graphs of cumulative (cumulative) losses;
• linear diagrams of cumulative costs distributed over time;
• display of the structure of losses of a circular type.

It is worth noting that at different stages of the development of the project, different design of design and working documentation is relevant. The fact is that we are talking about the development of different types of budgets. Between themselves, they differ in both the required accuracy and purpose. It is worth noting that the permissible budget error becomes much smaller as the project develops.

Varieties and purpose of budgets

The reduction in error can be argued by the data from the table below. So, consider the purpose and main types of budgets.

Project budget and cost estimates

It is interesting to note that the project budget is similar to the estimated current costs of one business element of the company. The main difference here is that it traditionally covers it completely, that is, from start to finish. In turn, the budget of a business unit is formed annually or quarterly. For the most effective control, it should be divided into two components: direct costs and indirect losses.

The first type of budget is a key means of management and control for project managers, as well as directors of the functional units that take part in it. This includes the costs (transportation costs, salaries, and so on) of all who are included in the program team. In this case, each of the entities performs separate tasks.

It is worth remembering that when justifying cost items, the following points are taken into account:

• the cost of materials that are purchased;
• the amount spent on production;
• the cost of deviations from the usual use of technology;
• the amount spent on putting the product into operation;
• cost of supplies;
• other costs.

In turn, direct costs should be presented as follows:

• in a broken form - exactly according to the structure of the project to the level of the tasks performed;
• include weekly expenses on employees' salaries, materials (manufactured under a contract or acquired) and other for each component and tasks of the project of intermediate importance;
• include overhead costs directly related to the payment of materials and labor;
• summarized in accordance with various tasks performed by participating structures;
• provide management reserves (in other words, leave a certain reserve of value and time just in case).

The importance of the budget process

Project budgeting puts significant pressure on both its managers and departments. The fact is that it puts forward such an alternative: if we fit into the budget, we act efficiently; if we exceed it, the work is poorly executed.

Nevertheless, this requirement is often not applicable to the actual budgeting of the project. The fact is that budgets are both formed and implemented under certain pressure from a number of factors, both subjective and objective.

For example, a project manager who has been hired is often forced to accept budgets developed and adopted without his participation, even if they seem unrealistic to him. Otherwise, the employee may be refused a contract. Nevertheless, if he agrees with the budget, which obviously does not meet the specified deadlines, as well as with the available resources, then as soon as the achievement of certain results requires expenditures higher than the planned funds, the employee is forced to explain this problem, despite the fact that initially the budget was set to an extremely low level.

It is worth remembering that budgeting a project can be rational. In this case, the purpose of the budget is primarily to establish the true cost of the project for the company. Therefore, if the person managing the project accepts a budget that will significantly exceed the 15–20% margin of error acceptable for the cost justification phase (information from the table above), it is very likely that the situation will not be limited to explaining the reasons for this excess to senior management. At the same time, the project manager is likely to lose his job.

How to avoid this?

To avoid this situation, M. Thomsett, an American scientist, offers managers to formulate their own project budgets. At the same time, he indicates a number of reasons for this behavior:

• You are responsible for reporting in accordance with future project costs and the ability to spend their budget. This will become impossible if you work with a predefined budget.
• As a project manager, you better than other employees should have information about how much a particular project is worth. The budget you set is considered a monetary measurable goal. It should satisfy you according to such parameters: to give the opportunity to measure the success of the project and be a way to measure the competence of the manager (that is, you).
• You should include some assumptions in the budget line items. This is crucial if future justifications for specific costs play a role. It is worth adding that the assumptions are compared with the possibilities for the current period, while possible complications are not taken into account. Only when you will have the opportunity to compare at precisely this level, the budget process will function in accordance with the intended plan.

Drawing up, tracking and execution of a financial plan

You need to know that project budgets are formed, tracked and executed separately from the financial plan of units involved in the business, the company as a whole.

There are reasons for this:

• Projects do not have the ability to repeat. The budgets of departments and units are formed annually. Often they are reviewed once every six months or more often. Projects end their existence immediately after their execution. The fact is that the implementation time of the program is not tied to the fiscal year. Revision of the budget is undesirable. The exception is cases when gross errors are detected in the initial version or with a sharp change in the environment (it is in it that a specific project is implemented).
• In the hands of the manager - direct control over budget execution. It is worth noting that the financial plans of departments and divisions, as a rule, depend on the relations that develop between several services: the execution department gives a cost limit to a particular department based on information provided by another department; however, top management makes decisions about personnel and the system. The project, on the contrary, uses the budget in accordance with two directions: the use of the resources that are available (achievements and staff), they are already included in the disposal and the budget of the department, and the limited use of external resources that are temporarily attracted. Hiring an additional employee translates into fixed costs in any case; an additional unit of staff for the project typically involves the forces already available in the service.
• The success of budget execution is directly related to the impeccable adherence to the project action plan, as well as the resource use schedule. It also depends on how well the manager has planned the implementation of each phase, as well as on whether the employees participating in the project team adhere to the established schedule. If the implementation of this or that stage or work as a whole is delayed due to the need, for example, in human or temporary resources, than was originally determined, this is one way or another reflected in the budget in an unfavorable way, that is, in the form of an increase in the cost of the project.

Such rules, at least in the case of an ideal situation, should be used by managers of all services of the company who have their own budget. It is worth knowing that each of them is responsible for the absence of exceeding the budget level and, consequently, cost overruns. However, in practice, only a smaller part of firms strictly follows this rule. On the other hand, only a few companies allow department directors to set the budget level that is really needed for a project being executed in a department.

Tenders, Negotiations and Agreements

Further, it is advisable to consider the climax of the project: the organization of tenders, special sites, as well as the conclusion of agreements on cooperation and partnership.

Tender should be understood as competitive bidding, during which the choice of suppliers of marketable products and services is implemented. Municipal and state customers carry out their activities under the 44- “On the contract system in the field of procurement of goods, works, services to ensure state. and municipal needs. "

State corporations, organizations that implement regulated types of activities, natural monopolies operate under the law 223- “On the procurement of goods, works, services by certain types of legal entities. persons ”(for example, construction tenders).

Special sites

Commercial structures operate within the framework of civil law relevant in the Russian Federation. They post information regarding their plans on tender sites. Both individuals and legal entities have the right to participate in procurement, which fully complies with the requirements of the customer and Russian law.

There are various tenders: open (that is, for all participants), for example, an open tender, request for quotations, electronic auction, request for proposals; closed (that is, for a limited number of persons), for example, limited auctions and tenders. Procurement can be carried out both in electronic form and in paper.

It must be borne in mind that such an event requires serious preparation, in particular, legal, financial and technical. This is necessary in order to ensure the application and execution of the contract. Therefore, managers should initially set their staff to team work, because the final result depends on the coordination of operations carried out by employees.

The main stages of the tender

Participation in such events can be represented schematically as follows: Market analysis → Selection and further receipt of an electronic signature → Registration process → Search for a tender site → Preparation of collateral in a financial plan → Establishment of a special account (this is necessary for procurement participants in accordance with 44-FZ) → Preparation and subsequent submission of an application for participation in the procurement → Directly appearing in the tender. The final step, of course, is to get the result.

Consider the main stage of the presented list: participation, for example, in a construction tender. This will be an electronic auction under 44-FZ. At a predetermined period, the customer begins to consider the applications of participants. When your bid is considered eligible to participate in the auction, you should calculate the minimum price level for which you are ready to supply a building product or provide appropriate services, organize work within the framework of this tender.

The electronic auction is held in real time. So, within ten minutes after the submission of the last bid for the price, the participant has the right to make his own proposal on the “auction step” online: from 0.5 to 5% of NMCC. In other words, the step that can be taken at a time should not exceed 5% of the initial maximum price of the partnership agreement (cooperation) indicated in the notice.

In accordance with the results of the auction, a protocol is drawn up. After the auction is considered completed, the stage of consideration of additional parts of the applications begins.

Conclusion

So, we examined the category of budgeting: purpose and types of budget, stages of the project. In addition, the main stage was disassembled in more detail. It is worth noting that even a beginner can win a tender. How to put this into practice?

Electronic bidding involves the presence of customers, that is, money. However, the tender excludes informal relationships. It will not work out in any way. If the conditions specified in the contract are not fulfilled, you can lose the agreement, lose money, and also miss the opportunity to participate in other tenders due to disqualification. Beginners often violate these rules due to banal carelessness.

First you need to get your hand on tenders that do not contain strict rules. For example, at the auction of a commercial plan. Only after that it is advisable to proceed to serious tenders, which are regulated by the procurement law in accordance with 44- and 223-. The main condition for victory is nothing but attentiveness. First of all, you need to think about the quality of work, and not about the amount of the agreement.

Imagine that you still won. You have a contract in your hands. Will the company be able to find additional power and strength to execute it without problems? And if not, how much money will be spent on hiring workers or renting equipment? Will the contract remain profitable?

It is worth remembering that among the mistakes of tenderers, the key ones are such as violation of the established deadlines, inattentive study of documentation, attempts to take part in many tenders at a time, malfunctions of the technical plan, and bidding at a loss. All this can lead to adverse consequences. That is why it is necessary to warn all of these shortcomings in advance.