Successful Project Management

Part 7: Tips for Project Billing and Continuous Monitoring

Welcome back to the topic project budget!

This, my dears, is a huge topic which will be with us for at least one more blog article! ?

Today we’re going to talk about creating a helpful billing system, which in turn forms the basis for continuous monitoring. Like the last time, I’ve again asked controller and budget expert Romana Rongitsch for her input on this topic.

Expert Romana Rongitsch says…

The project budget has been approved and you can start with your project. Or “worse”: you are extremely successful and responsible for MORE than one project? That’s great! But you could easily lose the overview of the project budget.

Regardless whether you’re responsible for one or several projects, it’s advisable to take care from the beginning that the costs allocated for each project are thoroughly and completely documented.

Sounds rather unexciting and even a bit tedious? Unfortunately, it is. But extremely worthwhile and helpful if you’ve got a reporting deadline or an audit coming up.

First of all, think about what “identifier” you’re going to use for each project so you can easily and quickly assign the costs accordingly (e.g. project number, project acronym, etc.) And now we get straight down to the nitty gritty.

Recording personnel costs

Personnel costs are always the biggest cost pool, so let’s start with that. Regardless of the time recording system you’re using, make sure that, at the very least, the following information is included:

• The number of hours,
• The project identifier,
• Allocation to project and
• Allocation to work package

If you can’t record the hours in an electronic system, use one template – even if you’ve got several projects going on at the same time. This avoids double entries in different lists.

Agree on a date by which the lists must be handed in to you with all project personnel so that you have enough time for a plausibility check before an audit or a reporting deadline. If you’re using Excel tables, regularly check that the recorded hours tally with the leave and travel application data as well as the sick leave notices.

In the heat of the moment it’s easy to overlook times absent or to forget to record them in time. The advantage of continuous monitoring is that you can spot and correct mistakes in time. Not to mention the work it saves you ahead of a reporting deadline or an audit.

Here’s an example of one such time recording:

Once all lists have been controlled and consolidated, you will have a validated value for hours per co-worker that you can multiply by the respective hourly rate.

Engage your accounting department

Accounting records every invoice – obtain access to this data! You’ll save yourself a lot of time and nerves if you avail yourself of existing data instead of creating parallel lists and then still having to check and balance if individual items are queried. Ask your accountant to include the project identifier at the very least. This allows you to obtain a record of all costs assigned to your project at any time (often known as “accounting journal” or “itemized breakdown”).

I recommend that the project allocations are already made at the time of ordering. If you receive the delivery incl. invoice, note the project identifier on it. And in the event that the delivery is not correct, and the goods/services are therefore returned, make sure that a credit note is also assigned to the project.

Please ensure that the booking text contains concise information – and not just the supplier name – so that you can quickly and easily clarify what led to cost deviations after the fact. Digging through hundreds of receipts or constantly copying project-related invoices so that all related data can be traced is not something one absolutely has to have experienced!

Regular control saves you nerves

In the case of long-term projects, it is usually useful to go through the items assigned to the project at least quarterly and check them for plausibility. For shorter projects or a large amount of documents, you should do this monthly.

Analogous to hourly records, peaks before an audit or report deadline can be avoided and systematic errors can be detected in time. The greatest benefit, however, comes from the project management point of view – you can quickly see whether there are any cost deviations and can take appropriate countermeasures well ahead of time.

The best and most precise reporting doesn’t help if it isn’t suitable or used to steer a project. Questions that were relevant at the beginning of a project change under circumstances in the course of the project.

Take a step back from time to time and ask yourself which of these questions are still relevant and if you can still answer them based on the data you have.

Thanks, dear Romana, for this important article!

And now we can put our feet up for a while and let the project budget chunk to sink in a bit. 🙂 Enjoy the next couple of weeks, see you again soon here in the BusinessMind blog!

Yours, Birgit