What types of Budgeting can I do? Tips to help understand the Budget Process

Now that you have installed PORTFOLIO, just what do you need to know about budgets? Here are some tips and tidbits about how budgets work, and what you may want to use or think about before entering that first entry.

Bottom Up Budgeting   Bottom up Budgeting is simply building from the lowest level up. PORTFOLIO will add up the budget to the higher levels as resources are added. The steps are to set up the project and phase.

Enter the resources needed at the lowest level. The example shows 10 hours entered for a Project Manager. The billing rate is coming from the rate table associated with the project. Notice the contract for labor is the same as the resource. This amount (1,150.00) is calculating the budget values up to the top project level.

As resources continue to be added, the hours and contract amount will change to reflect the new resources.

Once you complete the task of entering all your resources and you do not want the contract amount to change, you must click the padlock to lock that amount.

With the contract locked, if you add or modify a resource, the plus sign will appear as an indicator that the contract is not in sync with the resources. If you wish for the contract to reflect all changes, you must unlock the contract by clicking on the padlock and then click on the plus sign to bring everything into balance. Once everything is in balance, changes and additions to the resources will update the phase and project amounts.

Before unlocking and clicking the plus icon:

After unlocking and clicking the plus sign, the plus sign goes away once the contract and resources are in balance. Be sure to lock the contract again if needed.

Budgeting Prior to Resource
With many contracts, the budget amount is determined before deciding what resources are to be used. In this example, the budget is entered prior to any resources being added.

Once the resource is added, the contract will then be out of balance to the resource and the plus sign will appear. If you wish the contract to be in balance with the resources, you will need to click on the plus icon. Notice the plus icon is on all levels above the resource.

If you do not want the contract amount to change, you will need to lock the budget by clicking on the padlock or marking the budget final.

Top Down Budgeting
Top Down Budgeting is entered based on an overall budget for the project with specific percentages allocated to phases. Once the budget is entered on the project and the percentages entered on each phase, you can click the % icon and the budget amounts and hours will be allocated to each phase based on those percentage values. Typically if you are going to enter resources, allocate those initially on % as well.

Adding resources will not increase the contract amount. Once the resource is added, the contract will then be out of balance to the resource and the plus sign will appear. If you wish for the contract to be in balance with the resources, you will need to click on the plus icon. Notice the plus icon is on all levels above the resource.

If the plus icon is clicked to bring the contract and resources into balance, it will be for that phase level. Then the level above that will show a plus icon until the icon is only showing at the project level. This is important to know as this is based on the type of budgeting used from the beginning of the project - Top Down budgeting.

Existing Project Budgets
On existing projects, the plus sign should appear once the resource has been added and the contract amount is not in balance with the resources. That should happen on all levels higher than the resource.

If you do not want the contract amounts to change after they are correct, you should lock the phase or the entire project. On a project where the contract is entered prior to the resource, the contract should not change automatically. Only if the resource is entered first will the contract update to match the resource amounts. You will need to balance the upper levels as you balance the lower levels. This is not an automatic function.

Tips

• The fee rates are based on a hierarchy of rate tables, average rate from the Employee Type then average rate from Preferences. So if the resource is entered by a specific Employee Type and the rates are not entered on the rate table by Employee Type, there is no average rates entered on the Employee Type or in Preferences, no automatic billing rate is retrieved.
• If the budget is in balance, no plus icon will appear.
• If the contract amount is not to change once entered, marking the budget final or locking the contract will not allow the contract amount to change.
• If the contract is locked, the fee will not change. However, the hours and cost will increase on the budgeted amount if resources are entered with these values.
• If there is a work breakdown structure to sub phases, the lowest level sub phases must have a contract amount in order to invoice using a worksheet.

Another common scenario is to budget from the top down or bottom up as a starting point but then you may want to manually adjust to match the contract amount.

Example: Bottom up budget produces a $1,255 phase value, but you may want to bill $1,300. Simply over-ride the phase value thus producing an out of balance situation (+ sign shows).

This is just an overview on budgeting and resources, as each need may require evaluation of what is to be entered, how, and at what level.