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Winning at project budget management [agency guide]

Winning at project budget management [agency guide]

Effective project budget management isn’t just about dollars and cents. It’s also about achieving goals, building relationships, and meeting client expectations. Once mastered, you’ve got a powerful tool that can serve you in countless situations—think of it as your agency’s Swiss Army knife.

For the budget weary, don’t fret. Budget management is a discipline any professional can hone. All it takes is commitment and some trial and error. Before you start crunching the numbers for your next client project, consider these 4 factors.

4 factors to consider when developing a project budget that works for you and your client:

  1. Budget basics

  2. Importance of project budget management

  3. How to ask for your client’s budget

  4. Budget planning in project management

1. Budget basics

Most of us have a working definition of a project budget—anticipated costs of finishing a project by a set deadline. Typical budgets will include estimates for each part of the project, including labor, material expenses, licensing fees, operational costs, and more.

Keep in mind, your initial budget is a rough estimate of costs and should be as comprehensive as possible. It’s important that you and your client understand that budgets at this stage are fluid and can change depending on the complexity or scope of the project, evolving circumstances in the industry, and more. In short, budgets will always come down to the clock and the time it takes you and your team to complete a given project. Include realistic estimates for assigning labor and resources to meet your client’s timeline.

2. Importance of project budget management

The rewards of a solid budget plan are significant and more far-reaching than you may realize. Here are some positive outcomes when project budgets are streamlined to maximum efficacy.

Control costs

A well-managed budget gives you a clear idea where each dollar will go, putting you in prime position to allocate funds strategically. You’re better off negotiating anticipated costs and expenditures before starting a project than in the middle.

Optimize resources

More than just itemizing where money is going, your budget can become a roadmap that serves as a client brief. Ideally, the 2 documents can be used together. By breaking down each element of your project, you can alert yourself to potential challenges or unique demands and build your game plan accordingly.

Make project adjustments

As you create a plan according to client budgets, timelines, and your resources, you might discover areas that require rethinking or an entirely new approach. From streamlining content to expanding upon a feature, a thoughtful budget plan keeps you ahead of the curve and flexible when it comes to troubleshooting.

Get to know your client

Budget planning is a ripe opportunity to get well acquainted with your client. As you collaborate, you’ll develop a sense of their personality and temperament in addition to their finances. Understanding your client’s sensibility, the way they work and their communication style, can only strengthen your relationship moving forward.

Establish your M.O.

Just as budget planning allows you to get to know your client, your client is also getting to know you. Take this opportunity to demonstrate how you work. Define your terms of engagement, from your in-house chain of command to the number of touch points your client can expect.

Manage expectations

By breaking down tasks and expenses, you minimize surprises that may emerge as a project unfolds. You’ll avoid scope creep—a job slowly getting bigger than originally planned and agreed to—and minimize uncomfortable situations with stakeholders about deliverables.

Coordinate with your team

Putting together a budget often entails connecting and coordinating members of your team or subcontractors specially hired for the project. Use this chance to touch base with your team, brief them on the work to come, important deadlines, and give them a heads-up on you and your client’s expectations for the project.

Create trust

A well-planned budget is your strongest asset for creating transparency among all parties involved. As everyone signs off on key expenses, dates, times, and services, you establish a mutual foundation of trust which is vital to building healthy client relationships.

3. How to ask for your client’s budget

You and your client have much to gain from a well-managed project budget. But how do you get them to say how much they’re willing to spend for your labor?

No doubt, this can be an awkward subject to broach. Your client may hesitate or avoid the topic altogether, thinking it gives them bargaining power. Alternatively, a client may hold out for your initial quote in hopes that you’ll essentially bid against yourself. In many instances, especially early into a project, your client may not even have a concrete estimate of their budget and its scope.

Regardless of the situation, this conversation is key to your business’ sales discovery process and moving qualified leads through your agency’s funnel. Here are some essentials to keep in mind when prepping to talk about project budgets.

Do it as early as possible

While you may not want to request an exact figure during your first client interaction, you can’t wait too long. You need this estimate before you draft and present a complete proposal. Addressing budget as soon as possible will save both you and your client time and ensure you’re on the same page. From there, you can set realistic expectations, catering your services to best meet their resources.

Talk to the right person

This might seem like a no-brainer, but it’s often overlooked. Make sure your client contact is familiar with the project specs, allotted budget, as well as authorized to make important decisions in a timely fashion.

Share your approach to the work

Your client is learning about you, just as much as you’re learning about them, their project, and if you two will be a good fit. Now is a good time to clearly communicate your services as well as your work process. This is critical to building client trust, outlining project goals and expectations, and developing a solid foundation for when you actually talk money.

Showcase exemplars from your portfolio

Let’s face it, we’re visual creatures. Give your client a taste of what they’re getting for their money. Show examples from your portfolio that are similar to their project. Let them explore these websites, ask questions, discuss the challenges you faced, and give them reason to believe you’re a smart investment. There’s nothing more powerful than proof of concept.

Have a figure in mind

Once you have a general idea of what your client is looking for and the scope of the project, you should be able to draft a rough budget. Keep in mind, this is exactly that—a draft, not a contract. When sharing your proposal, be ready to outline what your client can expect from each subtask, clarify deadlines, cite industry-standard rates, and more. Some experts suggest “bracketing”, providing a range for a given task or project to allow for greater flexibility.

Don’t overthink it

Having a quote in mind makes budget-oriented conversations simpler. More than that, it will keep you from second-guessing yourself or letting emotions influence the process. Staying focused on your client’s project and its unique demands puts you in a better position to negotiate confidently.

Feel free to negotiate

You may get to a point where you and your client just aren’t in sync about the numbers. In that case, there’s nothing wrong with some good-faith negotiation. Regardless, stand behind the talents of you and your team. Use reviews, testimonials, and concrete examples to make your services and their benefits tangible. If you agree to a lower quote, consider asking for a lengthier timeframe or adjust your services/packages accordingly.

Stay positive

No matter how well you frame it, budget discussions or negotiations can get tense. You’re talking about money after all. Keep your tone positive and focus on the value you bring. This is a critical part of the sales process and the journey is all about getting to “yes”.

Don’t be afraid to walk away

You can only compromise and negotiate so much. Know when you need to draw the line, or you could sign on for a project that’s more trouble than it’s worth. It’ll be apparent early on whether or not you and your client see eye-to-eye on a project and its price point. Like any courtship, if it’s problematic from the get-go, it’s not likely to get better. Consider cutting your losses and moving on with other leads.

Understand the big picture

Agreeing on a quote is only the beginning of any project and hopefully many more to come. Remember every project sets the stage for more work with your client, or rave reviews that can lead to solid referrals. Let this domino effect work in your favor. Approach every discussion with the bigger picture in mind—you’re building lasting client relationships and a strong professional reputation.

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4. Budget planning in project management

Breaking large projects into smaller more manageable parts can serve as a guide for what needs to be done. This common technique, known as work breakdown structure (WBS), ensures all aspects of your project are aligned while improving productivity. Think of it as your project blueprint, containing all tasks, costs, and deadlines.

There are 2 approaches to the WBS model of project management, one focused on deliverables and the other on phases. The first approach works best when you want to highlight the relationship between deliverables and the work required, while the latter approach specifies deliverables unique to each phase of a project. Choosing a model simply comes down to personal preference—what makes the project manageable for you.

10 tips to effective project management

1. Define expectations

2. Be thorough

3. Use precedent

4. Stay connected

5. Expand your toolkit

6. Set measurable key performance indicators (KPIs)

7. Emphasize return on investment (ROI)

8. Involve key stakeholders

9. Expect the unexpected

10. Review and revise constantly