Budgets

General Best Practices for Budgets

• Every value within a cost document must have a scope of work or descriptive label attached to it that is explicitly clear, concise and correct.

• The level of detail required to support that cost is commensurate with the “need to know” basis of your audience.

• Tables are best and easiest to read, regardless of the level of detail.

• At the simplest level, a cost table could include the following:

or the following example of a more detailed cost estimate:

wherein the “item” may be a cost source code or budget code, or even a line item number to make discussing the budget easier (a navigational aid), and the “description” is sufficiently detailed to identify scope and quality.

Tables can become more and more complex the greater the number of items and level of detail, including possibly even the units that make up the internal spreadsheet formulas that determine the extended line item cost, such as:

• cost basis as a function of time (i.e., $100/hour)

• where the quantity and unit cost is further subdivided into labor, materials and equipment components with a formula supporting the total product of each component

• where overhead and profit are factored into the equations

• where general requirements costs as a function of productive output are factored into the unit cost.

• Sources of cost information can and should be footnoted where possible if generated from an outside source of information, including any limitations to applying those costs that the reader should know. Remember footnotes are deemed necessary information, but not important enough to place within the body of the budget.

• When budgets are accompanied by descriptive narrative, it is best to consider incorporating the table, or even sub-parts of the table, within the narrative to avoid the reader from having to flip pages to a summary budget report.

• Major sectors of a budget should be considered as separate sections within the context of the total project estimate, both as a narrative and within a table. For example, “General Requirements” of a construction project budget might have at a minimum its own dedicated line item, or at a maximum, a dedicated detailed table listing of each and every work item that comprises General Requirements, including the number of measured units (quantity), how the unit is measured (units), the unit price (cost), and the extended line item value, perhaps subtotaled to the section of general requirements, i.e. Temporary Conditions, covered within the work.

Completion Checklist

I. Analysis

Before creating your budget, does it includes the information the audience needs to know?

• Who are the people needing the information and why do they need to know?

• What is the nature of the information that needs to be conveyed?

• What is the best way to convey the information to the intended audience?

• Is cost to be itemized or summarized?

• How much is too much information? What information is important for this audience? (For example, the CEO may only need the total value and general scope, but the facility manager may need detail of the costs and detailed scope for their ability to coordinate internal work efforts).

II. Evaluation

Before submitting your budget, check the items below.

Content

• Can or should the budget be broken down into major/minor categories and sub-categories? If so, what are they (think of this as an outline)?

• Does every value have a descriptive/narrative scope of work or label attached to it?

• Do you have sources of cost information identified? (Source or cost codes, if necessary)

• Have you determined the level of appropriate detail needed for this audience?

• Is a clear and concise description of the scope of work, quality or other descriptor tied to each budget line item?

• Have you clearly identified items of ambiguity that may require further review and research? Such items as allowances and alternates figure prominently within a budget.

• Cost is not always considered in terms of currency, but rather in terms of metrics, such as cost/unit, percent of total cost, cost/measure of output, etc. Determine the metrics that best support your budget and are most useful to your audience.

Format

• Have you designed the table within which to present the information, appropriate to the information being provided?

• Have you checked your formulas that are embedded within your tables?

• Is the table legible within the document? This can be a common problem that lengthy tables have so much detail that when attached as an appendix, no one can reader the line items. If this is the case, simplify the table and create logical, separated sections.

• Have you identified your sources of information as appropriate? This can include databases, cost books, supplier references, etc.

• Is your scope for each line item of cost set to an appropriate level of detail for the reader? Remember, are you delivering this to the Board Room (less detail) or the Boiler Room (more detail)? That will affect the scope of work needed to be identified.

Appearance

• Is the final display of budgetary information clear and easy to follow? Is it legible?

• Is the table and the narrative properly joined in the document? (try to avoid the discussion on one page, and the budget summary represented by that discussion on another page)

• Is the budget properly segmented and “subtotaled” to ease its comprehension by the reader?

• Is that which should be footnoted, actually footnoted?

• Have you “test printed” it to see that it actually prints as it appears on your screen?

Source: The outline of this list was informed by Betty Ricks and Kay F. Gow’s Business Communication: Systems and Applications. 1987.

[2] This section informed by Alyssa Gregory’s “7 Tips for Writing an Effective Instruction Manual.” Sitepoint. 2010.

[3] This section was further elaborated by A. Peter Hilger, AIA, Faculty Director, University of Minnesota Construction Management Program