2(d) Budgeting
Figure 1. Many projects will require that you budget money for resources to carry it out (CC0).
Your project may need some money or other resources to make it work. Especially if you scale your project after a successful action, money and resources will certainly be involved. But even in the project development, you may need to buy materials to make a prototype, or have something printed professionally. Or you may need to pay someone to provide you a service.
In any case, you always need to consider what resources you need in your project plan and for scaling, and determine whether the resources will cost money. Budgeting is part of most project planning and scaling processes and is usually included in the concept plans / concept notes you learned about in Module 2(c) and funding requests, which you will learn about in Module 2(e). Budgeting and funding go hand-in-hand.
What is a budget?
A budget is an estimate of the cost of resources needed to produce something or carry out an action over a particular time. A budget also lists estimated revenues that might come from selling a product or service as a part of your project. When your Youth Mayors project has revenues as well as costs, we say that the project is a social enterprise, a type of business.
The cost section of a budget, by itself, is often referred to as ‘a budget’, and this becomes the limit on the money that you can spend to buy materials (like paper or construction materials), technical gadgets (like a video camera) or simply to buy a tram ticket to do research or carry out an action in your community.
For your Youth Mayors and other projects, you will likely need a budget to implement the project properly and in time. Great projects from engaged students have failed simply because of poor planning on budgeting. Don’t let money get in the way of your success!
How do you plan a budget?
It is common to use a spreadsheet to make a budget. There is a Budget tool at the end of this section that you can use and adapt as a spreadsheet template for your own project.
A budget spreadsheet will typically include the following information shown in Table 1.
Table 1. Sample budget
These are the different parts of the budget:
Time period - it is important to include a time period for the budget. It may be the case that you are able to include budgets for multiple time periods in which case you can either put them all on the same sheet, or you can add new sheets using the tab systems at the bottom. Be sure to name the time period in each new tab.
Categories of costs - you need to break down your costs into groupings as in Table 2. This helps you really think carefully about all the possible expenses, improves transparency, and helps others understand what you are spending money on.
Table 2. Categories of costs for a budget
Figure 3. It’s always a good idea to have a reserve of money, in case things don’t go to plan (Diliff, CC BY-SA 3.0)
3. Planned costs, actual costs and calculating variances - Planning your budget is the first step to a successful project in terms of funding. However, you also need to document your actual costs to show your funders how the money was spent. You will also need to analyse your planned vs. actual costs, what businesses call variance analysis. It is very likely that your spending will be different from what you anticipated. It is almost impossible for you to calculate costs exactly, if only because prices change over time.
Variance analysis takes the budget for your project to the next level by helping you stay within your budget limits, as well as providing a learning opportunity for you in the project development process, and potentially providing the evidence you need to justify asking for more funding.
To do a variance analysis, you need to include a column next to your planned costs and revenues that notes the actual costs and revenues for the resources. You will document these actual costs and revenues as your project develops. The template spreadsheet tool below includes this column, plus one further which is called the variance. This is the difference between your planned costs / revenues and your actual costs / revenues.
If this number is positive for the budget, called a favourable variance, it means that you spent less than you planned or earned more revenue than you planned. In the Budget spreadsheet tool below, favourable variances show in green. If this number is negative for the budget, called an adverse variance, it means that you spent more than you planned or earned less revenue than planned. In the Budget spreadsheet tool below, an adverse variance shows in red. You can have variances for revenues, costs, and profits (though revenues and profits may not be a part of all projects). A simple analysis of planned vs. actual costs is shown in Table 3.
Table 3. Simple analysis of planned vs. actual costs
In Table 3, the actual costs for budget categories A and C are lower than planned. However, the actual costs of budget category B are higher than planned. As a project manager, you need to be aware of where you are over budget, so that you can look for compensation measures to stay within your budget by project end. In the worst case, where you cannot compensate by spending less elsewhere, you will need to seek additional funding to finance the project. In Table 3, we can see that the adverse variance in category is compensated by favourable variances in categories A and C, so that the total budget is not exceeded. In fact, this project has room to spare in case of other unplanned expenses down the road.
What if you break the Budget Template spreadsheet?
Be careful about using the Budget Template spreadsheet. There are formulas embedded into the spreadsheet that make total calculations for you. If you add more rows or columns, the formatting should remain. However, you should check the calculations periodically to ensure it is still working as it should. It is possible to ‘break’ a spreadsheet.
If you find that your spreadsheet is broken, and you do not know how to adjust the calculations to make it work again, ask a teacher or mentor to help you fix it. Math and science teachers use spreadsheets often, as do those in your school responsible for budgeting. They can be good sources to help you.
Remember that you can also create your own spreadsheet if you want practice doing this on your own, or if you have special requirements in your project that need a different format. Google Sheets is a free spreadsheet maker. Microsoft Excel and Apple Numbers are two other examples.
Practice / Project Activity
If you are not ready to make a real budget for your project, you can still practice using one. Make a copy of the budget tool below. Play around with adding items and numbers for costs and revenues, planned and actual, to see how the spreadsheet works.
If you are already deep in the planning process of your project, you can start to add your planned costs (and revenues if applicable).
Examples in different contexts
Reducing plastic in the household
However, the Budget spreadsheet tool could be used to compare some costs associated with purchasing plastic-free products vs. those with plastic packaging. The variance tool would be helpful here. Zero-waste products may (or may not!) be more expensive, which would be good for consumers to know.
Mitigating CO2 emissions in the school
- Cost of trees
- Cost of tools and materials needed to plant and care for the trees
The students were able to find a tree-specialist who volunteered time to work with them to select the trees and guide the planting.
Invitations to the tree planting and to the spring sprouting ceremony were sent via email, so no printing was necessary.
The ongoing care of the trees was organised and carried out by the students, so no additional costs were incurred.
Informing people with Down syndrome about social distancing during a pandemic
Tools
A budget spreadsheet with categories and formulas already embedded. You can adapt the template as needed for your project.
Displays for exhibitions and reports
Don’t forget to document your work. For a reminder about documentation, see Module 1(e).
Ideas for documentation in this section include:
Budget spreadsheet
Works cited
Diliff. “File:Eastern Grey Squirrel in St James's Park, London - Nov 2006 Edit.jpg.” Wikipedia, Wikimedia Foundation, 28 Feb. 2016, en.wikipedia.org/wiki/Vigilance_(behavioural_ecology)#/media/File:Eastern_Grey_Squirrel_in_St_James's_Park,_London_-_Nov_2006_edit.jpg.
Images for examples in different contexts source information:
Samoilov, Yuri. “Coronavirus.” Flickr, Yahoo!, 20 Mar. 2020, https://tinyurl.com/ya2ngksd. CC BY 2.0
Webster, Tony. “Plastic Bottles - Waste.” Flickr, Yahoo!, 16 Sept. 2012, www.flickr.com/photos/87296837@N00/7992944072. CC BY 2.0
XoMEoX. “Tree.” Flickr, Yahoo!, 28 May 2017, https://tinyurl.com/y8bw46ns. CC BY 2.0
