Copyright 2010, The World Bank Group. All Rights Reserved. Budgeting Statistical Projects Section A...

Copyright 2010, The World Bank Group. All Rights Reserved.

Budgeting Statistical Projects

Section A

1


Budgeting

The development of detailed cost estimates for each task in order to prepare a realistic

estimate of the total cost of the project

2


Three Stages of Project Budget

• Initial rough estimate during development of project scope statement

• Detailed budget as output of detailed work plan

• Final approved budget - baseline

3


Types of Costs

• Direct costs are costs that are directly attributable to the project

• Indirect costs are costs that cannot be traced directly to the project

4


Calculating Indirect Costs

• Shouldn’t be a straight percentage of the total project budget

• Can be included as a percentage in salary rates

• Can be included as a percentage of project work days

5


Uses of the Budget

• Demonstrates types of costs and amount required

• Shows donors the resources required

• Provides guidance for decisions on expenditures

• Helps in measuring project progress•

• Highlights project problems and/or waste

6


Characteristics of a Budget

• Reflects overall project plan

• Based on workloads, rates of production, and personnel

• Includes equipment, facilities, and supplies

• Accounts for factors that may impact future costs

• Prepare for each operation in detail on a fiscal year basis

7


1. What are the effects of underestimating costs when preparing a budget?

2. What are the effects of overestimating costs when preparing a budget?

8


Donor Requirements

• What types of activities and costs are they likely to fund?

• What budget formats do they prefer?

• How large are the grants they can give?

• What currency do they use?

9


Estimates of Costs

Survey Phase: % of Total Survey Costs:

1. Planning/negotiation……………..… 15%

2. Survey preparation…………………..25%

3. Field implementation……………….. 25%

4. Data analysis…………………………15%

5. Reporting/presenting results…..… 20%

TOTAL COSTS………………… 100%

10


Contingency Funding

• Should not be fix for poor budgeting

• Estimate risks at task/activity level

• Assign a percentage to each identified risk based on likelihood

• Review overall contingency percentage against other projects

11


Scope Creep

• The sponsor asks for more after the scope statement has been approved

• Calculate the detailed impact of changes on the project plan and budget

• Explain in detail how quality, timeliness and cost will be affected

• All changes must be tested prior to implementation

12


Summary Versus Detailed Budget

A summary budget presents subtotals for the major cost categories. It allows one to tell at a glance the relationships among items.

A detailed budget shows how these subtotals were calculated for the major items.

13


Standard Budget Formats

• Easy to understand categories

• Increased accuracy

• Easy to monitor project spending

• Reduces review and approval times

• Facilitates comparisons and estimations

14


Project Manager’s Role

• Be involved, informed and realistic

• Be aware of donor requirements

• Keep proper documentation

• Be detailed and complete

15


Projecting Cash Needs

• There will be varying needs for cash for each phase of the project

• Use your detailed project plan and budget to forecast project cash needs in advance

16


Sample Excel Budget

• Can combine detailed and summary budget

• Should show annualized data clearly

• Organization can follow project work plan

• Set up formulas to make quick adjustments or estimate the impact of changes

17


Participatory Budgeting

• Not the job of one accountant alone

• Project staff should be involved

• Departmental staff should review, including:

– Finance

– Human Resources

– Procurement

18


Escalation of Commitment

Ways to control escalation of commitment:

• Objective proposal review

• Regular and meaningful project status reports

• Project review meetings by a third party to assess project health

• Conduct a post project review

19


Section A Quiz

1. List the three stages of a project budget

2. What are the two types of cost?

3. Should contingency funding be 50% of total project cost?

4. Should you change scope without reviewing the budget?

5. Who is responsible for budgeting projects?

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Copyright 2010, The World Bank Group. All Rights Reserved. Budgeting Statistical Projects Section A...

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