Getting A Hang Of Budgeting When Undertaking A Project
Oh the thrills, excitement and fun that Interior design should be all about, right? But what people don’t see and think about are the days and nights that go into planning, making sure the right processes are in place, vendor management, research work, project management, sourcing, and my ultimate, least favourite…… BUDGETING.
The irony of this is I like to make money and it would only make sense that I should like everything money related but managing funds during a project is a nightmare.
Some of the difficulties we face when planning for a project is the financial budgeting and we’ve seen that the issue of managing finances when undertaking a project cuts across all sectors, not just Interior Design. I remember this Tech company that charged their client a fee for a project thinking they had planned for any and every issue that might arise. To their surprise, as they kept building the software they ran into more and more technical difficulties than they envisaged and they couldn’t go back to the client to ask for more funds. Long story short, they couldn’t deliver what they promised and ran into major issues with that client.
Unfortunately, this happens to even the best of us. Financial management is a critical skill everyone must possess even in our personal lives else one would keep running into debt.
Budget overrun is the bane of any project manager’s work especially when the bulk of a project is heavily dependent on external purchases, there is hardly any control one can have on price fluctuation and product availability. For instance, you saw a product at a store a week or two before and going back you find out it’s sold out and the only way you can get it is to import said product. The first scare is the unfriendly exchange rate, then you think about customs duty, next you think about the time that would be lost waiting for the delivery to be made and it doesn’t even end there. Meanwhile, you’ve made estimates based on your previous knowledge of market prices. Who are you going to cry fowl to? Let’s not forget about those costly mistakes that we encounter on site that usually cost a leg.
Personally, another reason why I think budgeting is of the devil is because I am an ‘overachiever’ when it comes to designing a space. If I see an item I know would make all the difference to the space i’m designing, I wouldn’t hesitate to go for it.
How then do we try to Manage Spendings vs Budget and how can you do this too?
We label this as ‘Escrow’ when we send an invoice to our client and usually set it at 3-5% depending on the unforeseen risk we think we might encounter in future- these risks vary from project to project.
2Scoring for Bargains:
Occasionally, we come across retail stores that are running a sale and this helps you save some but because the industry isn’t robust enough we only get this once in a while as there are only few stores we like to get our products from.
3Create a Spreadsheet:
This helps you monitor and balance expenses. A handy line item budget helps us track our actual spendings against the estimated budget. In instances when an item is cheaper than the estimated cost, we allocate the extra to buy a finer piece of furniture from the unbought items.
We often delve into these uncertain territory sometimes but there’s always the issue of quality control, honesty and lateness in delivery.
There are a lot more budget control systems that managers use for effective and efficient delivery and we would love to hear which ones you’ve adapted in the past or what processes you are using currently to manage a project.
Image credit: Virus Update