Project Budget

Manage your project expenditure using Budget

Budget helps to align your spending with the available resources. While managing the budget for complex projects it becomes strenuous to discriminate the resource cost for different tasks. The task level budget view in Zoho Projects allows users to view the resource cost for different tasks. This helps in understanding where the project went wrong.

In this tutorial we will explain how to create a well-planned budget and manage your project within the planned cost.

Learning Objective

At the end of this tutorial, you will be able to

  • Create a budget
  • Determine planned and actual costs for your project
  • Prioritize the project cost and learn to deal with inadequate funds
  • Plan for future costs

Business Scenario

Consider this, Zylker Corporation created a mobile application for a web designing company that has 5000 employees. After many attempts and iterations, the approximate budget of the entire project was arrived at $1500. The application was created within the agreed timeframe at a total cost of $2000. Though they spent an extra $500, they were satisfied with the output and believed that it would be worth the cost overrun. However, the client recommended additional changes to the application and insisted the changes be carried out within the originally agreed cost. This caused Zylker a critical budget crisis since their client refused to pay bear the cost for this additional requirement.

What did Zylker miss before taking up the project?

When it comes to the execution of a process, there are few crucial points to be considered

  • Zylker failed to layout a well-defined budget initially for the entire project.
  • The project managers set up an approximate amount for the entire project and missed out on prioritizing the necessary overheads. This, in turn, results in unnecessary expenses in the long run.
  • They never sent a quote to their customer projecting the planned cost which should be inclusive of the emergency costs too.
  • There was no way to compare the estimated amount with the actual amount spent.
  • No proper policy in place to cover the costs incurred due to enhancements, scope creep or any other changes.


  • Create a budget taking into account the short and long term costs.
  • Generate estimates and send it to your clients at regular intervals so that the client is aware of the progress in development and also the cost incurred for it. Understand how to create estimates and invoices.
  • Set aside a portion of the amount for the emergency or unforeseen expenses.
  • Budgeting helps you shut off the unnecessary spends and focus on the essential work items.

Project Budget

In this tutorial, we will look at few cases where Zoho Projects will help Zylker Corporation to create and manage their project budget better.

Some projects work based on a fixed amount while the others are based on hours. Zoho Project allows its users to choose their project budget based on the below criteria

  • Budget based on hours
  • Budget based on amount

Case I: Budget based on hours

Zillum is a manpower resource which provides skilled labors on contract to various organizations. Zillum employees work on an hourly basis in Zylker too. Let’s consider a milestone, say Iteration I, which has a task list. We are going to calculate the planned and actual cost for that milestone. Zillum allocates a total budget of 100 hours for this project.

Below are the tasks performed by Zillium consultants in Zylker. It's been a week after the project began. Let's now calculate the variation in planned and actual hours of the project, 

            Task Work / Planned hours (P) Actual hours (A) Hours remaining (P - A)
Survey planning                    21  1
Risk assessment                    57- 2
Tax planning                    68- 2
Reporting                    810- 2
Total                   2126--

A positive value in Hours Remaining indicates that the project is under budget. The estimated total hours by day six was 20 whereas the actual hours is 26:00 hours. Also, note that it is only six days into the project and the costs and performance are starting to vary from the original plan. Hence it is necessary to track the progress of the project on a regular basis to avoid budget overruns.

Case II: Budget based on amount

Zylker Corporation is creating a mobile application for a web designing company that has a head count above 5000. A budget of $10000 is allocated for the project. let us calculate the planned and actual cost of the project.

Let's consider our first example where Zylker Corporation is creating a mobile application for a web designing company. A budget of $5000 is allocated for the project. Before calculating the planned and actual cost of the project let's understand about billing method in a project,

Billing Method

Billing method is used for two purposes

  1. To calculate the actual and planned cost of the project.
  2. To generate invoices for your clients.

Zoho Projects provides three billing methods for their clients

  1. Based on staff hours
  2. Based on project hours
  3. Fixed Cost for project

When the billing method is based on the project hours you should provide the rate per hour for your project (while creating a new project) with which the planned and actual cost is calculated. In the staff hours billing method, the costs are calculated using specific staff rate. The staff rates are configured in Portal Users tab. You can override this rate by changing the user rate in the Users module of your project. For instance, let us consider that Helen works on two projects parallelly, one is managing a reporting tool and as a tax planning consultant. Also, she is charged based on the staff hours. For the reporting task, the cost is calculated from the overall portal rate, which is $10/hour for Helen. Whereas for the tax planning assignment Helen is charged at $20/hour and the planned and actual costs are calculated with this rate. Thus you are allowed to have different rates for the same users based on the work that they do.

In case of fixed cost billing method, you can set a fixed cost for your project. Invoices are generated based on this fixed cost. But note that in exceptional cases you can also add an extra line item to this fixed cost in case of any unexpected expenditures.

While invoicing if the billing method is based on project hour then the invoiced amount would be the product of actual hours and project rate. On the other hand for staff hour based billing, the invoiced amount is equal to the product of actual hours and the staff/user rate per hour. For a fixed cost billing method, a fixed amount is specified while creating the project, hence the rates doesn't change based on the log hours or work hours of your project. While selecting the fixed cost billing method you cannot track your budget based on the amount.

  • Based on project hours
    Planned cost = Work hours * Rate per hour.
    Actual cost = Total log hours * Rate per hour.
    Invoiced amount = Actual hours * Rate per hour.
  • Based on Staff hours
    ​Planned cost = Work hours * Staff rate per hour.
    Actual cost= Log hours * Staff rate per hour.
    Invoiced amount = Actual hours * Staff rate per hour.

You can integrate any invoicing tool to generate invoices in your project. In case Zoho Invoice is integrated with Zoho Projects then you can generate multiple invoices with different date ranges. Say you different time logs and you have to generate monthly invoices that include the logs for that particular month. Also, view the invoiced hours in your project dashboard. Your dashboard will show the total actual hours invoiced till date. (i.e. Sum of the amount in all the three invoices). Click here   to know where all you can view your project budget.

Case I: Say we chose the billing method based on project hours and the rate per hour is $10

            Task Work hours Planned cost(Work hours * Rate/hour) Log hours Actual cost(Log hours * Rate/hour) Cost variance(P - A)
Requirement analysis                    4$40  8  $80  - $40
UX designing                    5$507  $70 - $20
UI development                    6$608$50 - $10
Functionality and framework layout                    7$706.5$65  $5
Testing                   15$1509$90  $60
Environment setup                   7$708$80- $10
Delivery and maintenance                   30$30025$250  $50

Case II: Billing method is based on staff hours and let's consider Employee A's staff rate is $5 per hour, B's staff rate is $10 per hour, and C's rate is $7 per hour. Let us calculate the project costs for two tasks

     TaskTask owner Work hours Planned cost(Work hours * Rate/hour) Log hours Actual cost(Log hours * Rate/hour) Cost variance(P - A)
Requirement analysisA                    2$10  3  $15  - $5
UX designingB                    3$304  $40 - $10
UI developmentC                    5$353$21  $14

Project Budget: A short gif on how to create a project budget.

Billing Method: A short gif on setting a billing method.





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