Zansa › Answers › Professional services
How do I track budget burn on fixed-fee projects?
Budget burn compares hours or cost spent so far with the project budget, alongside the percentage of work complete. If 70 percent of budgeted hours are used but only 40 percent of the work is done, the project is heading for overrun.
Formulas in words:
- Budget used: hours or cost to date divided by budget.
- Estimate at completion: hours to date divided by percentage complete.
It matters because fixed-fee overruns directly reduce margin and cannot be billed.
Commonly misread:
- Using elapsed time instead of work complete as the progress measure.
- Estimating percentage complete optimistically.
- Checking only at the end instead of weekly.
Set alerts at agreed thresholds such as when 80 percent of budget is used, and discuss scope changes with the client early, while they can still be priced.
Want this applied to your business? Zansa builds dashboards and forecasts for small and mid-sized companies worldwide. Start with a free intro call.
Book a call