We're discussing how project budgets will be set and tracked. My view is that the budget should be set for the duration and tracked that way. Our finance team have a preference for the budget to be for the financial year with what happens in the next year covered in future financial planning. I can see where our finance colleagues are coming from but have concerns:
- if we pro-rata or estimate per financial year:
- What happens if we exceed budget this year as we are ahead of schedule (great for project but will cause a finance problem)?
- What happens if our spend is below budget? How will that work for the next year (carry over unspent amount?
- What is the problem for the finance team if we set the budget for the entire project and do not pro-rata it or estimate per year?
Appreciate the guidance here; getting polarized opinions and need to know if there are pragmatic approaches out there that work ....