Introduction
Just as a scope defines what a project aims to achieve, a budget outlines the resources the project will need to achieve those aims. In digital production, this typically includes costs for design, development, testing, deployment, and project management, as well as contingency funds for unexpected expenses. If there is a film production component that is a separate matter but I’ve also provided the template for it.
By accurately estimating and closely monitoring these costs, you can ensure that the project delivers its intended value without exceeding the available budget.
Estimating Costs
Cost estimation begins with a breakdown of the project into its constituent tasks. For each task, you'll need to estimate the required hours of work and multiply this by the relevant hourly rates. Sample rates are included in the template I’ve provided, with a recording on how to use the sheet below.
The more experience you have the easier it gets but overall it's always better to overestimate rather than underestimate. Until you do have that experience you’ll need to ask for time estimates from your creative and technical directors!
Consider factors such as the complexity of tasks, the expertise of the team, and potential roadblocks or delays that could increase the time (and thus the cost) required. These factors can be strategic elements beyond our circle of influence (referring back to the strategic producer chapter).
Don't forget to include some buffer for overhead costs; sales, project management, meetings, and communications, as these can significantly add to the project's overall cost.
The Contingency
Our saviour, the contingency. A contingency fund is a portion of the budget set aside to cover unexpected expenses, often from problems or mistakes that will happen during the production. The size of this fund will depend on the project's size, complexity, and level of uncertainty, but a general rule of thumb is to allocate about 10-20% of the total project budget for contingencies.
Tracking Project Costs
Once the project begins, you’ll need to regularly monitor and control costs to avoid overspending. This includes tracking actual costs against the estimated budget, identifying any cost overruns early, and taking corrective action as necessary. This could mean renegotiating contracts, reassigning resources, or even revising the project's scope as a last resort.
Cost management also involves managing changes to the project that could affect the budget - namely scope creep. Any changes to the project's scope, schedule, or resources should be assessed for their impact on the budget, approved through a formal change control process, and reflected in updated budget estimates. This is all outlined in detail in the scope of work contract template.
Dealing with Budget Overruns
Despite your best efforts, budget overruns can still occur. It's important to remain calm and take a structured approach to deal with this situation. Firstly, try to understand the reasons for the overrun and if it was due to an underestimation, unforeseen challenges, or scope creep. Then, explore potential solutions such as revising the budget, reducing scope, or securing additional funds.
Budgeting for Maintenance
Digital projects don't end at deployment. They often require ongoing maintenance and updates to keep them running smoothly and to continue delivering value over time - whether this is done internally or by a vendor it has a cost. When budgeting, remember to factor in these future costs. For example:
- hosting
- licensing
- browser or software updates
- support and testing
Exercise
Now it's time to prepare a budget for your project! Using your scope of work and the budget template make an estimate of time across disciplines and predict external costs you might need on the production. You can add the total cost in your scope of work agreement and in your proposal.
Here’s a quick walkthrough of how to use the template:
