Manage Your Business Expenses: How to Track Project Costs and Expenses

Project budgeting is arguably the most dreaded part of project planning. But, learning how to track project costs and expenses is crucial.

Here is the TL;DR version: to improve project budgeting, use project management software.

Follow these steps to automate project tracking: 

1. Find an automated project cost tracking system.
2. Create a realistic project budget.
3. Ensure you have team members on board.
4. Automate your tracking system.

This step-by-step post will show how you can create a project budget, double-check your accuracy, and automate tracking. We’ll teach you some project management estimation techniques to help you avoid overspending or running out of money.

Understanding project expenses and costs

Your business depends on project budget management. Accurate budgeting helps team leaders manage expectations and remain accountable. 

But first, you need to understand the different types of costs you should be budgeting for. Let’s quickly brush up on some key terms.

Direct vs. indirect expenses:

• Direct expenses: costs that are directly tied to your projects, such as work hours, supplies, or software. 
• Indirect expenses: other costs such as utilities and office supplies that are not directly related to the project. 

Fixed vs. variable costs:

• Fixed costs: budget items that will not change, such as rental payments or the annual price of a software subscription.
• Variable costs: vary depending on the market, such as the cost of supplies or delivery fees.

How to track project costs and expenses

A comprehensive project plan and budget can be the difference between a project succeeding or failing. Careful budgeting and expense tracking can help avoid project scope creep and enforce time management.

Here are four detailed steps you can take to control your project budgeting. 

1. Find a project cost tracking system

Project resource planning is most efficient when you use project management software and time management tools.

A project cost management app like Hubstaff can help cost control with reports and forecasting insights. With Hubstaff Desk, your team will never exceed your budget with set work time and budget limit alerts for projects and team members.

Plus, with time tracking software, you can ensure the salary and wages for your project stay on track. Hubstaff allows for tracking time as billable or non-billable hours.

Integrating Hubstaff Desk and Hubstaff Tasks will give you access to project templates, Agile workflows, and project roadmaps.

Of course, we’re partial to our software, but it isn’t the only project management option. Hubstaff is just one of many excellent project management tools that can help you budget and plan your projects.

2. Create a realistic project budget

Once you have a system for logging and tracking your project expenses, it’s time to create a budget. Start by determining what you need to include in your budget.

Determine project budget items

No two projects are the same, but there are some general expenses you should consider each time you create a project budget.

• Materials and supplies: You should include anything bought for a project in the budget. This includes wood, software, machines, paper for the printer, post-it notes, and even coffee for the breakroom. 

• Labor costs: Include paying your internal and external team into your budget. Don’t forget about overtime or holiday pay.
• Travel: Does your team need to travel to complete a project? If so, you need to calculate the cost of gas or airfare, hotels, and per diem for food.
• Miscellaneous costs: This is where you should factor in variable costs like buying the team lunch, expedited shipping costs, and other fees.

Determine the cost of each of these budget items as accurately as possible and add them to your project management software. 

3. Ensure team member buy-in

You can pick the best project management system in the world, but it is useless if your team isn’t sold on the software you’re using.

If team members don’t understand how important it is to track budget items and time, your tracking will be ineffective. 

It’s essential to onboard your team to the software you’ll be using and ensure they are committed to using it consistently and correctly. Then, provide online access to each member of your team.

Be clear about who needs to enter budget updates into the software and the time frame to complete the task. Depending on the size of your team, you may need to assign a team member to track expenses and give stakeholders updates on the project’s progress. 

Assigning one team member to track project status and update stakeholders can ensure the project runs smoothly.

4. Automate everything

The crux of our answer to tracking project costs is automating everything. There is no reason for you to be manually tracking your budget in an Excel spreadsheet when project software can make your life easier. 

Automation can not only help you track your project budget. It can reduce the time you spend working on a project and, in turn, reduce your overall project costs. 

Tools like Zapier can help you integrate your most-used applications to ensure data is in sync and no budget items or information falls through the cracks.  

Add your time limit or budget for a project and step back while your team logs the time and budget items. Your project management tool will do the rest. 

Start tracking your project costs 

Streamline budgets with a project management tool.

With helpful software, budgeting can be straightforward. Automation can save you time and prevent user error. Now, you can get to work while your tools monitor project spending in real-time.

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