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and sponsor. It’s common to include budget updates as an agenda item during your

project update meetings.

Expenditure tracking includes measuring the project spending to date, determining
the burn rate (or how fast you’re going through the money), and tracking expenditures
to the cost baseline so that stakeholders can see what was planned versus what was
actually spent on the project. Expenditure reporting is the mechanism you’ll use to
report on the current state of the project budget.

Project management software is useful in tracking project spending. You can run
reports that show spending to date versus what was planned, and you can also use
software to look at the impact of adding new tasks or resources using what-if scenarios.

You can also use your handy spreadsheet program for expenditure tracking and
reporting. Table 7.4 is a sample of a budget report showing the estimated costs (what
was planned) versus the actual costs to date and the variance, or difference between
the two.

TABLE 7.4 Sample project budget report

Account Code Category Estimated Actual Cost at Variance
Costs Reporting Date

1001 Contract $50,000 $48,500 $1,500
labor

1003 Materials $2,500 $2,500 $0

1005 Hardware $22,700 $24,500 $(1,800)

1010 Training $7,000 $5,000 $2,000

Total Variance $82,200 $80,500 $1,700
This Period

Earned Value Management

One of your duties as a project manager is to control and monitor the costs of the
project. There are several techniques you can use to do this. Earned value
measurement (EVM) is a performance measurement technique that compares what
your project has produced to what you’ve spent by monitoring the planned value,
earned value, and actual costs expended to produce the work of the project. When
variances that result in changes to the cost baseline are discovered, those changes

should be managed using the project change control system. If the budget needs
updating and/or funding has been added to the project, you’ll need approval and sign-
off from the sponsor for the new cost baseline.

The primary functions of EVM analysis techniques are to determine and document the
cause of the variance, to determine the impact of the variance, and to determine
whether a corrective action should be implemented as a result.

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