Sticking to a project budget – to save or splurge?
Updated: Nov 23, 2020
Are you a spender or a saver?
Different publishers have different expectations about their budgets. For some, the budget is set when the project is signed off and it doesn’t change. For others, the sign-off budget is a guideline to be followed and in the best-case scenario improved on. In both cases, one of the key roles of a project manager or commissioning editor is to ensure that their projects stay on budget.
We have all worked on those projects where the budget feels like the equivalent of having fifty pence to fix the church roof. But what about those times when you have a healthy budget to work with? Do you try to impress your colleagues and come in under budget? Or do you kick off your heels and pop open the champagne (or invest in a highly experienced development editor, as the case may be)?
Budgeting best practice
In the past, I have made it my mission to come in not just on budget, but under. It is a clear and immediate way of measuring my own success on a project. It might take months to find out from customers whether they have found my products useful. Coming in under budget is an instant way of determining whether my project is on track. I can also derive confidence from knowing that I’m giving my clients value for money.
But in this pandemic-struck economy (the UK's economy dived 20% in April 2020), I have recently wondered whether this is the best principle to follow. I decided to weigh up the pros and cons of saving and splurging to see whether I can improve my ways of working.
Watch the pennies…
There are some very good reasons in favour of pruning your budget as you go.
1. All good budgets include contingency. The contingency is meant as a buffer in case disaster strikes. If disaster doesn’t strike, you shouldn’t need that money and it can go back into the pot.
2. The budget is only an estimate. Often budgets are based on similar projects or on a per page rate. But no two projects are the same, so adjustments should be made once you know what your project really needs.
3. If you don’t ask, you don’t get. If you offer freelancers slightly less than your budget, you might find they are willing to do the work at that price. You get to keep some contingency left over and can remove it later if it isn’t needed. If you choose this route, you should make it clear to your freelancer that the fee can be renegotiated if the work turns out to be more than anticipated.
4. It keeps the accounts team happy. Not to mention the rest of the team. They will be thrilled that you’re making their job easier.
Loosening the belt
However, this doesn’t mean forking out your whole budget is a waste.
1. Paying a good rate helps to ensure higher standards. The more you spend on your freelancers, the better you equip them to do a good job. They can allocate more time to your project and give it the attention it deserves. If you underpay them, you run the risk that they rush the work to make it worth their while.
2. You will have better relationships with your freelancers. Well paid freelancers are happy freelancers. If you have always paid them a fair rate, when a problem does arise they will look for ways to help you fix it. If they have felt consistently underpaid and undervalued, you risk your freelancer dropping out altogether.
3. It’s good for the economy. The economy is one enormous ecosystem. Someone gets paid well, they spend their money on products and services, businesses make more money and they can pay someone else well. Paying your freelancers well makes you a healthy, well-functioning part of that ecosystem, which will flourish and grow.
Breaking with convention
Every project manager needs to exercise their own discretion over their budgets. Maybe you have one of those church roof budgets I mentioned at the start and you just can’t come in under budget. Maybe you have been using the same trusted freelancers for years and you’re confident your budget is accurate and doesn’t need any changes.
To me, it seems that coming in under budget is a short-term success strategy. There are definite benefits to it, such as leaving yourself some contingency in case of disasters. Whereas investing more upfront sows positive seeds for the future. You’re helping to ensure the quality of your product and creating good relationships with freelancers, which might pay dividends if disaster ever does strike and you need their help fixing problems.
I keep coming back to one thought: if you have the budget, spend it; put it back into the economy. Freelancers have been hit hard by the coronavirus pandemic – they have lost work, they can’t be furloughed, if they are eligible for the government grant they have had to support themselves until it is paid. In the future, this is the principle I'm going to keep in mind when I'm managing my budgets.