5 steps to ... sticking to a project budget

Kate Allen, Regeneration & Renewal, 30 May 2008

For an annual budget built on the previous year's actual spending figures, try to build in a contingency of perhaps three to five per cent of total costs. For a new budget or a one-off project, try ten to 20 per cent.

2. Play safe with unknown costs. There will always be some expenditure items where the actual costs are unknown, but don't leave them to chance, warns McDermott. Try to obtain estimates or quotes, and talk to other organisations that have carried out similar projects.

3. Remember that costs will vary over time. "If the project is for two or three years, then it's usual to base the second year's budget on the first year, allowing for an inflation-related increase of approximately three per cent, although sometimes your funder may say what inflation level they will accept," advises Sarah White, partnership manager at sport coordinator Active Surrey. "There may be some costs in the first year, such as recruiting new staff, which will not reoccur, while other costs such as monitoring expenses may only appear later on."

4. Check the budget's accuracy with all parties. "The project budget must be approved by the organisation's trustees or management committee, and should be agreed by the staff and volunteers who will be delivering the project," says White.

5. Review your expectations. "This can help to highlight any potential overspends early on, giving you the chance to reduce your future budgeted expenditure to bring you back into line," explains McDermott. "A budget isn't set in stone, it's a tool to help you manage your expenditure."

- More information A budgeting guide is available at www.fit4funding.org.uk/help_and_advice/applications/budgets. You'll find community accountancy organisations at www.communityaccounting.org.