Budgeting: Are you ready for 2013 ?

Have you updated your budget and indirect rates for 2013?
It’s that time of year if you are a calendar based fiscal year business.
You should approach your budgeting process as an opportunity to reflect on the successes of your company this year and to understand what can be done better next year.

Do not take the approach of just adding x% to this year’s financials because this may not sufficiently address the financial needs of your growing organization.

Instead take the time to review the financials and the new budget line item by line item. Use this basic outline to guide your organization through the process:

Sales pipeline:
1. What are your known contracts, what is their POP and how much is the remaining funded value for each contract?
2. What proposals do you have in process? What is their likelihood of award? What is their funded value for 2013?

Build Your Labor Budget:
3. Direct Labor: Identify by person or labor category the direct labor hours and dollars required to support / perform the contracts identified above.
4. Indirect Labor: Identify current and future indirect positions desired to support the organization.

5. Identify all additional direct costs required to support current and potential new contracts – materials, travel and other costs.

Indirect Costs:
6. Review your indirect expenses, such as fringe, overhead and g&a expenses by discrete line item.

Budget Notes:
7. Annotate all assumptions used in developing your budget: this will make it easier to analyze variances that may occur between the budgeted and actual amounts next year!

Update Pricing templates:
8. Based upon your reviewed and approved budget, use your updated indirect rates to update your pricing templates for future cost proposals.


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