Budget Builder
What Is It?
The Budget Builder is an application that allows you to create detailed budgets and timelines during the business development phase.
Output Of The Applicationnn
- labor
- timeline
- expenses
- margins
- Tables for your proposals
Key Notions
Margin
Margin is a term used in both business and finance to refer to the difference between the price of a good or service and the amount of money required to produce it. It is the amount of money that remains in your pocket once you have delivered a service.
Margin is usually expressed in percentage. Ex: if you sell a product or service for $1,000 with a 40% margin, you earn $400.
In Conduite, margins apply to many things:
- Labor (though Daily Rates)
- Budgets
- Contracts
- Projects
Margin Types
| Margin Type | Description |
| Margin at Signature ($/%) | The margin computed at the time a contract is signed (provided by the associated Budget Builder). For a project this is a static value. |
| Margin Objective ($/%) |
The margin objective that is set for a project. At the beginning of a project that value equals the Margin at Signature. But it can evolve overtime (up or down). In Conduite, setting a margin objective is the primary way to steer the performance of a project. |
| Expected Margin ($/%) | The margin that we expect to make on a project at any given time based on what was spent and what we think we need to spend to finish the work. |
Daily Rates
The Daily Rate is the cost of a staff member for one day of work. Each person in your company has a different daily rate. For the sake of simplicity Conduite assigns a daily rate for each role of your company (developer, project manager, designer, domain expert, ...). Daily rates are needed for all the roles that you want to include in your budgets.
The Daily Rate can be expressed in two ways:
- Unloaded - This corresponds to the cost of the employee role for the company.
- Loaded - This corresponds to the cost of the employee role including the margin you want to make. This is the amount that you charge your clients.
In other words, the difference between the loaded and unloaded rates is your margin. The amount of margin you add to the Unloaded Rates is specific to your organization and to the contracting mechanisms between your clients (ex: government contracts often have specific rules for rates calculation).
The daily rates are combined in a summary table a Rates Card that specifies:
- Role
- Unloaded Rate
- Margin
- Loaded Rate
Labor
In a budget, labor refers to the cost of all the employees needed to execute a contract. In Conduite that cost is computed based on the Daily Rates and the number of days needed.
Expenses
In a budget or contract, the expenses (or direct costs) refer to all the non labor costs that are needed to execute the contract. For example:
- Travel and accommodation
- Software licences
- Hosting fees
- Equipment
- 3rd party service
These items are usually charged at cost to the client. Therefore you cannot specify a margin for direct costs.
Budgets
A budget refers to a financial plan that outlines the expected labor costs and expenses associated with the project or service being provided under a contract. The budget is usually an integral part of the contract and serves as a basis for determining the financial obligations of each party involved.
Conduite works with budgets that have the following (simple) structure:
- Labor
- Expenses / Direct Costs
The Budget Builder computes the margin for labor (value and %) automatically. The margin on labor is the margin of your contract.
