Are you a project manager facing troubles or needing help in preparing project budgeting? Do you want to save time as well as reach maximum accuracy while budgeting projects?
We know preparing project budgets is one of the most challenging parts of project management, especially for bigger and more complex projects. With budgets getting tighter, managers need smarter ways to estimate costs accurately, so they can procure funds for resource allocation and give clients and stakeholders the confidence that projects will be delivered on time and on budget.
This is where SmartBudget in Polaris PSA (our professional services automation software) comes in. Managers can use SmartBudget to simulate cost, price, margin, and profitability for projects to ensure that the project is set up for profitability and hits revenue goals.
Read on to learn more about the features of SmartBudget that reduce project budgeting challenges and increase the return on investment for projects.
Challenges in Project Profitability
Polaris PSA’s SmarBudget is designed to root out the problems in project budgeting and support Professional Services Organizations (PSOs) in achieving maximum profitability. The budgeting issues PSOs face include:
- Not understanding what billing rates provide maximum profits
- Lack of visibility into real-time current billing rates and problematic areas where the budget is falling short
- Lack of clarity into how to adjust rates so they yield optimal profits
Polaris PSA’s SmartBudget provides a solution to all of these issues, so it can help project managers who leverage it can achieve optimal results.
Features of SmartBudget
The features of Polaris PSA’s SmartBudget offer optimal benefit to the project managers when budgeting. Below, we outline some of the things SmartBudget can help you achieve, to give you a better understanding of this project budgeting automation tool.
Create Profitable Bids
A recent SAP study, Intelligent Enterprise for the Professional Service Industry, notes that 80 percent of project profitability is determined at the bid stage, and more than half of all projects do not deliver to plan. This is mostly because project managers fail to factor in true utilization, 100 percent of costs, and margins to ensure profitability.
However, SmartBudget offers a solution for ensuring profitable bids. The key feature of SmartBudget is its ability to build competitive bids by considering all business costs, complete utilization of resources based on historical data, along with current and future availability. The insights from historical as well as real time data help managers avoid underquoting during the bidding process. SmartBudget paves the way to making a well informed decision.
Operate with Optimal Billing Rates
Project managers must understand the billing rates that will yield optimal margins while taking all relevant costs into consideration. Operating with optimal billing rates is the ideal way to maximize profits. One of the hurdles to deciding optimal billing rates is the failure to calculate all relevant costs, which can include billing rates, project expenses, training and upskilling costs, research expenses, capital expenditures and other significant material expenses involved in the project.
SmartBudget minimizing the risk of missing relevant costs since it automatically consolidates all business-related costs, including project, non-project, direct, and indirect costs, to calculate the most profitable billing rates. The auto-calculated billing rates are estimated considering the entire business of the organization, cost of resources, desired margin, and utilization rates. This automation minimizes administrative overhead and human-induced errors. Since SmartBudget provides visibility into billing rates in real time, project managers can rely on it to figure out the costs that may affect project profitability.
And, since resource requirements will vary from project to project, SmartBudget gives project managers the flexibility to adjust rates to fit each individual project’s profit goals. This leads to maximum revenue generation from the project. Finally, to avoid repeating the same work, project managers can create default rate cards for each role using SmartBudget.
Project revenue is mainly influenced by utilization rate, billing rate and margin. Project managers need to employ critical thinking to analyze project “what ifs” and understand how changes to each of these items will impact cost and utilization in the future.
SmartBudget gives project managers the opportunity to simulate profit and revenue scenarios based on varying utilization, margin, and revenue goals, plus the average billing rate. Project managers can customize these goals and objectives, and SmartBudget will consider all the metrics and calculate the rates required to reach the best results. As SmartBudget’s built-in engine presents project managers with all metrics, managers can drill down to check how successful each scenario would be in growing profits.
Track Revenue in Real Time
SmartBudget provides real-time visibility into all financial metrics involved in projects, such as costs, billing and cash flow, so project managers receive up-to-date information on the financial health of their projects. Keeping tabs on how project estimates compare to actual cost helps project managers focus on where the project is failing to achieve the desired profit. Focusing on roadblocks paves a way to fixing issues quickly. SmartMatch is accurate, and automatic calculations allow project managers to figure out where they’ve gone off course easily and instantly adjust billing rates, costs or margins to fix their trajectory proactively.
Explore the Power of SmartBudget
With SmartBudget, businesses can set revenue targets, considering all costs and leveraging historical metrics to make informed pricing decisions. Managers get complete visibility into true costs and billing rates in real time, which lets them make necessary changes before problems eat into project profitability.
Benefits of Using SmartBudget
Using SmartBudget can give your organization numerous benefits. It can help you:
Stay Within Your Budget
If something is affecting your budget, project managers can easily root out the cause using SmartBudget. It allows you to track job costs and commitments while improving project delivery and highlights risks in real time, so you can address them before they derail your budget.
Keep a Close Watch on Critical
Breaking a project into smaller achievable targets enables project managers to ensure every task is completed. It also helps them keep an eye on critical tasks that need more attention. Since SmartBudget provides real-time data, project managers are always up to date on how their projects are progressing and can make prompt changes, when needed.
Optimize Decision Making
SmartBudget brings together all relevant project financial data from across your organization’s and users’ systems to provide a single source of truth. Having one source of up to dat data makes it easy for project managers to identify potential areas of concern, and to make the right decision at the right time to overcome those hurdles.
Improve Time Management
As SmartBudget is an automated tool, project managers no longer have to carry out tedious calculations. This allows them to invest their time in other critical project tasks that require their attention.
Set Effective Billing Rates
Being a part of Polaris PSA allows SmartBudget to cut across data silos and collate all relevant financial data from all of your integrated users and office systems and applications. By analyzing the data from these various sources, SmartBudget can easily generate effective billing rates.
Sign up for a demo to learn how using SmartBudget with our Professional Services Automation software, Polaris PSA, can help your business.