software consulting, custom reporting, financial resources

Articles:

Credit Card Transactions

Entering Fixed Assets as Journal Entries

Estimating

Estimating-At-A-Glance

Estimating, Project Management Overview

Paying Liabilities and Transfers Between Accounts

Payroll Overview

Profitability

Proposals

Profits - Strategies to Improve

Responsibility As A Motivator

Risk Management

Schedule Variance

Take Your Business to the Next Level

Teamwork As A Motivator

Time Management

Time Management Matrix

Timetable of Procedures

The Balance Sheet, Part 1

The Balance Sheet, Part 2

The Balance Sheet, Part 3

The Balance Sheet, Part 4

Training Saves Money

Value As A Motivator

Year-end Close

Project Budgets

Budgets in Master Builder

This article deals with project budgets (as opposed to company financial budgets). The article describes how the Budgets screen (6-2) is normally used in Master Builder. Some companies use it differently. Please contact me if you would like a detailed explanation of using it differently and the possible effects.

A budget represents a summary of the internal hard costs estimated for the job, and provides the basis for all budgeted versus actual cost, hour, or unit comparisons. In Master Builder, the Budget is the “estimate” for all intents and purposes. You may create a detailed takeoff, but job reports which compare actual costs vs. estimated costs use the Budget in screen 6-2 (plus any revisions in 6-4-1 Change Orders) to display the estimated costs.

The costs for a budget are categorized by cost code, and each cost code is further organized by cost types. You can also state the estimated hours necessary to complete the work for each cost code (which will display in certain job reports). For work performed on a unit basis, include the quantity of units to be performed for each cost code. The program can automatically compute the cost per unit.

There are several ways to create a budget: you can export the data from a takeoff, import a budget file, or create a budget manually. Once the budget is completed, you can set the original budget. If at any point the budget is changed, you can compare it to the original. Setting the budget will not “lock” the budget; that can only be accomplished with the Lock Edit feature.

If it becomes necessary to adjust the costs in a budget, enter the changes by issuing change orders. Change orders allow you to alter the budgeted costs independent from the budget itself. This also creates a trail within the program and avoids incorrect revisions to the budget.

How change orders affect a budget or proposal:

Change orders allow you to make changes to the budgeted costs and bid amounts. When you print contract-related reports, the program computes the new contract amounts based on the amount in the Contract box in screen 3-5 Jobs plus Approved changes from the Prime Change Details tab in screen 6-4-1 Change Orders.

In cost analysis reports, the program computes the new costs based on the costs from the Budget and Approved Change Orders based on the Budget and Sub Change Details tab in screen 6-4-1 Change Orders. The program does not alter the original budget created in the Budgets window, or the original proposal created in the Proposals window.

After work begins on a contract, enter any changes to the budget or proposal as a change order. As you create the change order, determine whether the costs affect bid amounts, budgeted costs, or both.

For example, let’s say that you forgot to estimate the cost of some work required in the project. To include the costs in the budget and charge the client, enter the changes to the bid amount in the Prime Change Details tab in screen 6-4-1 Change Orders. Then in the Budget and Sub Change Details tab, enter the changes to costs. If instead you want merely add the costs to the budget and NOT charge the client, enter only the changes to the costs in the Budget and Sub Change Details tab.
Alternately, you could use a separate cost code for each change order.

To create a Budget:

In screen 6-2 Budgets,
1. Use the data control in the upper left corner of the screen to select the job.
2. If you are using Phases on this job, in the Phase list, select the phase.
3. Enter the Cost Codes (basically, a list of tasks), or import a Budget File. You may
     click on the down arrow in each Cost Code cell, or pick from a list by using the F8
     Function Key.
4. In the grid, do the following:
In the Hours cell, enter the estimated hours if the cost code has associated labor costs.
     In the Material cell, enter the material costs.
     In the Labor cell, enter the labor costs.
     In the Equipment cell, enter the equipment costs.
     In the Subcontract cell, enter the subcontract costs.
     In the Other cell, enter the miscellaneous costs.
5. Repeat step 4 for each cost code.
6. On the File menu, click Save.

If you do not break apart costs into cost types, enter the total cost of each cost code in the Other column.

If you perform unit-based work or issue unit-based change orders, enter the unit of measurement in the Unit cell. Then enter the quantity of units in the Quantity cell. The program automatically calculates the unit costs.

If you anticipate changes and want to preserve the current budget, set the original budget.

If you exported the budget from screen 9-5 Takeoffs, the program inserts the data from the takeoff, summarized by Cost Code and Cost Type.

Setting the original budget:

When you set the original budget, by clicking Set Budget, Master Builder copies the budget information to the Original columns. With the original budget preserved, you can compare it to the current budget. The original budget information is for reference only.

Budget Recap:

You can display a summary by cost code or phase of the budget for review before printing the final budget. The cost code recap summarizes the cost types for each cost code across the job phases. The phase recap summarizes the cost types in each phase and provides a summary of the budgeted hours to complete each phase of the project.

Deleting a budget
1. Open Budgets (menu 6-2).
2. Using the data control, select the record.
3. On the Edit menu, click Delete Budget.

In addition, you can use the budget as the basis for the proposal you provide the client. This will be covered in a different article.

In future newsletters, I’ll describe how Budgets relates to Proposals (bids) and Job Reports. Please e-mail me at service@missiondevelopment.com if you have any questions.

Andy King
T: 805-771-8400
service@missiondevelopment.com