In turbulent economic conditions, public organizations often find themselves in a difficult position in terms of effectively managing project budgets. Sources of funding can be reduced or even cut completely, leaving public administrators with little to no budgetary room to execute current or future project initiatives. These cuts can be devastating for any organizational project, yet proper budget management can help alleviate financial pressure, and may even result in the prevention of future budget cuts. To help with this issue, here are four budget management tips that can help public administrators organize their projects to more effectively withstand budgetary stresses, as well as maximize sources of funding.
1. Thoroughly Evaluate the Costs and Benefits of Projects
Funding sources can be difficult to attain for public organizations, and administrators can be eager to pursue many of the funding opportunities or projects that arise in order to keep dollars flowing in. Bonds and levying taxes have been a prominent means of obtaining financial resources for public organizations, but the importance of budgetary project management while weighing the costs of these and other funding opportunities are often overlooked. To help effectively manage an organization’s budget, public administrators should have a preset limit on how much they’re willing to spend on project funding. This strategy can greatly assist public administrators with effectively evaluating projects and remaining organized when looking to alleviate budgetary stress.
When considering projects, potential benefits of an opportunity may be clear, but evaluating the costs requires more critical thinking and a look at the organization’s resources, staff, and overall capabilities for fulfilling the parameters of the project or funding opportunity. These considerations are essential for effective budget management, on both a project and organizational level. Administrators should address the following questions with key staff when evaluating potential opportunities:
- Do we have adequate staff to fulfill the desired project outcomes?
- Is our current level of expertise on par with what this project requires?
- Can we deliver the project results with the current projects we have in operation?
- What will it cost to hire and train additional staff to fulfill this opportunity, if necessary?
- Does this opportunity fit our organizational goals and overall vision?
2. Maintaining Reserve Funds
The most logical approach to protecting an organization from unforeseeable funding challenges is to build and maintain a reserve fund. While the idea of saving dollars for future hardships is clear to those managing a budget, when putting together budget
details of particular projects, reserve dollars can sometimes be an afterthought. Some administrators can view saving money as secondary to utilizing funds in a manner that ensures project success. Still, it is better to implement a policy that allows for allocating a portion of every source of funding for the sake of building a reserve fund. Public administrators should be sure to detail how the reserve fund will be defined, appropriate sources for the fund, and the exact percentages to be set aside for the fund. This strategy can help administrators build a more stable and effective organization.
3. Distribute Project Funds Wisely
Many funding sources have explicit guidelines for how funds should be divided in pursuit of project goals. Sometimes, the guidelines are not as clear, and administrators must figure out the most effective way to allocate project funds. In either case, it is critical that administrators evaluate where and how project funds will be spent, as allocating more funds than necessary can lead to wasted resources, while not allocating enough funds can result in poor performance. To ensure that funds are distributed wisely, leaders in the public sector will need to remain stringent with budget management, especially by keeping financial decisions and allocations consistent with the values and goals of the organization. Studying the financial decisions of successful and unsuccessful organizations might help administrators better determine the proper, ethical balance for their own project budgets. For example, administrators must understand whether a project outcome can still be delivered if staff and labor hours are reduced, or whether it would be necessary to hire more staff to deliver an outcome.
4. Delegate Roles and Project Tasks Strategically
When a project has multiple components, organizations can sometimes lose track of who is handling which responsibilities on given initiatives. Poor task management can lead to huge losses in time and resources, as well as put additional stress on budget management. To help with this, public administrators should develop clearly defined roles for each staff member and outline key responsibilities, as well as provide each project leader with budget constraints so they know just how much they are able to spend. Timeframes and monthly budgets for project duties should also be sketched out. Public administrators may also wish to hold debriefing sessions throughout the project to receive updates from staff members on budget updates and progress toward the project’s goals. This will help administrators manage the remaining budget, as well as determine whether additional tasks should be assigned to certain members, or if tasks should be redistributed to increase project efficiency.
Every public administrator that relies on funding or revenue to operate must manage their budgets efficiently in order to remain competitive. Creating more fiscal stability for projects and organizations can be achieved by developing an organizational structure where individuals involved have explicitly-stated plans and responsibilities. These plans and policies should guide how funds will be allocated for specific project activities and what portion of each funding source should be reserved. Defining key staff roles for successful project outcomes and determining which staff members have the skills and capabilities that best fit those roles can also help administrators manage resources more efficiently. Most importantly, accurately weighing every opportunity against the organization’s key purpose and overall vision can help administrators achieve long-term success.
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