Few projects can succeed without money. Your purchase orders, vendor bills, checks, credit card bills, and other documents will be used to verify what is actually being spent on the project. As you learned in Chapter 12, your budget should clearly illustrate the sum total of what needs to be spent.

You, or someone handling the disbursements and expenditures, should have a system in which every payment is approved, using the original invoice only, to make sure that no bills are paid in duplicate. Make sure purchases are accounted for and subtracted from your budget. Just because the new computer isn't sitting on your desk doesn't mean that $2,000 from your budget hasn't already been spent. Remember that the $150 for shipping the computer needs to be accounted for in the budget as well. Make sure any additional expenditures that were not in the original budget are addressed and noted immediately — don't wait for the end of the next monitoring period, such as the weekly status report. It's important that a $500 change in the budget on a small project be incorporated on Monday when the purchase is made and not on Friday when the status report is handed in. Someone, very likely you, needs to review and approve any and all additional expenses.

If your accounting department is handling the payments, they may not be keeping separate records for your particular project. That means you must take on the responsibility yourself and keep track of the project budget. If they are handling the budget for the project, you must make sure to have steady communication and know exactly what they have and have not yet included as expenditures. The best way to monitor expenditures is to set up a system at the beginning of the project that accounts for all expenses. Use software if you choose, but remember, it's up to you and your team to make sure the correct data is entered.

To judge your project's success in relation to your original projected budget, you'll need to compare how much you have spent in conjunction with how much you have in the overall budget. Using a system known as Earned Value Analysis, you can determine whether you are ahead of or behind your budget at a specific point in the project.

For example, suppose your total budget to move the office to the new location is $40,000 and you have a time frame of two months. After one month, you've spent $20,000. Are you on budget? If all work to be done, including all expenses (such as resources and manpower) is equal in both months, you're fine. However, this is not always the case. You will have different needs and costs at different points in your projects. You need to look specifically at the project's schedule and resource expenditures to that point, both actual and projected. If you had planned to spend only $15,000 through the first month and you have spent $20,000, you have overspent by $5,000 at this point, based on your projection. This is known as your cost variance.

Your proposed budget has an additional $25,000 to be spent in the second month of the project. You have only $20,000 left in your actual budget. Therefore, you will either need to ask management or whoever is sponsoring the move for an additional $5,000 or find a way of saving $5,000 in the next month.

If you take the actual cost of work performed and divide it by the budgeted cost of work performed, then multiply your answer by the total cost of the project, you can get a rough estimate of how much you would spend at the current rate. This is important if you are over budget and see upcoming spending continuing at a similar rate. It's a rough estimate because there are variables that will come into play that will impinge on your budget. You may also find ways to save money.

Your Earned Value Analysis tells you it's time to do one of the following:

• Find ways to save money

• Ask your sponsor for more money

• Eliminate a portion of the project that may be extraneous and will not impinge on meeting the goals of the overall project

• Hop a plane and leave town