Budgeting Techniques for Consultancy Projects

A Cost-Management Checklist for Consultancies When markets slow down, consultancies need to act fast—but not all cost-cutting measures are created equal. Here’s a smart, strategic approach to managing costs while keeping your firm strong: ✅ Budgeting & Forecasting Review budgets weekly to avoid surprises. Ensure clear visibility of cash flow and project profitability. ✅ Expense Management Cut non-essential costs (unused software, unnecessary office space). Differentiate between growth-driving spend vs. vanity spend. ✅ Revenue & Payment Strategies Offer early payment discounts to improve cash flow. Tighten credit terms (e.g., net-30 → net-15). Increase upfront payments for large projects. Renegotiate proactively if clients show payment difficulties. ✅ Operational Efficiency Enforce timely timesheet submission to speed up invoicing. Focus on utilisation—small gains in billable hours = big impact. Ensure partners spend time on business development, not just delivery. ✅ Contractor & Salary Management Align contractor payments with client cash inflows. Consolidate salary payments for easier cash flow management. Are your seniors selling enough? If you need to cut staff, do it deep, and do it fast. ✅ Leverage Technology Firms using PSA and CRM systems tend to be more profitable than those who don't Automate expense tracking and accounts payable to reduce errors and save time. ✅ Scenario Planning & Revenue Growth Develop contingency plans early—don’t wait for a crisis. Focus on upselling and cross-selling to maximise revenue from existing clients. 💡 Final Thought: Cutting costs thoughtfully and strengthening cash flow will put your consultancy in a stronger position—not just to survive, but to thrive. Have I missed anything? 👇 #Consulting #CashFlow #CostManagement #ProfessionalServices #BusinessResilience

𝑯𝒐𝒘 𝒕𝒐 𝑬𝒔𝒕𝒊𝒎𝒂𝒕𝒆 & 𝑪𝒂𝒍𝒄𝒖𝒍𝒂𝒕𝒆 𝑷𝒓𝒐𝒋𝒆𝒄𝒕 𝑩𝒖𝒅𝒈𝒆𝒕 #PlanningEngineers 𝐂𝐨𝐬𝐭 𝐄𝐬𝐭𝐢𝐦𝐚𝐭𝐢𝐨𝐧 Quantitative assessment of amount likely to be spent to complete project 𝐏𝐫𝐨𝐣𝐞𝐜𝐭 𝐁𝐮𝐝𝐠𝐞𝐭 Total cost required to complete project tasks & contingency reserve for known risks Budgeting is process, not project event Budget is developed at project start & later refined as more info becomes available about project & detailed WBS prepared At project start, Rough Order of Magnitude (ROM) estimate created, with accuracy range -25% to +75%, result in outcomes to get initial budgetary approvals & get project off ground ROM estimate further refined into preliminary estimates when more information becomes available After creating detailed WBS, definitive estimates developed with accuracy range -5% to +10%. 𝐂𝐨𝐬𝐭 𝐄𝐬𝐭𝐢𝐦𝐚𝐭𝐢𝐨𝐧 𝐌𝐞𝐭𝐡𝐨𝐝𝐬 𝟏》𝐄𝐱𝐩𝐞𝐫𝐭 𝐣𝐮𝐝𝐠𝐦𝐞𝐧𝐭 Get estimates from expert (consultant/ In-house) with specialized experience understanding project’s domain area 𝟐》𝐓𝐨𝐩-𝐝𝐨𝐰𝐧 𝐞𝐬𝐭𝐢𝐦𝐚𝐭𝐢𝐨𝐧 Estimates overall project cost, then decompose whole project into smaller components & allocates part of total budget to these components 𝟑》𝐀𝐧𝐚𝐥𝐨𝐠𝐨𝐮𝐬 𝐄𝐬𝐭𝐢𝐦𝐚𝐭𝐢𝐨𝐧 Look at historical data from previous similar projects to drive estimate for current project 𝟒》𝐏𝐚𝐫𝐚𝐦𝐞𝐭𝐫𝐢𝐜 𝐄𝐬𝐭𝐢𝐦𝐚𝐭𝐢𝐨𝐧 Use historical data from previous projects to calculate cost estimate for current project, using mathematical formula & statistical relationship between different variables to estimate complete project cost 𝟓》𝐁𝐨𝐭𝐭𝐨𝐦-𝐮𝐩 𝐄𝐬𝐭𝐢𝐦𝐚𝐭𝐢𝐨𝐧 Estimate WBS smaller components, aggregate them to calculate project budget 𝟔》𝐓𝐡𝐫𝐞𝐞-𝐩𝐨𝐢𝐧𝐭 𝐄𝐬𝐭𝐢𝐦𝐚𝐭𝐢𝐨𝐧 Done by taking average of 3 different estimates to calculate expected cost •Optimistic(O): Best-case scenario •Pessimistic(P): Worst-case scenario •Most likely(M): Realistic scenario Expected cost (E) driven using: 》Triangular Distribution Formula E= (O+P+M)/3 》Beta Distribution Formula E= (O+P+4*M)/6 𝐏𝐫𝐨𝐣𝐞𝐜𝐭 𝐁𝐮𝐝𝐠𝐞𝐭 𝐃𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭 𝐒𝐭𝐞𝐩𝐬 》Prepare ROM budget at project start utilising top-down or analogous estimation techniques 》Get initial budget approval 》Create WBS & define work packages 》Decompose work packages into activities 》Estimate each work package cost 》Add contingency reserve 》Create sum total of work package cost estimates 》Add project-level contingency reserves as required 》Refine budget further to reconcile with initial budgetary estimates & constraints 》Get approval on final budget 》Refine budget in case any changes impact project #PlanningEngineer #ProjectManagement #CostEstimation #Budget #OilandGas #Energy #EPC #PeojectControlManager

How do you get the best value out of your consulting spend? This is a high spend and fast-growing category, especially for government agencies and semi-government entities in the Middle East. And it’s not been an easy one to crack. Here are a few pointers: 1. Disaggregate your consulting spend. What is truly strategy consulting (where deep expertise is required)? What is operational consulting (program management), and which demand is the ‘secondment’ type (longer term, context specific demand) etc This matters—strategy consulting comes at the highest rates; secondments, the lowest. Minimising what qualifies as strategy consulting is step one. 2. Make strategy consulting win-win. Identify the exact areas of expertise you need—and ensure you’re truly paying for global expertise. Vet experts. Ensure the need is real and current. Trends like sustainability or localisation once required deep expertise, but over time, they became more commoditised. 3. Watch for legacy firm bias. Many CEOs or CXOs carry long-standing relationships with a few strategy firms. These firms often move with them from one organisation to another. Boards must ask the tough questions and challenge these historical preferences. 4. Use a should-cost approach. Especially for operational consulting and secondments. Know the salary bands, bonuses, margins, and financials behind the proposal. Don’t accept a black box. Margins in some consulting projects have been known to be as high as 80 percent + 5. Infuse competition. Never name a “preferred strategy partner” publicly. Doing so sets you up for inflated fees. Always have at least one peer firm competing—even if it’s tough. 6. Scope projects independently. All too often, incumbents write scopes that favour themselves. Your procurement team needs to neutralise the scope and encourage real competition. 7. Build in-house capability. Especially for operational consulting or PMO-type work, which is recurring. There’s no need to go external every time. These practical measures can lead to better outcomes for all parties, leaner costs, and a more transparent consulting partnership model. #StrategyConsulting #MiddleEast #PublicSector #ConsultingSpend #ProcurementExcellence #ValueForMoney #Transformation