October 26, 2017
BY: EMILY WELSH
Money, money, money. Money!
Class Insight
This week's lecture focused on budgeting and resource management. In order to understand your project and create an accurate network diagram, you first need to understand all of the resources your project requires. Remember, resources aren't just material things! Your resources required also include people, facilities and space. Your network diagram will vary depending on whether or not your resources are constrained. If you have no constraints, you will be able to complete activities concurrently and thus reflect this by stacking activities in your diagram. If you are constrained by your resources, then you may not be able to complete activities concurrently.
Mapping your resources out over activities can help you even out the allocation of resources and work over time. You want to find gaps that can minimize the amount of time to complete your project. This rearranging of resources is called resource leveling.
When you understand the resources you will need to complete your project, your next step will to be create a budget by estimating activity costs. You can decide to complete your budget in either a top-down or bottom-up fashion. Creating a budget from the bottom-up (by looking at all the tasks and estimating funds required and adding up to see if you meet the funding package) makes more sense to me than a top-down approach. You can start by being realistic in your estimates and seeing if they add up to the amount available. If not, then you look for areas to change or compromise on. Going top-down (eg. I have $600,000; I'll give $100,000 to this part, $200 000 to that) seems harder to do and more unreliable but perhaps there are situations where it is useful.
When making your budget, consider making a time phased budget and not merely an itemized list. If you create a budget that illustrates the costs associated with the different phases of your project, you will have a better grasp of the cash flow over time. This knowledge can be helpful for fundraising efforts and sponsors.
Finally, don't forget your shadow costs! These are items you won't include in your budget but are still important to consider, especially when determining whether a project is worthwhile to complete. An example of a shadow cost is a salaried person's work hours; they would be getting paid anyways and thus their wages don't matter to the budget, but their time is being taken away from the organization for this project! Thus, you want to make sure the project is valuable!
Reading Insight
Chapter 21, "Financial Planning," by Zuern in Lord and Piacente's Manual of Museum Exhibitions was a great chapter for putting project resources into a museum context. The chapter begins by listing costs you will typically need to budget for in a museum exhibition project. These costs include direct ones, such as fabrication, copyright permission acquisition and installation, and related costs, such as conservation and public programming.
Zuern also clearly articulates that a budget is not a static entity. You are to revisit the budget frequently during the project and clearly communicate to your team which costs in your budget are to be trusted and which are estimates. As time progresses, more costs will become reliable and known, for example when contracts are signed. As your budget changes you may need to keep making adjustments to components and designs within your exhibition in order to ensure you meet your budget.
I also appreciate the author is very blunt when discussing the common sense solutions for when your items lead to a total greater than that available. You will either need to lower or increase the budget. Lowering costs may include finding cheaper ways to achieve your desired elements, reducing the scale, combining activities, and eliminating items from your plan.
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Whatever you do, don't pull from future budget items to pay for ballooning earlier ones! Zuern explains, "assuming that the initial budget allocations were sound, pulling funding from future project phases only postpones the problem - and usually makes it worse, since the time to effectively deal with it will have compressed" (Zuern, 2014, p. 378).
Happy Planning!
Resources
Zuern, E. (2014). Financial planning. In Lord, B. & M. Piacente (Eds.), Manual of museum exhibitions (pp. 373–378). Lanham, MD: Rowman & Littlefield.
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