Real Time Expense Tracking - Keeping Your Projects on Budget

For consultants and engineers, tracking your expenses effectively and in real-time ensures that your projects remain within budget. 

The problem that we see time and time again is that many consulting and engineering firms don’t have an efficient way to track expenses in real-time or to break down costs by category, such as: labor, sub-contractors, direct expenses, and more. Until very recently, there hasn't been an effective software solution to track expenses for ongoing projects and monitor costs.

In this article, we’re going to examine the challenges of traditional expense tracking, new ways to manage spending, and how project management software purpose-built for consulting and engineering firms' unique workflows can make all the difference.

The Challenges of Traditional Expense Tracking 

Tracking expenses manually or using spreadsheets is inefficient and time-consuming. It takes a lot of administrative time to manually enter each expense, taking away hours that can be allocated to monetized tasks such as client work. It also has serious consequences for the project itself, including:

1. Inaccurate information: When you manually enter expenses, there will inevitably be mistakes that are made. It only takes one comma to change a number completely and make your project costs inaccurate.
2. Lack of data visibility: Without real-time expense tracking, managers only become aware of issues at a later time, often once the project has been completed. This problem can lead to costly delays and projects running over budget.
3. Scope creep: Traditional methods of expense tracking can struggle to keep up with project-based work. For ongoing projects, it's important to keep tight control over costs to make sure projects remain profitable.

How Real-Time Expense Tracking Ensures Projects Remain Within Budget

Studies have shown that almost a third of all projects end up spending 20% more than planned. Failure can happen for many reasons: the wrong team was chosen, poor leadership, bad communication, and bad expense management. When you can’t effectively manage project expenses, you increase the possibility of failure by allowing projects to run over budget. 

How to Break Down Your Project Expenses

There are three main categories of expenses that are most common for consultants and engineers:

• Direct costs: Expenses that are fixed priced, such as equipment and materials.

• Labor: Labor costs that are based on an hourly rate and charged by the amount of hours that are incurred.

• Sub-contractors & third parties: Sub-contractors, vendors, and other third-parties that are used to complete a project. Typically, these expenses include a markup before invoicing the client.

3 Ways to Keep Your Projects on Budget with Real-Time Expense Tracking

To ensure projects remain within budget and are profitable, you need to have control over your expense tracking. There are three main ways to effectively manage spending, let’s dive in.

1 - Excel Reports

Let’s start with a classic! Tracking your expenses in Excel is definitely a step in the right direction. It’s a good way to see all of your spending, and you can personalize your spreadsheet to include the categories of expenses that you need. Excel also allows you to share the expense report with team members when the spreadsheet is saved in the cloud, making it easier for the team to collaborate. 

However, spreadsheets are static, unorganized, and don’t integrate with other areas and tools that you use in your project. Each Excel spreadsheet is a silo, making it hard to find the key information that you need for the project or to fully understand financial performance.

Excel spreadsheets also make it hard to view real-time information in an easy-to-understand way. There aren't reports or dashboards that show you real-time information indicating whether a project is running over budget or not. You’re forced to estimate costs based on the most recent information you have, leading to decisions based on guesswork.

2 - QuickBooks

Using QuickBooks, or another financial system is an improvement from Excel. However, QuickBooks is primarily an accounting tool.

The main problem with QuickBooks is that it's not designed for project-based financial tracking. It can be hard to organize your different types of expenses, such as direct, labor, and sub-contractors. Furthermore, QuickBooks doesn't provide a way to simply add markups to costs before sending an invoice.

Just like Excel, QuickBooks doesn’t integrate with any task tracking or timesheet tools that you may use to manage your projects, making it yet another tool you need to integrate into your workflow.

3 - Purpose-built Project Management Software

We’ve saved the best solution for last! Using project management software purpose-built for project-based work can help you effectively manage your expenses, integrate with your project management tools, and ensure your projects remain within budget.

Firms that rely on outdated systems, manual processes, or a variety of different tools are faced with challenges that lead to missed deadlines, budget overruns, and financial losses.

When you find a project management software that was made for you, tracking expenses in real-time will be a breeze. This type of tool also enables you to track employee and contractor hours to manage time more effectively. And since there is now software that can manage all aspects of your consulting or engineering projects, you’ll also be able to create, track, and assign tasks efficiently. 

Aldoa: Project Management Software with Real-Time Expense Tracking for Professional Firms

How Aldoa Empowers Real-Time Project Expense Tracking

Aldoa was made specifically for consultants and engineers to manage their projects. With Aldoa you can consolidate all your project and financial management workflows in one place. 

You’re able to track your expenses in one platform, compare them to your initial budget, and generate insights based on real-time data. Aldoa enables you to create lump sum and T&M budgets with ease while also creating, customizing, and sending invoices directly to clients - all in one system. 

Discover How Aldoa Improved DCS’ Expense Tracking

Civil engineering firm, DCS was experiencing an issue with project management and financial tracking. Previously, they were using three different systems to manage finances, track project tasks, and manage employee hours. Their data was siloed and a lack of understanding of their past projects. 

DCS wanted to consolidate project and financial management and have transparent, real-time access to their data. They started working with Aldoa to consolidate time tracking, task tracking, and invoicing into one system and deliver exceptional experiences for their clients. By tracking each project by phase and breaking them into tasks, Aldoa helped DCS identify areas for operational improvement, ultimately increasing profitability. 

Track Your Project Expenses in Real-Time with Aldoa - Book a Demo Now!

Learn how Aldoa can improve your expense tracking, consolidate your systems, and support your team in completing quality projects on time and within budget. Schedule a product demo with our team and let's get the conversation started together.