Budgeting for Success (CAD Manager Column)30 Sep, 2008 By: Robert Green
You might hate budgeting, but it's crucial to making sure you and your users have the tools they need.
I know that many CAD managers — perhaps you're one of them — hate preparing budgets. They put off budgeting until the last minute, and consequently it is an error-prone process for many. I'm making it my mission this month to change your mind. No matter how much you think you hate budgeting, I want to get you pumped up to prepare a great budget document.
Why should you care? Because without money, nothing happens! If you don't ask for money, you certainly won't get it. Budgeting is simply what you must do to get things done for your department, your users, and yourself. Let's get to work.
Scrutinizing every cent of your budget to achieve maximum effectiveness will be respected by your senior management staff.
Think about Your Needs
A great budget starts with a needs analysis to ensure that you account for everything you require. This needs analysis can take some time, so get started now. Continue thinking about all your needs for a couple of weeks to make sure you haven't forgotten anything. Here are a few hints to get you started:
Consumables. Printer cartridges, paper, backup media, memory sticks, toner, cleaning supplies, and pens. It's easy to miss this stuff, but it all adds up to big money over the course of a year.
Annual contracts. Software subscriptions, maintenance agreements for hardware, reprographic contracts, etc. These big-ticket items are very embarrassing to overlook.
Training. Training for your users, for yourself, and for partner firms. Training budgets are dynamic, but you must ask for training to get it. Be sure to include training for your professional development, because everything you learn can be leveraged to provide greater user efficiency.
Hardware. Even if your information technology (IT) department handles the hardware, you'll do well to include your budgeted hardware needs in your own budget or make sure that the IT department does. IT departments that don't work closely with the CAD staff tend to underbudget for graphics cards, monitors, RAM, and disk subsystems. Paying attention to your hardware budget will help you acquire the high-end tools you need to run CAD well.
Software. This category includes purchases beyond subscriptions. Think about new software packages, expensive 3D upgrades, and even software utilities. Be creative here and include everything you think might be coming at you during the next year, and don't forget that many software products require a license for each user.
CAD management itself. Many CAD managers find themselves stretched to perform so many different tasks that making time to perform CAD management duties takes a backseat to other priorities. If you budget your own time for providing support, training, creating standards, troubleshooting software issues, or doing any of the myriad activities you do, you might actually get management's support for what you do.
Write It Down
Getting all your needs on paper is a giant step toward understanding your budget and being able to present it to your boss. If you don't write everything down, you'll miss something! I recommend starting a spreadsheet document that can be refined over time, to organize all your budgeting needs. The goal at first is to simply capture everything in a rough format. Here are a few hints to get your draft budget document in order:
Create a tab for each major budget area. One tab for hardware, one for software, etc. This system keeps everything separated and makes each area manageable. I also find that categorizing my budget helps me keep my mental approach to budgeting more organized.
Prioritize items. In each budget area, start with the must-have items and make your way down to the we-may-need items. This approach allows me to show my boss that I understand that money is limited and that I've thought through the budget carefully. I've also found senior management appreciates the honesty of admitting that not everything on a budget is critical.
Assign costs and quantities. For each budget item, you'll now need a cost and quantity estimate. You can collect these estimates from Web sites, written quotes, old purchase orders, or even notes from phone call records. Don't trust your memory to recall past expenses or how many rolls of paper you used last year.
Collect data as you go. Every time you get a quote or collect data on the Internet, print a hard copy or save a digital file and put it in your budgeting documentation folder. Collecting data as you go can be tedious, but you know somebody in accounting will want this information.
Total each category. Subtotaling each category of expenses will give you a good handle on how much money you'll need for each area of your CAD management duties for the next year. Here's where you'll be glad you put everything in a spreadsheet, because it will do your math automatically!
Refine as needed. Forget something? Go back, add, and adjust as much as required. I've never written a good budget document without spending at least two weeks and tweaking it 10 to 15 times.
A budget document can come back to haunt you if you omit something important. I learned this the hard way early in my engineering career when I neglected to include $8,000 of electrical controls in a vacuum pump assembly budget. That mistake taught me to have my peers and management examine my budget documents whenever possible.
When your boss reviews your budget, ask for a critique. The goal of this process is to find anything you've missed and get your boss' impression at the same time so you can adjust if needed. Take any feedback seriously and ask for clarification whenever needed. I've always found it easier to ask my boss to look at my budget than to go back later and admit a mistake.
Is Change Coming?
As your boss reviews your budget, take the initiative to ask about any changes in company finances or configurations that could affect you. Here are a few scenarios I've experienced as examples of what organizational change can mean for a CAD manager:
Branch office growth. More branch offices mean more printers, more servers, more consumables, more CAD management time for support, and more travel. You may not know a new branch office is coming unless you ask.
Acquisitions. Purchasing other companies means culture clash, and that'll require more CAD management time to coordinate those cultures.
Poor business outlook. If things don't look good for your company, be prepared for some austere times and know that your budget likely will be slashed. If this is the case at your company, pay particular attention to prioritizing your budget so you can defend your must-have items if cuts come later.
Good business outlook. New projects will mean more staff, which means new computers, more training, and more CAD management time in general.
If your boss gives you any indication that any of these change scenarios is on the way, you'll need to revise your budget accordingly or prepare an alternate plan. Not only will you seem better prepared later if the change comes, but you'll benefit from the thought process. It's far better to head into changing times with a plan than to improvise.
Make It Final
After you've planned, tweaked, reviewed, and tweaked some more, your budget is almost done. The only thing that remains is to get everything formatted nicely and make your budget presentable for the executive management staff who will review it. Ask other managers in your company for a budget-format document they like or ask your boss if the company uses a standard budget spreadsheet. If you use a budget format that your senior managers already like, your budget will be better received.
For a sample spreadsheet that might give you a good starting point, see my CAD Manager's ROI Worksheet at www.cad-manager.com/tools.
After you understand why budgets are so important and you have a method for navigating the process, it's time to get going and build that budgeting spreadsheet. Don't wait until the end of the year to undertake this task; get to work now so you'll have the time to think through the budgeting process without being hurried.
As time goes by, keep up with your budget by always collecting new information for your budgeting folder, requesting information from vendors, and tweaking your spreadsheet for next year. I think you'll find budgeting gets easier as you work at it, and I guarantee that your boss will respect you more as your budgets improve.