WiJiT is republishing this blog post authored by CohnReznick and published on the GovCon360 site. This blog provides some helpful tips such as establishing guidelines for the overall team to insure all team members provide information in similar formats and understand the forecast timeline. Once a budget is developed and implemented, it must be periodically reviewed to understand why you need to make course corrections versus reforecasting. We encourage you to read on to learn all 10 tips for successful budget preparation.

As we embark on a new federal fiscal year, some of the most challenging activities performed by government contractors are budgeting and forecasting.  Keep in mind that when creating a budget, the costs to be low enough to win a contract but high enough to allow profit.  There also may be a need to reforecast depending on a significant win, loss or extension of a contract. As CohnReznick has helped many contractors stay on the path to profitability, we have created 10 tips to improve the budgeting process and plan strategically for the year ahead. These tips were featured in our 2017 GAUGE Report, and are worth revisiting for this year’s budgeting season.

  1. Kick-off the budgeting cycle by providing a timeline, parameters, and overall goals. Make sure that all stakeholders are included in this session.
  2. Establish guidelines for budgets that are very clear to the overall team. Below are just a few examples:
    • What is the timeline/horizon for the forecast?
    • When are the due dates?
    • How to handle proposals in the forecast?
    • How are options to be forecasted?
    • What is the growth rate expected?
  3. Make sure your organization uses a tool that provides all stakeholders with the visibility and control they need over the budget.
  4. The budget should be time phased, and the tool must provide the ability to group information by month, quarter, and year.
  5. Budgets should align to the timing of the work. Understand the full scope of your projects to properly align your budget to these projects.
  6. Scenario modeling is critical to understand the best- and worst-case scenarios. A tool that allows the formation of “what-ifs” or modeling is necessary.
  7. Account for rate differences, whether they are OH (Overhead), G&A (General & Administrative), MSH (Material/ Subcontract Handling), or GSA labor rates. Make sure your tool is flexible enough to account for project-specific rates, ceilings, budget, and forecasting rates.
  8. Hold monthly reviews throughout the year to review the budget and make course corrections versus forecast (recasting of the budget).
  9. Understand that the budget is a living, breathing document, and not a static metric to be filed away. Update the budget to incorporate any significant changes in your business environment.
  10. Use GAUGE metrics to benchmark your budgets to others in the industry. For example, see where you are tracking in terms of Revenue per full-time equivalent, percentage of healthcare cost to revenue, and G&A.

For more information about how to forecast/budget for the year ahead, please contact Karen Louis at karen.louis@wjtechnologies.com or at 703.885-8158.

Our thanks to CohnReznick and GovCon360 for producing this great insight.