The following checklist is our quick guide to preparing and agreeing project budgets. Please note that it is by no means a definitive guide... However, we hope you find it useful!
- Estimated days to complete work
Questions to consider:
- Is there a range? Is there an upper limit set for days to complete the work?
- Is there reasonable confidence it can be achieved in the days estimated? (Ask the contractor what their basis is/what might extend the number of days).
- You may want to budget for the upper end of the range
- Is it an agreed ‘fixed’ price to complete the agreed work or a flexible arrangement based on amount of work under-taken?
- Accounting for VAT
Is the contractor registered for VAT? If so, does the estimate provided include VAT? As a rule, request all contract estimates/bids to include VAT and all known additional (or probable) expenses.
Confirm if any is travel involved or participant remuneration/expenses in delivery and where this sits in the price given.
- Is there is more than one party involved in delivery of the work?
If yes, confirm that costs are included for all parties and centrally invoiced (preferred arrangement), or if there is a different arrangement. The questions about VAT and additional expenses are also relevant to sub-contractors.
- Costs for time
Ask for time to be separated from costs in budget breakdowns. Costs, including expenses, are third party (e.g. materials or travel). There might be situations in which it makes more sense for your organisation to pay for things things versus the contractor (e.g. venue or equipment hire).
- Participation costs
Consider covering costs that make it possible for staff and participants to engage in projects such as childcare, carers, access requirements, translators, accommodation, subsistence, and time if the project requires part-time staff to work additional hours etc.
- Additional expenses
Confirm any additional expenses that might be added to the final invoice (e.g. travel, admin expenses, specific software licensing).
- Is it an ongoing relationship?
If an ongoing relationship, or over a period of time, are there additional expenses liabilities or expenses that you will incur due to this (e.g. regular invoicing/retainer type costs)? It may be helpful to ask for a budget (by month or year, depending) which details fixed and variable costs. This should be reviewed regularly (whatever interval makes sense) by your organisation and the contractor (e.g. look at actual versus budget to understand variances, to ensure work is on track and there is alignment about expectations).
- Accounting for inflation rise
If the contract is over a number of years, is there an inflation rise in the agreement?
- Will the project deliver a 'product'?
If the work results in a ‘product’ (e.g. production of a report, software, database) – where do the costings sit for this in the estimate (and is the expectation the contractor will commission/contract this, or will it sit with your organisation?).
- Confirming the details
- Confirm by email of the total amount of invoicing (inclusive of VAT and any additional expenses) and invoice timings/payment schedule against deliverables
- Confirm that payment is subject to satisfactory delivery of the agreed work