# A budget over time with a reserve > Spread the 600,000 UAH ceiling over the months, keep a contingency reserve for named risks and a management reserve for surprises, and run one earned value check correctly. - Course: [Project Management Without the Bureaucracy: Run One Project from Brief to Closure](https://productovi.com/courses/project-management-without-bureaucracy.md) - Module: Estimates and the budget - Lesson 15/32, ~25 min - Source: https://productovi.com/courses/project-management-without-bureaucracy/budget-over-time ## From a ceiling to a plan by month **Hanna:** 600,000 is a ceiling, not a plan. I need to know how much leaves the account each month, October to January, and what you keep back. **Alex Tutor:** Each line of work gets its full budget and an owner, then that budget is spread over the months when the work happens. Here is the plan, with the progress check from Monday, 30 November. **Dataset (CSV):** [Physics launch budget by month, UAH](https://productovi.com/datasets/project-management-without-bureaucracy/budget-over-time/klasna-physics-budget.csv) Six lines of work and two reserves within the 600,000 UAH ceiling. Monthly columns are planned cash; the last two columns are the 30 November check. - `line`: Line of work or reserve - `type`: work or reserve - `owner`: Who answers for it - `budget_uah`: Full budget of the line - `oct_uah`: Planned cash in October - `nov_uah`: Planned cash in November - `dec_uah`: Planned cash in December - `jan_uah`: Planned cash in January - `pct_complete_nov30`: Share of the line's work done by 30 November, % - `actual_to_nov30_uah`: Money actually spent by 30 November **Alex Tutor:** The work lines add up to 510,000: 45,000 in October, 160,000 in November, 190,000 in December and 115,000 in January. December is the heaviest month: the review, the practice sets and the first ads all land there. **Hanna:** Good, December is when families pay for spring packages, so I can plan around it. And the other 90,000? > **Exercise:** Using the work lines only, how much cash is planned to have left the account by the **end of December**? In UAH. ## Two reserves, two owners **Alex Tutor:** The 90,000 is two reserves. 50,000 is a contingency reserve for risks we can already name: a second round of demo lessons if fewer than eight tutors pass, extra days from the outside reviewer, diagrams redone, more ads if the waiting list is weak. **Alex Tutor:** It's sized from what each risk would cost and how likely it looks, and you, the lead, can spend it when one of those risks happens, without a new decision. **Alex Tutor:** The other 40,000 is a management reserve for surprises nobody can name today. It sits with the sponsor, outside your plan. **Leo:** And I release it only on a written request that says what happened and what was tried first. **Sofia:** So I control 560,000: the work and the contingency. The last 40,000 is Leo's call. > **Exercise:** Match each situation to the money that pays for it and who decides. **Alex Tutor:** And the other 40,000: who can touch it, and how? > **Exercise:** In mid-December the video vendor changes its terms and Klasna needs 25,000 UAH nobody listed as a risk. How does that money get released? ## One progress check, done right **Hanna:** On 30 November we had planned to spend 205,000 and actually spent 201,000. So we are on plan, right? **Alex Tutor:** That only compares money with money. It says nothing about how much work those 201,000 bought. For that you need a third number: earned value. **Alex Tutor:** Planned value is the budget of the work scheduled by now: 205,000. Actual cost is what was spent: 201,000. Earned value is each line's share done times its **full** budget. The curriculum is 70 % done: 0.7 × 120,000 = 84,000. **Danylo:** My test is 40 % done and I have spent 52,000. So I have earned 40 % of 52,000? **Alex Tutor:** That's the classic slip: multiply by the full budget of the task, never by the money spent or by the plan to date. > **Exercise:** The diagnostic test has a full budget of 85,000 UAH, is 40 % done and has cost 52,000 so far. What is its earned value? **Alex Tutor:** Now turn the three numbers into one ratio. > **Exercise:** On 30 November the six work lines have an earned value of 171,500 UAH against a planned value of 205,000. What is earned ÷ planned? Two decimals. ## What the two ratios say **Alex Tutor:** Across all six lines, earned value is 171,500. Two ratios follow. Earned ÷ planned = 171,500 ÷ 205,000 ≈ 0.84: we have done about 84 % of the work planned by now. Earned ÷ actual = 171,500 ÷ 201,000 ≈ 0.85: each hryvnia bought 85 kopiykas of planned work. **Hanna:** So we are behind and paying more than planned for what we get. **Alex Tutor:** And if the rest of the work costs the same, 510,000 ÷ 0.853 ≈ 597,700. That is more than the 560,000 you control and nearly all of Leo's reserve. **Danylo:** Most of that is my test: scoring took twice the hours I expected. The rest of the test is simpler. **Alex Tutor:** Then that's the next step: a ratio is a signal, not a verdict. Ask where the gap is and re-estimate what is left. Hanna's finance course covers budget variance in depth: see "Budgets people believe" and "Case: plan vs actual" in Finance for Product People. > **Exercise:** On 30 November: planned value 205,000 UAH, earned value 171,500, actual cost 201,000; the lead controls 560,000 of the 600,000 ceiling. Which statements are correct? Choose all that apply. ## Spending versus progress **Leo:** Why do I need three numbers? Hanna already sends me spending every month. **Alex Tutor:** Spending alone can look perfect while the work falls behind, as it did today. One check a month, with the three numbers and a sentence on the cause, is enough. No more ceremony than that. **Sofia:** And the share done: who says the curriculum is 70 %? **Alex Tutor:** Its owner, against something checkable: chapters accepted, not hours worked. "Almost done" is not a percentage. > **Exercise:** **True or false:** a task's earned value is its share done multiplied by the money already spent on it. **Alex Tutor:** One more: where does "70 % done" come from? > **Exercise:** Vira, who owns the curriculum line, reports the curriculum as 70 % done. What makes that figure usable in the earned value check? ## Your turn: the note to Hanna and Leo **Hanna:** Send me and Leo a short note on the 30 November check. Numbers first, then what you will do. **Leo:** And tell me straight if you will need my 40,000. **Alex Tutor:** Four or five lines: the three numbers, what they mean, where the gap is, and the next step with any reserve request. **Sofia:** Signal first, then the plan for the test. > **Exercise:** Write a 4–5 line note to Hanna, head of finance, and Leo, the sponsor, on the 30 November check. The numbers: planned value 205,000 UAH, earned value 171,500, actual cost 201,000; most of the gap is the diagnostic test, where scoring took twice the hours expected; you control 560,000 (work plus the 50,000 contingency reserve) and Leo holds a 40,000 management reserve. Cover the three numbers, what they mean, where the gap is, and your next step, including whether you ask for any reserve now. > **Key points** > > - Give each line of work a full budget and an owner, then spread it over the months: Hanna plans cash, not a ceiling. > - A **contingency reserve** (here 50,000) covers risks you can already name; the lead spends it without a new decision. A **management reserve** (here 40,000) covers surprises; the sponsor releases it on a written request. > - New scope is paid by neither reserve: it is a separate decision. > - One check a month: planned value, **earned value** (share done × the task's **full** budget) and actual cost. Earned ÷ planned shows schedule; earned ÷ actual shows cost. > - A ratio is a signal: find where the gap is and re-estimate what is left. **Alex Tutor:** Next, the case: how long the earlier launches really took, and the date you can honestly give Leo for physics. - Previous lesson: [Past projects as a reference, and one shared buffer](https://productovi.com/courses/project-management-without-bureaucracy/past-projects-and-one-buffer.md) - Next lesson: [Case: estimates versus actuals](https://productovi.com/courses/project-management-without-bureaucracy/estimates-vs-actuals-case.md) --- Productovi Learning. Free, no sign-up needed to read.