Your project budget starts with its tasks. Each deliverable contains tasks, and the task budgets build up into the deliverable and project budgets.
You can also group deliverables into optional phases. Phases sit above deliverables and help you filter and report on groups of work.
Internal budget and contract value
The internal budget is the budget your team works towards. The contract value is the commercial value you charge your client. They can be equal, or you can set a fixed price while keeping a separate estimate of the resources required.
The following three scenarios show how your pricing method determines these values. Resource estimates use hours and billable rates from the rate card allocated to the fee proposal, budget or project.
Fixed price without resource estimates
Suppose you agree to charge $8,600 for a Concept Design task and do not add estimated resources. With a fixed price and no resource estimates, the internal budget and contract value both follow the task price.
Budget component | How it works |
Quantity × price | 1 Per Item × $8,600 = $8,600 |
Estimated resources | None |
Internal budget | Matches the fixed task price: $8,600 |
Contract value | Fixed task price: $8,600 |
Buffer | $8,600 − $8,600 = $0 |
Dynamic pricing from resources
Suppose a Construction Documentation task needs 40 hours of Senior time and 24 hours of Director time. In dynamic pricing mode, both the internal budget and contract value follow the total estimated resource value.
Budget component | How it works |
Senior estimate | 40 hours × $240 = $9,600 |
Director estimate | 24 hours × $250 = $6,000 |
Internal budget | $9,600 + $6,000 = $15,600 |
Contract value | Matches the resource estimate: $15,600 |
Buffer | $15,600 − $15,600 = $0 |
Fixed price with resource estimates
Suppose a Schematic Design task needs Senior, Director and Junior time, but you agree to charge a separate fixed price. The task is set to a quantity of 1 Per Item at $19,500. Its internal budget follows the resource estimate, while its contract value follows the fixed task price.
Budget component | How it works |
Senior estimate | 40 hours × $240 = $9,600 |
Director estimate | 16 hours × $250 = $4,000 |
Junior estimate | 16 hours × $180 = $2,880 |
Internal budget | $9,600 + $4,000 + $2,880 = $16,480 |
Contract value | Fixed task price: 1 × $19,500 = $19,500 |
Buffer | $19,500 − $16,480 = $3,020 |
Drum displays this buffer as 15.5% of the contract value. This lets you include a commercial contingency while giving your team a separate budget to work towards.
Where you build budgets
Task-level budgeting is used when building a proposal’s project budget, editing a project’s original budget, and managing a project variation.
For the practical steps, see Set task prices and internal budgets.