Budgeting Management Part 2 (Budgeting example)

Budgeting Management Part 2: (This is a high level example of budgeting) I could add a lot more detail, but this post will get to long!

Budget Example:

A firm is approached by a music festival that wants to create an a mobile app for the festival. This app should cover all the main mobile platforms. This includes iOS, Android, Windows Phone and Blackberry.

They (the music festival) have a budget of £20,000 to do this.

The first and most important thing is that the scope is clearly defined. This will mean sitting down with the client (music festival) in a meeting or several, to discuss what they require. Requirements come in all shapes and sizes, but for a mobile app you want to define certain key things.

  1. What mobile platforms should it operate on?
  2. What date does it have to be delivered by?
  3. Is there an example of another similar app?
  4. What will the content of the app be? A list of key requirements. This will also require a design mock-up of what the app will look like and also what the various sections or areas of the app will cover and look like. Some wire frames (how the sections, pages, areas of the app fit together. Also a wire frame may be required of how one page or section works). This will probably change in some shape or form during the build of the app.
  5. A technical specification may also be required. This is a plain language document describing how the app will work and detailing how all the sections and pages will fit together.
  6. Copy. This is written content of the app. This includes the main written content. Any articles, information, notices, FAQs etc.
  7. Terms and Conditions. These are the terms for using the app.

The requirements are defined and the client wants a relatively straight forward app to be created. This will entail some videos, photos, some information and history about the event and some contact details for further information. It will also contain redirects and details of where and how to buy tickets for the music festival. Also the client would like a twitter feed built into the app so any twits about the festival show up in the feed.

Initially the client wanted the app on all mobile platforms. But after discussing this with the client and the extra costs and possibly low take up on some of the platforms. The client agrees to an app for only iOS and Android.

There would be two different ways to build this app. One would be an native app and the other would be a web (html5) app. Some thought is given to this, but it is decided to create a web app. Web apps are created using HMTL 5. Creating a web app should make it easier to use across the mobile platforms. It won’t require creating two apps using the developer kits for the various mobile operating systems which would be the case if creating a native app.

The client already has their own youtube channel so videos from the site can be used with the app. A photo gallery is also created using photos provided by the client who can provide these free of charge.

Because the app will be given away for free and they will be no in app purchases or subscriptions. It will be far easier getting it past the Apple guidelines and placing on the iOS store. Android apps can be directly loaded to the Google play store with no clearance process.

The project manager speaks to an in house developer who knows how to develop web apps and has done both for Andriod and iOS. However he is busy with two of the other in house developers at the moment and cannot take on this development himself full time. As the client wants a quick as possible turn around. It is agreed an developer should be brought in for 3 weeks to do the bulk of the work. The in house developer knows a really good developer who also knows some of the technical aspects of the build that he is not familiar with. This developer is free for the work and at £400 a day it is quite a good price for a developer!

An in house account manager, the project manager, project assistant and in house accountant will make up the rest of the team and as they are internal and paid monthly. They will not add to the cost of the project. However as salaries do have to paid the in house costs are charged at a 30% fee of the overall budget and this costs £6000 (In this price all costs will be covered and this also includes any contingency costs). This also includes an account manager who will provide a post launch service to the client.  Agreement is made with the client that an overall charge of £17,400 will be made. Coming £2600 under budget.

Break Down of Costs:

Company Charge: £6000

Developer: £400 X 21 Days = £8400

Designer: £300 X 5 days = £1500

QA Tester: £300 X 5 days = £1500

Itunes App Store: $99 and 30% cut of each download.  (This app will be given away for free so not cut is applicable).

The iOS Developer kit – allowing you to develop and distribute apps in the iTunes App Store – costs $99/year.

Google Play (Andriod Store): Pay a $25 registration fee. (This is a one-time fee required for all developers, even if you are publishing a free app. You can pay using credit card or Google Checkout).

Google takes 30% of the revenues of paid apps for“carriers and billing settlement fees”. The same as Apple.

Photos and Video: Free of charge. Provided by client.

Copy: (The blurb i.e. information, articles anything in written form) Free of charge. Provided by client.

Overall Cost: £17,400

There is an contingency cost agree with the boss, from the £6000 of about £3000. (Note: In some budgeting risk and issue budgets may also be required).

Looking at the costs above. Any delays or increases to the number of days the contractors work for could seriously increase the costs. Tight management and communication will be required to make sure the budget does not go over costs. As at the scoping stage of the project it was identified that this was a relatively straight forward app to build. No major risks are logged. However all risks, issues, progress and general monitoring of the project must be closely maintained to keep the budget on track,

Think of some other risks that could affect the budget. A change in project scope. Delays in the work. Issues with integrating with 3rd party systems such as twitter or youtube. All this must be taken into account. From this simple example it can show that budget management can be quite complex, Being affected by multiple variables.

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