The Financial Leader’s Monthly Action Plan: Budgeting Month for Government Contractors

We’ve released an eBook titled “The Financial Leader’s Monthly Action Plan.” Each month, we are posting excerpts here on our blog.  For the month of November the theme is “Budgeting Month for Government Contractors.” 

November ushers in the crisp air of change, and for government contractors, it brings an immense responsibility: budgeting for the upcoming fiscal year. The Federal Acquisition Regulation (FAR) requires proposed indirect billing rates submitted 60 days before the fiscal year ends (although in practice this target is rarely hit).

With little time to spare, you must coordinate a complex dance involving numerous stakeholders including: 

• Customers: Their needs and expectations shape project scope and resource allocation. 
  
  
• Project managers: They translate customer needs into actionable plans and resource requirements. 
  
  
• Subcontractors: Their costs factor into the overall budget equation. 
  
  
• Financial managers and analysts: They oversee financial health and ensure cost recovery through accurate rates. 
  
  
• Project management office (PMO): They ensure project alignment with the budget and track resource utilization. 
  
  
• Resource manager: They allocate resources based on project needs and budget constraints. 
  
  
• Business development (BD): They forecast potential wins and their impact on revenue and resource needs. 
  
  
• Contracts manager: They navigate contract terms and ensure compliance with billing requirements. 
  
  
• Sales: They understand market trends and competitor pricing, informing BD's win probability estimates. 
  
  
• Human resources: They forecast personnel costs and potential hiring needs.

Aligning this diverse group (especially during the holiday season) requires a Herculean effort. Look to business development to play a key role in the process.   

Business development's strategic role 

BD provides foundational inputs essential to the budgeting process. In addition to identifying the sources of revenues for the new year, BD also has to assign a probability of win (PWIN) and an expected value to everything in the pipeline.  

This gives you an excellent starting point for growth projections. The 2023 GAUGE Report shows that more than one-third (35%) of firms expect growth of 15% or more in the year ahead. Understanding (but not overestimating) your business’ potential is key to accurate budgeting.  

Once the numbers are collected and analyzed, Finance translates these possibilities into concrete resource needs and costs. The PMO ensures alignment between projects and the budget. And Unanet, your powerful budgeting software, orchestrates all the inputs into a cohesive financial plan. 

Unanet: Streamlining planning and scenarios 

Unanet brings order to the complexity. The robust platform provides a structured space for planning and scenario building. BD's PWIN and planned costs by accounting period find a home in Unanet's project planning capability. The result? A range of budget scenarios, offering nuanced perspectives on the financial landscape. 

Unanet's expertise goes beyond scenario creation — it calculates various iterations of indirect rates for the upcoming year. Though Target, Provisional, and Actual rates may differ, Unanet's functionalities empower organizations to navigate these variations, ensuring a comprehensive understanding of the financial roadmap. 

Suggested resources 

Make budgeting a breeze this year by honing your skills with insights from the following reading: 

• Budgeting for Project-Based Organizations 

Want to learn more? Download the entire eBook here.