Project Budget Burn Rate

Overview

Burn Rate measures how fast a project consumes budget over time, providing early warning when spending pace exceeds projections and enabling corrective action before budget depletion.

Calculation

Burn Rate = Total Costs Spent / Time Period

Example:

• $50,000 spent in 5 weeks
• Burn Rate = $10,000/week

Forecasting Budget Exhaustion

Runway = Remaining Budget / Burn Rate

Example:

• Total Budget: $100,000
• Spent: $50,000
• Remaining: $50,000
• Burn Rate: $10,000/week
• Runway: 5 weeks until budget exhausted

Planned vs. Actual Burn

Planned Burn Rate:

• Total Budget / Planned Duration
• Example: $100,000 / 20 weeks = $5,000/week

Comparison:

• Actual: $10,000/week
• Planned: $5,000/week
• 2× over budget pace → Red flag!

Warning Thresholds

Green: Actual burn ≤ Planned burn Yellow: Actual burn 1.1-1.25× planned Red: Actual burn > 1.25× planned

Root Causes of High Burn

• Scope creep
• Inefficient resource allocation
• Underestimated complexity
• Quality issues/rework
• Excessive meeting time
• Wrong skill levels assigned

Corrective Actions

Reduce Burn Rate:

• Reallocate to junior resources
• Eliminate scope creep
• Improve processes
• Reduce meetings

Extend Budget:

• Request change order
• Renegotiate scope
• Add funding

Time Tracking Integration

Burn rate requires:

• Accurate daily time tracking
• Proper project allocation
• Fully loaded labor rates
• Real-time cost calculation
• Regular budget updates

Pricing

N/A - This is a project management metric.