A work element budget
is an estimate of how much of the total contract budget applies to each work element. This estimate is for reporting purposes, and does not impact the payment of invoices.
Contractors enter work element budgets in Pisces. Contractors must also attach a line item budget to their contract within Pisces. While line item budgets help us account for items such as labor, travel, and materials, work element budgets enable us to create reports that identify how much the Fish and Wildlife program has budgeted for installing fish passage improvements versus maintaining vegetation versus producing status reports.
Preparing a Work Element Budget
Things to consider when creating your work element budget:
- Identify what percentage of the total contract budget is associated with each work element, and divide the total contract budget accordingly. For example, if Work Element B constitutes 20% of the total contract effort for a $100,000 contract, then one might estimate that 20% (or $20,000) of the total contract budget could be allocated to this work element.
- After estimating a total budget for each work element based on percentage of effort, you may make adjustments based on other factors. For example, some work elements may have costly equipment purchases or subcontracts associated with them. Other work elements may comprise much of the effort but little of the cost because of investments in automation or efficiency of contract personnel.
- Do not breakout overhead and indirect costs separately. Instead, allocate the total overhead across all of the work elements, as appropriate. (The Fish and Wildlife program does care about tracking overhead, but that information can be accessed from the contract line item budget.)
- Don't forget to include subcontract costs in your estimate.
- Recognize that this exercise is an estimate. A reasonable estimate should be accurate enough to give the program the information it needs. If you are feeling frustrated with this activity, you may be working too hard at it.
If you already break out your line item budget by tasks or work elements, it should be easy to roll up your total costs into work element totals and allocate overhead across them.
NOTE: The work element budget should be entered in Pisces 90 days before a new contract is to be executed.
Updating a Work Element Budget
Contractors may update their work element budgets at any time throughout the contract performance period.
Contractors must provide an updated work element budget once they have completed all milestones and deliverables associated with that work element. A work "Completion Guide" will prompt you to do this before you submit your status report. See the Completion Guide for Entering Required Data in Pisces (PDF) document for more information about how to use the Guide.
Why update work element budgets?
BPA used to require contractors to submit a spending plan with every new contract and renewal, forecasting their costs by month. Now Pisces can generate contract, project and program spending plans automatically based on work element durations and work element budgets. To ensure accurate spending forecasts, we ask contractors to notify us via Pisces whenever they expect changes that significantly impact work element budgets or schedules, so we can integrate this information into our spending plans and cash flow projections.
Work element budgests are also the foundation of most financial reports (cost per metric, spending per focal species, spending per location, etc). In order to be reasonably accurate, they must reflect any major changes between what was planned and what actually happened.
Why enter updated work element budgets as part of status reporting, rather than at the end of the contract?
BPA managers generate spending forecasts several times throughout the year. Updating work element budgets in real time, as changes occur and as work elements are completed, improves the quality of the data used to make these forecasts. We will also use updated work element budgets and information about changes to work element durations to support the within-year budget modification and rescheduling processes.
How accurate does an updated work element budget have to be?
BPA recognizes that a work element budget estimate provided as part of a Pisces status report may be quite rough. The goal of updating work element budgets is to identify major deviations from planned work element budgets. Examples would include construction being delayed a year, material proces doubling, or a cost-share partner pulling out of the project and shifting costs to the contractor. To idenitfy smaller discrepancies between planned and updated work element budgets, we recommend that you conduct a final review of your work element budgets at the end of the contract. Ideally this would be done after the submission of the final invoice so that the sum of the work element budgets would equal the actual costs for the contract. NOTE: work element budgets may be updated even after a contract is complete.
How are work element budgets used?
- Work element budgets and work element durations (captured via milestone start and end dates) enable Pisces to generate reports that predict monthly contract spending, and monthly program spending, which helps the program manage cash flow.
- Work element budgets can be rolled up to report on how much we budget by focal species, location, etc.
- Work element budgets can be connected to status reports to determine the financial impact when work runs ahead or behind schedule.
- Work element budgets can be used to help benchmark how much future program actions might cost.Recognizing that different actions cost more or less for good reasons, a work element budget can provide a general cost range for common actions, such as the replacement of a culvert.