When preparing a detailed budget, you will find it helpful to sort all anticipated expenditures and revenues into the categories listed below. Included in the description of each budget category are some helpful suggestions to make the budgeting process easier and more accurate.
Fixed assets:
These are assets that have a useful life of longer than a year, such as land, buildings, furniture, and large pieces of equipment.
Revenues
Revenues from sales or fees are calculated by multiplying the anticipated number of commodities to be sold (or services to be provided) by the prices to be charged, and then deducting from the total the value of commodities and services provided free of charge. Revenues from grants should be based on the grant agreements and equal the expenses to be made under the grants. The projections of funds from donations should be based on previous experience, unless circumstances are expected to change significantly.
Salaries and Wages
This category includes monies to be paid to staff. To estimate personnel costs, it is useful to start by listing all staff positions, the amount of salary or wages to be paid to staff in that position, and the percentage of time that that position will be employed (100 percent, 50 percent, etc.). Private sector managers will almost always include salary costs in their budgets. However, many public sector managers will not budget for salaries since these costs are paid for by a higher level in the ministry or by another ministry altogether. Even if managers don't budget salary costs, it is a good idea to list the staff positions which are required to implement planned activities. This will allow managers to respond appropriately to any increases or decreases in staff due to changes in program activities.
Fringe Benefits
This category includes expenditures for benefits that are in accordance with your organization's usual policy and practice. These should include all benefits required by law, for example, social security, severance pay, annual vacation, housing allowance, medical insurance, and others. Calculate the benefits for all positions you listed under salaries and wages.
Fees
Examples of specialized or infrequent activities for which fees are paid instead of salaries include annual audits, design of information systems, maintenance of accounting books (in small organizations), special training for staff, design of educational materials, and surgical time. Of all of these, only surgical time is a variable cost, which you determine by calculating how long it takes to perform a procedure and related tasks, and how many users of surgical methods or IUDs you have projected for the year. You may wish to pay surgeons and doctors on the basis of how many hours they have worked rather than per procedure, as the latter practice could serve as a financial incentive to the provider to promote certain methods.
Building Operating Costs
These are fixed costs and can include minor repairs and renovation to the buildings owned or rented by the program, as well as janitorial services and the maintenance of building and grounds. Rent or mortgage and utilities are often major fixed costs in large cities.
Vehicle Operating Costs
These variable expenses depend on the level of use of the program's vehicles and the number of vehicles. Usually, the manager must calculate an average charge for fuel, maintenance, and repairs per kilometer traveled for those activities in the budget that require use of the vehicles. Insurance costs sometimes vary depending on the age or original value of the vehicle.
Travel and Per Diem Expenses
The type of travel normally included in this category is the regular and customary travel associated with the activities of the project, for example supervisory travel, staff meetings, outreach, and field visits. Some travel costs are variable and some are fixed. For example, the supervisory travel costs are usually fixed because they are the same no matter how high or low the average number of clients per distributor or health post. The travel costs for home visits, however, are variable, because they increase or decrease depending on your targets for numbers of home visits. Refer to the job description for each staff person or consultant and to the work plan. Project the number of trips, the destinations, and the duration of trips for each person. Include all estimated costs for travel, such as air fare, bus/train fare, taxis, out-of-pocket expenditures, fuel, mileage, per diem, etc.
This is the charge representing the utilization of a fixed asset during the period. Thus a vehicle with an estimated life of five years would depreciate by 20 percent of its costs (minus resale value) each year. Depreciation is probably only taken into account if the organization expects to have to replace the fixed asset itself (as opposed to having a donor replace it).
Communications
Postage, couriers, telephone, and cables are usually treated as fixed costs, because it is so hard to attribute increases in these costs to specific programs or activities. One exception is large mass mailings, for which you can calculate the cost per piece mailed.
General Administrative and Maintenance Expenses
These fixed expenses represent costs incurred in running an office. They include, but are not limited to: equipment rental, maintenance and minor repairs to office and medical equipment, data processing, copying and printing costs, office supplies, bookkeeping expenses, and insurance.
Educational and Publicity Contracts
This category is often a mixture of fixed and variable costs and includes items such as the purchase, printing, or copying of pamphlets, books, slide shows, and videos. Materials which service providers use repeatedly in client education are fixed costs, while materials that are given to each client or person educated are variable. Publicity costs may vary according to the number of new clients the program wants to attract; for example, in order to draw 2,500 clients, the program may print 10,000 promotional brochures or purchase advertisements in local magazines. Publicity costs may also be fixed from year to year; an example would be a standing fixed expense for radio spots on a local show.
Medical Supplies and Equipment
These are often variable costs, although large equipment depreciation is usually a fixed cost. The supplies most often used in family planning programs are medical supplies and equipment such as gloves, specula, and contraceptives. The quantity that will be needed can be predicted directly from the numbers of users and clients that you have projected for the year during your planning process. The equipment to be included in this category rather than under "Fixed Assets' consists of low-cost items that are bought fairly frequently, which therefore count as recurrent costs charged to the fiscal year in which they were bought. Surgical instruments and examination lamps are examples of equipment that you might replace frequently, such as every three years.