Bottom-Up Method
For the budgeting of The Drip the top-down estimating method was used. We chose this method due it the similarities it has with a past project that we have done. This allowed us to tap into knowledge that we already had regarding specific parameters of those projects. We felt this was the best approach for a conceptual estimate in the early-stage of the project.
Original Vs. Actual Budgeted Costs
Labor Variations: Due tolabor cost, in order for us to stay within budget, it is best to hire part time associates at minimum wage. No overtime will be given; only 30 hours per week. Only one manager will be needed to start to help with coffee shop duties with 40 hours a week given. Tutors for the community center will also be part time. The original budget was $200,000.00 and remained the same.
Material Variations: The material costs were overestimated in the original budget by $10,000.00. We shopped around for materials and were able to find deals on items as well as our contractors providing ideas which allowed us to save money in this category. It remained the same.
Contractor Variations:The contractor cost was underestimated. They were key things that were not included in the estimation at the beginning that are part of the contractor budget. Those items include plumbing, flooring, electrical and venting system. These were items we were unaware of as a building had not been secured at the time the original budget was done. Original budget was $70,000.00, which remained the same.
Equipment & Facilities Variations:The overall equipment and facilities cost came to a total of $140,000.00. The amounts are for the coffee makers, POS system, computers, legal expenses, phone, etc. The original budget was $150,000.00 resulting in a savings.
Travel Variations:The original budget set in place for the travel expenses was $10,000.00. The actual budget cost came out to $6,000.00. This included basic company travel expenses and advertising. This change was due to in-person meeting not being needed at the current time, but allows for them to take place as the completion of the project nears.
Contingency Plan
Our budget contingency plan is using cutbacks and leaving extra in the budget for any unexpected circumstance that may happen. This includes travel expenses, materials, labor and equipment. In order of our business to be successful we need to make the most of our budget. The savings will serve as a cushion to our budgeted costs. The Drip's contingency budget will include $10,000.00
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The Drip Budget
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Original Budgeted Cost
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Actual Budgeted Cost
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Labor
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$200,000.00
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$200,000.00
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Materials
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$50,000.00
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$50,000.00
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Contractors
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$70,000.00
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$70,000.00
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Equipment and Facilities
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$150,000.00
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$140,000.00
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Travel
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$10,000.00
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$6,000.00
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Total
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$480,000.00
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$466,000.00
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Attachment:- fill_the_cup_2.rar