8 min read • Guide 834 of 877
Agile Budget Management
Budgets can be agile too. GitScrum provides visibility into work delivered and remaining, helping teams have informed budget conversations.
Budget Challenges
Traditional vs Agile
BUDGET TENSION:
┌─────────────────────────────────────────────────────────────┐
│ │
│ TRADITIONAL BUDGETING: │
│ ────────────────────── │
│ 1. Define project scope (12 months ahead) │
│ 2. Estimate cost │
│ 3. Get budget approved │
│ 4. Execute plan │
│ 5. Variance = Problem │
│ │
│ PROBLEMS: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ • Scope changes → Budget fight ││
│ │ • Learning mid-project → Can't adapt ││
│ │ • False precision → 12-month estimates are guesses ││
│ │ • Use-it-or-lose-it → Wasteful end-of-year spending ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ ─────────────────────────────────────────────────────────── │
│ │
│ AGILE APPROACH: │
│ ─────────────── │
│ 1. Fund capacity (teams) │
│ 2. Prioritize continuously │
│ 3. Deliver incrementally │
│ 4. Measure value delivered │
│ 5. Adapt as you learn │
│ │
│ BENEFITS: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ • Change priorities without budget change ││
│ │ • Stop when "enough" value delivered ││
│ │ • Invest where returns are proven ││
│ │ • Reduce large failed investments ││
│ └─────────────────────────────────────────────────────────┘│
└─────────────────────────────────────────────────────────────┘
Funding Models
Agile Budgeting Approaches
AGILE BUDGET MODELS:
┌─────────────────────────────────────────────────────────────┐
│ │
│ MODEL 1: FUND THE TEAM │
│ ────────────────────── │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ BUDGET: $1.2M / year ││
│ │ ALLOCATION: Team of 6 developers ││
│ │ ││
│ │ Team works on highest-priority backlog items ││
│ │ Priorities can change monthly/quarterly ││
│ │ No budget negotiation for scope changes ││
│ │ ││
│ │ REVIEW: Quarterly ││
│ │ "Is this team delivering enough value to justify?" ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ MODEL 2: INCREMENTAL FUNDING │
│ ──────────────────────────── │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ INITIAL: $200K for first 3 sprints (discovery) ││
│ │ ││
│ │ After 3 sprints: ││
│ │ • Review progress and learning ││
│ │ • Decide: Continue, pivot, or stop ││
│ │ • Approve next funding increment ││
│ │ ││
│ │ PHASE 2: $300K for next 3 months (if approved) ││
│ │ PHASE 3: $400K for scaling (if approved) ││
│ │ ││
│ │ Fund based on demonstrated progress ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ MODEL 3: VALUE-BASED FUNDING │
│ ──────────────────────────── │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ BUDGET TIED TO OUTCOMES: ││
│ │ ││
│ │ "Increase conversion 10%" → Fund until achieved ││
│ │ "Reduce support tickets 30%" → Fund until achieved ││
│ │ ││
│ │ Stop funding when: ││
│ │ • Goal achieved ││
│ │ • Proven not achievable ││
│ │ • Better opportunity elsewhere ││
│ └─────────────────────────────────────────────────────────┘│
└─────────────────────────────────────────────────────────────┘
Forecasting
Predicting Costs
AGILE COST FORECASTING:
┌─────────────────────────────────────────────────────────────┐
│ │
│ USING VELOCITY: │
│ ─────────────── │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ KNOWN: ││
│ │ • Team velocity: 30 points/sprint ││
│ │ • Sprint cost: $50K (team cost) ││
│ │ • Backlog: 180 points ││
│ │ ││
│ │ FORECAST: ││
│ │ 180 points ÷ 30 points/sprint = 6 sprints ││
│ │ 6 sprints × $50K = $300K ││
│ │ ││
│ │ RANGE (velocity varies): ││
│ │ Optimistic (35 pts): 6 sprints = $260K ││
│ │ Expected (30 pts): 6 sprints = $300K ││
│ │ Pessimistic (25 pts): 8 sprints = $360K ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ ─────────────────────────────────────────────────────────── │
│ │
│ BURNUP BUDGET VIEW: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ ││
│ │ SCOPE ││
│ │ 200│─────────────────────────● Total Scope ││
│ │ 150│ ●───●──── ││
│ │ 100│ ●───●─── ││
│ │ 50│●───●─── ││
│ │ └─────────────────────────────► BUDGET SPENT ││
│ │ $50K $100K $150K $200K $250K ││
│ │ ││
│ │ Projection shows ~$280K to complete current scope ││
│ │ Budget is $300K → On track ││
│ │ ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ UPDATE FORECASTS: │
│ ────────────────── │
│ Every sprint, refine forecast based on: │
│ • Actual velocity │
│ • Scope changes │
│ • New learning │
│ │
│ COMMUNICATE RANGES, NOT POINTS │
└─────────────────────────────────────────────────────────────┘
Tracking Spend
Budget Visibility
BUDGET TRACKING:
┌─────────────────────────────────────────────────────────────┐
│ │
│ SPRINT BUDGET DASHBOARD: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ PRODUCT: Customer Portal ││
│ │ ANNUAL BUDGET: $600K ││
│ │ ││
│ │ YEAR TO DATE (January - March): ││
│ │ Budget: $150K (25% of year) ││
│ │ Spent: $145K ││
│ │ Remaining: $5K this quarter ││
│ │ ││
│ │ STATUS: ✅ On track ││
│ │ ││
│ │ SPEND BREAKDOWN: ││
│ │ ├─ Team costs: $130K (90%) ││
│ │ ├─ Infrastructure: $10K (7%) ││
│ │ └─ Tools/Services: $5K (3%) ││
│ │ ││
│ │ VALUE DELIVERED: ││
│ │ ├─ 12 user stories completed ││
│ │ ├─ 45 story points delivered ││
│ │ └─ 3 features released ││
│ │ ││
│ │ COST PER POINT: $3.2K (target: <$3.5K) ✅ ││
│ │ ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ ─────────────────────────────────────────────────────────── │
│ │
│ FORECAST UPDATES: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ REMAINING BACKLOG: 120 points ││
│ │ AVG VELOCITY: 15 points/sprint ││
│ │ ESTIMATED SPRINTS: 8 more ││
│ │ ESTIMATED COST: $400K ││
│ │ REMAINING BUDGET: $455K ││
│ │ ││
│ │ BUFFER: $55K (12%) ✅ ││
│ │ ││
│ │ Last month forecast: $420K (improved by $20K) ││
│ └─────────────────────────────────────────────────────────┘│
└─────────────────────────────────────────────────────────────┘
Value Metrics
ROI Tracking
VALUE-BASED BUDGET CONVERSATIONS:
┌─────────────────────────────────────────────────────────────┐
│ │
│ DON'T JUST TRACK SPEND, TRACK VALUE: │
│ ───────────────────────────────────── │
│ │
│ COST PER FEATURE: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ FEATURE COST VALUE DELIVERED ││
│ │ ─────── ──── ──────────────── ││
│ │ Self-service $45K Support tickets ↓30% ││
│ │ Quick checkout $30K Conversion ↑15% ││
│ │ Mobile app $80K Mobile revenue ↑$200K/mo ││
│ │ Admin dashboard $25K Admin time ↓2hrs/day ││
│ │ ││
│ │ ROI on each investment is tracked ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ ─────────────────────────────────────────────────────────── │
│ │
│ INVESTMENT DECISIONS: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ FEATURE PROPOSAL: Advanced Analytics Dashboard ││
│ │ ││
│ │ ESTIMATED COST: $60K (4 sprints) ││
│ │ ESTIMATED VALUE: ││
│ │ • Time saved: 10 hrs/week × $100/hr = $52K/year ││
│ │ • Better decisions: Est. $100K+ value ││
│ │ ││
│ │ PAYBACK: ~5 months ││
│ │ PRIORITY: High (good ROI) ││
│ │ ││
│ │ DECISION: Fund in Q2 ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ ─────────────────────────────────────────────────────────── │
│ │
│ QUARTERLY REVIEW: │
│ ────────────────── │
│ • What value did we deliver? │
│ • What did it cost? │
│ • What's the ROI? │
│ • Should we continue investing? │
│ │
│ NOT: "Did we spend the budget?" │
│ BUT: "Did we get value from the budget?" │
└─────────────────────────────────────────────────────────────┘
Stakeholder Communication
Budget Conversations
COMMUNICATING WITH FINANCE:
┌─────────────────────────────────────────────────────────────┐
│ │
│ LANGUAGE TRANSLATION: │
│ ───────────────────── │
│ │
│ AGILE TERMS → FINANCE TERMS: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ "Velocity" → "Delivery rate" ││
│ │ "Story points" → "Units of work" ││
│ │ "Backlog" → "Planned work queue" ││
│ │ "Sprint" → "2-week delivery cycle" ││
│ │ "Scope change" → "Priority adjustment" ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ ─────────────────────────────────────────────────────────── │
│ │
│ BUDGET STATUS REPORT: │
│ ┌─────────────────────────────────────────────────────────┐│
│ │ Q1 BUDGET SUMMARY ││
│ │ ││
│ │ ALLOCATION: $150,000 ││
│ │ SPENT: $145,000 (97%) ││
│ │ STATUS: On budget ││
│ │ ││
│ │ DELIVERED: ││
│ │ • 3 major features released ││
│ │ • 12 smaller improvements ││
│ │ • Customer satisfaction: +5 NPS points ││
│ │ ││
│ │ OUTLOOK: ││
│ │ • Remaining work: $400-450K estimate ││
│ │ • Annual budget: $600K ││
│ │ • Status: Within range ││
│ │ ││
│ │ KEY CHANGES: ││
│ │ • Deprioritized Feature X (low usage) ││
│ │ • Added Feature Y (customer requests) ││
│ │ • Net effect: Similar cost, higher value ││
│ │ ││
│ │ DECISIONS NEEDED: ││
│ │ • Q2 funding confirmation ││
│ └─────────────────────────────────────────────────────────┘│
│ │
│ FOCUS ON: │
│ • Value delivered (not just money spent) │
│ • Risks and changes (transparent) │
│ • Forward forecast (what we expect) │
│ • Decisions needed (actionable) │
└─────────────────────────────────────────────────────────────┘