Cover Image
close this book Community Nutrition Action for Child Survival
close this folder Part II - Planning nutrition action projects
close this folder Unit 4: Planning nutrition action projects
View the document Session 1: Describing the problem
View the document Session 2: Writing project goals and objectives
View the document Session 3: Choosing project activities
View the document Session 4: Developing a project work plan
View the document Session 5: Planning how to evaluate
View the document Session 6: Preparing a budget

Session 6: Preparing a budget

Purpose:

In this session, trainees discuss and practice the steps in preparing a project budget, including estimating costs and contributions, categorizing costs by line item and presenting detailed and summary budgets. The same steps and skills are useful for the development of routine budgets within organizations as well as those submitted to donor agencies.

Time: 2-3 hours

Materials:

- Handout - "Preparing a Budget"

- Handout - "Estimating and Categorizing Costs by Line Item"

- Handout - "Sample Project Budgets"

- Trainer's Reference/Handout - "Budgeting Exercise"

- Flipchart and marking pens

Prior to the session: Distribute the Handout "Preparing a Budget," and ask trainees to read it before the session.

Steps:

1. Introduction: Explain the purpose of this session. Trainees will now complete the final step in project planning - preparing the budget. The budget is prepared after the project work plan has been completed so that the costs for all proposed activities may be included.

2. Review the ways in which we use project budgets:

- To estimate types and level of project costs

- To project additional resources needed from the organization or an outside donor

- To guide decisions about expenditures during implementation

- To judge the desirability of certain objectives or activities based on their cost

3. Write these steps for preparing a budget on the flipchart:

- Identifying needed resources

- Categorizing resources by line item

- Estimating costs

- Organizing and presenting

4. Identifying needed resources: Demonstrate how costs are calculated based on the resources needed to complete activities. Give several examples of project activities.

Work with trainees to make lists of the items needed to carry them out. Make sure that items are stated in specific terms, i.e., family planning nurse vs. staff, per diem allowance for workers vs. travel. Use a chart like the one below.

Activities

Resources

1. Develop education materials for 30 project villages
Assess community knowledge and needs Develop draft materials
Pretest materials
Revise and produce materials
Distribute materials to health workers

Consultant in health education for two months Vehicle and driver for visits to at least five villages
Travel allowance for consultants and field supervisor
Artist
Two field supervisors to work with consultant Supplies
Printing of materials

2. Provide growth monitoring to 100 children monthly in 30 villages
Purchase and distribute equipment
Develop, pretest and produce recording forms Train 30 community health workers to conduct growth monitoring
Conduct growth monitoring sessions

Weighing scales
Growth cards
Supplies for forms
Vehicle and driver for pretest and distribution of forms
Training site
Transport and travel allowance for community workers during training
Vehicle and driver for supervision
Travel allowance for supervisors

5. Categorizing resources by line items: Distribute the Handout - "Estimating Costs by Line Item." This handout classifies individual resource items into line items and gives guidelines for calculating the different types of costs.

6. Demonstrate how to organize the resources listed in step 4. by line item.

I. Personnel

- Field Supervisors

- Health Education Consultant

- Artist

- Community Health Workers

- Driver

 

II. Travel and Per Diem

 

- Vehicle Costs

 

Travel Allowance for:

 

- Supervisors

- Consultants

- Community Health Workers

 

III. Equipment and Materials

 

- Scales

- Growth cards

- Supplies for education materials

 

IV. Other Direct Costs

 

- Printing education materials and forms

- Training space rental

- Postage, telephone, cable

- Other

 

7. Estimating Costs: Demonstrate how to calculate the Quantity of each item listed by referring back to the work plan. Quantity may be based on the number of individuals to be involved; length, number and location of activities, etc.

Then estimate the Unit Cost for each example and multiply to find the Total Cost of this resource.

Example: Vehicle costs for: assessing village needs (five trips), pretest and education materials and supervising CHWs.

Quantity = approximately 600 km (or miles) per month for 12 months

Unit Cost = $.50 per km

Total Cost = $3,600

8. Now show how to write each item as it might be written in a budget:

Example:

Vehicle costs

- 600 km per month x $.50 per km X 12 months = $3,600

Project Director

- 1/2 time at annual salary of $6,000/yr = $3,000

Health Education Consultant

- 2 months at $500/month = $1,000

9. Presentation of Budgets: Distribute the Handout "Sample Project Budgets. " Discuss with trainees the need to determine budget format with their organizations and/or the donor agencies. Organizations and donors may require more or less detail, according to their own internal guidelines.

Review and discuss the detailed budget first; then examine the summary budget.

10. Contributions and Income: Call the trainees' attention to the way in which contributions (cash and in-kind) have been shown on the detailed and summary budgets. This demonstrates to the donor that other organizations, the community, etc. are willing to commit resources to the project.

After calculating a total budget, the manager should go back and decide which costs will be contributions to the project by his/her organization, the community, clients, other organizations, etc.

11. "Budgeting Exercise": This section can be done individually or in small groups. Distribute Handout A.

Identifying Resources, of the exercise and follow the corresponding instructions provided in the trainer's reference.

Monitor and assist trainees to successfully complete the exercise. When they finish, answer any remaining or unanswered questions.

12. Summary: Review the steps in preparing a budget found in Step 3. Review the uses of budgets. Point out that budgets often go through many revisions before they are realistic and acceptable. Changes in the budget may also require changes in the objectives or the work plan, i.e., fewer communities to be served, fewer supervisors or supervision visits, etc. Budgeting is one of the most important management skills. A budget reflects not only the costs for project activities but also the manager's ability to predict and organize the resources needed to achieve project goals.

HANDOUT

PREPARING A BUDGET

A budget is a plan prepared to detail the resources and costs for carrying out a project. A budget has several valuable uses:

- To estimate types and levels of costs for project activities

- To provide your organization or donors you may approach with information about the anticipated resources required to meet certain objectives

- To guide decisions about expenditures during the implementation of project activities

- To evaluate the cost of meeting certain objectives

Those people who are involved in designing and implementing a project are in the best position to know what resources will be needed, and they should be directly involved in writing the project budget. Once the project has been funded, the budget becomes the starting point for managing project finances.

Action Plan
and
Budget

Final Project
Plan and Budget

Actual Expenses
Financial Reports

Your best guess of what is required

Your agreement with the donor or organization for their support

Reality

Calculating Costs

A budget is generally prepared after you have completed your project plan, so that costs for all proposed activities may be included. When doing a project budget, consider the following suggestions:

- Be Involved. Don't expect an accountant to do it all. The accountant knows numbers, but you know what it will take to carry out the activities that must be financed.

- Be Aware of Organization/Donor Requirements. What types of activities and costs will they fund? What budget format do they prefer? How much funding can they give?

- Be Informed and Realistic. Get estimates on the costs of needed equipment and materials, office rent, transportation, consultant fees, etc. It takes time to determine realistic figures, but this is better than either being refused funds because your budget is unreasonable or finding you did not request sufficient funds to do the project well. There will be items for which you will be unable to get totally accurate estimates. Then you will have to rely on your experience to make the most informed, realistic approximation you can.

- Be Detailed. Build up to the total amount needed for each particular category of cost by considering all the elements that affect that cost. For example, to budget for transportation, you need to consider the following:

- Number of project site visits per year

- Round-trip distance to the site

- Number of kilometers per liter of petrol

- Cost per liter of petrol

- Be Complete. Refer to examples of budgets. Ask others to review your budgets. Remember, if you forget to budget for an item you need, you will either have to do without, go back to the donor or use funds intended for other items.

- Be Thinking About Record-keeping. Both for your own financial management and to satisfy donor requirements, you will need to keep proper records of expenditures: receipts, check stubs, copies of bills, time sheets.

In-Rind Contributions and Income

Contributed resources that are not in the form of money are called in-kind contributions and may include donated space (office or project site), time (volunteer workers) or materials. Often in-kind contributions are extremely important to the success of a project. They lower the actual cash costs. They show that your organization or the community is interested enough in the project to donate resources. They are the first step to self-sufficiency for project activities. You will need to estimate the value of these in-kind contributions and show them in your budget.

Your budget should also include information on any income you expect from the project. For example, you should include money paid by beneficiaries for services, fees paid to enroll in training or profits from the sale of goods produced during the project. You should estimate the amount of income expected and show how it will be used. For example, income may be applied to certain costs such as staff salaries or shared as profits among project participants.

Budget Format

Budgets vary greatly in terms of format, amount of detail and the categories of costs (known as line items). The more specific and detailed a budget is, the easier it is to describe the exact purpose of each expenditure. The first task in preparing a budget is to determine how much detail YOU need and how much is required by your organization or donor. Do you need to know if an expenditure is for pens rather than pencils; or, is it sufficient to know that the expenditure is for training supplies rather than office administration supplies; or, more general yet, that it is for materials?

Usually a budget is broken down into one-year periods. Often resources/costs are shown by source, that is, by name of the contributor. This is particularly helpful when more than one donor is involved or when there are resources (cash or other) that have been contributed by your organization, by a community, etc.

Often a summary budget, as well as a detailed budget, is required. The summary budget presents subtotals for the major cost categories. The detailed budget shows how these subtotals were calculated. The summary budget allows one to tell at a glance the relationships among line items. It is also often used as the basis for financial reporting.

HANDOUT

ESTIMATING AND CATEGORIZING COSTS BY LINE ITEM

I. Personnel

Answers to the following questions will help you determine personnel costs for your project:

- How many people, with what kinds of skills, are needed to undertake project activities?

- Will they work full-time or part-time?

- Would it be more efficient to have a short-term consultant to do some activities?

- Will some people, who are involved in the project, be volunteering their services?

- Will people work more hours than they expect payment for? If so, they are making an in-kind contribution.

II. Travel and Per Diem

To calculate the costs of travel and per diem (food and lodging) for your project, consider these questions:

- What activities will require staff to travel? (Supervisors visits, extension agents' travel from headquarters to field locations, participants' travel to the training centers, consultant's travel to the project site, etc.)

- How far are the distances? Do travel costs vary according to the type of transport and the distance?

- If vehicles are used: What is the cost of petrol? How much does it cost to travel the required distance by vehicle?

- For how long will staff travel? Will they require an allowance for overnight lodging or food?

III. Equipment and Materials

For this section of your budget, you should get price quotations for major purchases. Here are some helpful questions:

- What equipment and supplies are needed for each of your project activities?

- Have you included enough paper and other supplies, including those needed to develop and produce training materials and periodic program reports?

IV. Other Direct Costs

Here you may include costs which do not fit in the preceding categories. Often this category is called Operating Costs. Answers to the following questions will help determine these costs:

- Will you have to get a telephone installed, and what are estimated monthly charges?

- Do you need to rent office space, training facilities or other rooms for project activities?

- Have you included the costs of all needed utilities water, electricity, gas?

- What are anticipated postage, cable and telex costs?

A final word of encouragement: At first, budgeting seems like a complex, somewhat frightening task. But when you break the process down into the many smaller questions that you can answer, it is really quite easy. Do not hesitate to go to donors who have expressed interest in your groups' activities and ask for guidance in developing the type of budget they prefer.

HANDOUT

SAMPLE PROJECT BUDGET

Detailed Budget

Summary Budget

Detailed Budget (One Year)

Kigondo District Nutrition Project

Cost Category

Total Annual Cost KSH

In-Kind Contributions KSH (from Ministry of Health, Family Planning Association and Community)

Project Funds Requested KSH

I. Personnel

     

A. Staff

     

- 1 half-time Proj.

     

Director @ KSH 1,500

     

per month x 12 mos.

18,000

-

18,000

- 2 Field Supervisors

     

@ KSH 2,000/mo. x

     

12 mos.

48,000

-

48,000

- 1 Secretary @ KSH

     

1,600/mo. x 12 mos.

19,200

19,200

 

B. Consultants

     

- 2 Family Planing

     

Nurses for 1 day per

     

week for 40 weeks @

     

150/day

12,000

12,000

 

C. Volunteers

     

- 30 Community Health

     

Workers (stipends) @

     

KSH 200/mo. x 12 mos.

72,000

36,000

36,000

Subtotal Personnel

169,200

67,200

102,000

II. Travel and Per Diem

     

A. Project Director and

     

Field Supervisors:

     

Round trips from

     

Kigondo Town to

     

villages (9 trips/

     

week x 45 weeks @

     

KSH 40/round trip)

16,200

-

16,200

B. FP Nurses:

     

Round trip Kigondo

     

Town to villages 2

     

trips/week x 40 weeks

     

@ KSH 40/round trip

3,200

-

3,200

C. Community Health

     

Workers:

     

- 10 training days for

     

30 CHW's @150/day

45,000

-

45,000

- 30 round trips/month

     

@ KSH 40 x 10 months

     

for meeting

12,000

-

12,000

Subtotal of Travel & Per Diem

76,400

0

76,400

III. Equipment and Materials

     

- weighing scales @

     

KSH 800/scale x 30

     

scales

24,000

-

24,000

- education materials

     

and supplies @ KSH

     

600/village x 30

     

villages

18,000

-

18,000

- office and training

     

supplies

10,000

-

10,000

Subtotal Equipment & Materials

52,000

0

52,000

IV. Other Direct Costs

     

- Office Rental

8,000

8,000

 

- Training Room

     

Rental

500

500

 

- Telephone, Telegraph and Postage

7,000

-

7,000

- Water, Electricity

     

and Other Utilities

5,000

-

5,000

Subtotal Other Direct Costs

20,500

13,500

7,000

Grand Total KSH

318,100

80,700

237,400

Summary Budget

Kigondo District Nutrition Project

   

Total

Contributions

Total Requested

I.

Personnel

169,200

67,200

102,000

II.

Travel and Per Diem

76,400

-

76,400

III.

Equipment and Materials

52,000

-

52,000

IV.

Other Direct Costs

20,500

13.500

7.000

 

TOTAL KSH

318,100

80,700

237,400

 

TRAINER'S REFERENCE/HANDOUT

BUDGETING EXERCISE

A. Identifying Resources

B. Estimating Cost

C. Detailed Budget

D. Summary Budget

Note: This section contains materials for the trainer and the trainees. Each trainer's reference of instructions precedes the applicable handout.

TRAINER'S REFERENCE

BUDGETING EXERCISE

A. Identifying Resources

Step 1. Write several nutrition project activities and action steps on the flipchart. Use those developed in previous exercises.

Step 2. Distribute Handout - A. Identifying Resources.

Step 3. Ask trainees to list on their handout all of the items needed to carry out the activities and action steps that have been written on the flipchart. These should be descriptions of specific items, not general categories.

Step 4. Go on to B. Estimating Costs

HANDOUT

BUDGETING EXERCISE

A. Identifying Resources

List the resources needed to carry out project activities and action steps. Be specific.

TRAINER'S REFERENCE

B. Estimating Costs

Step 5. Trainees classify the resources listed in A. by line item, and write them in column 1- Resources Required.

Step 6. Trainees calculate the quantities of each item needed. This information is entered in column 2 - Quantity.

Step 7. Trainees estimate the cost for one unit of each item. This information is written in column 3- Unit Costs.

Step 8. Trainees multiply the Quantity times the Unit Cost to calculate the total cost. This is entered in column 4 - Total Cost.

Step 9. Go on to C. Detailed Budget.

HANDOUT

B. Estimating Costs

Resources Required

Quantity

Unit Costs

Total Cost

I. Personnel

     

II. Travel and Per Diem

     

III. Equipment and Materials

     

IV. Other Direct Costs

     

 

TRAINER'S REFERENCE

C. Detailed Budget

Step 10. Distribute Handout - C. Detailed Budget.

Step 11. Trainees transfer resource calculations from B. to C. To do this they must:

(1) Write items so that they state: What is needed? Quantity? Unit Price? Total price?

Example:

Petrol

- 40 round trips x average 60 km per round trip x $.60 per kilometer

(2) Write the total costs for each item in column 1.

(3) Calculate subtotals by line item.

Step 12. Trainees should decide which items will be provided by the organization, community or other sources. All contributions are entered in column 2 Contributions next to the individual items they will support. If contributions are from different sources, the name of each of source can be written in.

Step 13. Trainees calculate line item subtotals and grand total for Contributions column 2.

Step 14. Trainees calculate Total Funding Requested (column 3) for each item. This is done by subtracting the amount in column 2 from column 1.

Step 15. Trainees calculate line item subtotals and grand total for column 3 Total Funding Requested.

Step 16. Check to be sure that items have been categorized, calculated and presented correctly.

Step 17. Go on to D. Summary Budget.

HANDOUT

C. Detailed Budget

Resources Required

Total Cost

Contribution by Source

Total Funding Requested

I. Personnel

Subtotal

     

II. Travel and Per Diem

Subtotal

     

III. Equipment and Materials

Subtotal

     

IV. Other Direct Costs

Subtotal

     

Grand Total

     

 

TRAINER'S REFERENCE

D. Summary Budget

Step 18. Instruct trainees to turn to D. Summary Budget.

Step 19. Trainees transfer line item subtotals only from C. Detailed Budget to D. Subtotals are separated by Total Cost, Contributions and Total Funding Requested.

Step 20. Trainees transfer or recalculate column totals.

HANDOUT

C. Summary Budget

Resources Required

Total Cost

Contribution

Total Funding Requested

I. Personnel

     

II. Travel and Per Diem

     

III. Equipment and Materials

     

IV. Other Direct Costs

     

Total