How do you balance the burn rate in a product development services ? Navigating the financial flames in a project delivery is challenging.

The term burn rate 📉
– Not only applicable at funded start up level
– But also at a product development level too!
Refers to the rate at which a project consumes its allocated budget.

The formula can be quite simple. 🔢Project Burn Rate = (Total Budget – Remaining Budget)/ Time Period

The problem starts here. All the 3 parameters are variables and not constants.

1. Total Budget – Don’t miss to look at details.
– Do not allocate entire budget at once before trying it out with actual users.
– Even though it is the final number you look at a quote, be vary of the details.

2. Remaining Budget – Don’t miss to measure it.
– Set a dashboard to equate your remaining work items to remaining work hours.
– Make sure you plan to spend enough for the product’s core value proposition.

3. Time Period – Don’t miss to breakdown time.
– Allocate work hours going down to the least broken down tasks and then roll it up.
– Check for integrating ancillary functions with any available ready made digital solutions.

A common thumb rule: Be prepared for deviations ⤴
Deviation percentage
0 – 5 % – Not possible, Only a dream.
5 – 15% – Is very good if satisfied users.
15 – 25% – Ok if you have top notch quality.
25 – 40% – Should have been estimated better.
> 40% – Could be a drastic estimation failure.

Estimating a long term #digitaltransformation project is like projecting final score just by knowing pitch report, team combination & toss.