The Agony of the Budget – Part 2

“Have you included the depreciation in your budget plan?” Those words or similar ones is what I’ve heard from some accountants when I’m running projects. Honestly, what does depreciation have to do with running a project? What’s really important from a project stand point is how much money you have and how much are you going to spend. Whether the amount impacts the company’s taxes immediately or over time, as in the case of depreciation, is an accounting artificiality that’s irrelevant to a project’s budget. Yes, it is important to the company. But that’s the realm of accountants with our input.

Similarly, the question comes up as to how much should be capitalized. Why do accountants ask that of PMs? It would be best for them to ask what is being delivered, how much can be considered new functionality vs. maintenance, and then figure it out on their own. They are the experts after all! BTW, if the product you developed is not generating revenue, should it be capitalized? Well, accountant, that’s your area of expertise not mine!

But in many organizations we are faced with having to handle these obscure subjects. Yes, we need to know how much money we have (sometimes even that is hard to find out!) Yes, we need to know how much we are going to spend and whether we have enough funds to pay for those expenditures. But, depreciation? Give me a break!

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