Project Burn Rate Calculator
How to Calculate Project Burn Rate
In project management, the Burn Rate is the speed at which your project consumes its budget over a specific period. Monitoring this metric is vital to ensure the project doesn't run out of funds before completion.
Burn Rate = Total Amount Spent / Time Elapsed
Why Burn Rate Matters in Project Management
A project's "Runway" tells you how much time you have left before the budget hits zero. If your burn rate is higher than anticipated, you may need to reduce project scope, request additional funding, or optimize resources to improve efficiency.
Practical Example
Suppose you have a software development project with a total budget of $100,000. After 4 months, you have spent $40,000.
- Burn Rate: $40,000 / 4 Months = $10,000 per month.
- Remaining Budget: $100,000 – $40,000 = $60,000.
- Project Runway: $60,000 / $10,000 = 6 Months.
This means at the current pace, your project can last another 6 months before requiring more capital.
Managing Scope Creep
One of the most common causes of a spiked burn rate is scope creep. When new features or requirements are added without budget adjustments, the burn rate increases, shortening your project runway. Regularly calculating these figures helps project managers identify these trends early.