One thing that often gets neglected by operationalizing projects smoothly is Burn Rate. Depending upon the size of the team or enterprise-level operation undertaken, the burn rate could be either the measure that keeps your project within budget or it throws a wrench into the project causing budget overruns.
Being the country-leading project management software, Do Insights helps project managers across industries to track and maintain burn rate in real-time, aiding effective decision-making, budgeting, and ensuring project success.
So, what really defines burn rate, why it is important, and how you can manipulate it?
What is Burn Rate?
In project management, Burn Rate is when your resource utilization either in time or money is consumed by the project.
More specifically, there are two types of Burn Rate:
- Financial Burn Rate: How fast expenses are being incurred against the project budget.
- Work Burn Rate: How fast tasks or hours are being completed.
- Formula (Financial Burn Rate):
Burn Rate = Total Project Spend / Time (e.g., per week or month)
Example: With a project budget of ₹5,00,000, if you’re spending ₹1,00,000 per month, then your burn rate is ₹1,00,000/month.
Understanding this metric helps you answer crucial questions like:
- Are we on track with our budget?
- Will we complete the project before the funds run out?
- Are we underutilizing or overutilizing our resources?
Why Burn rate Matters in Project Management
Pretty much whatever you do related to software development, construction, marketing, or delivering any specific product for a certain timeframe, the concept of burn rate could provide you with a real-time view on the health of your project.
Here are reasons a project manager should give it any mind:
Budget Control
A high burn rate might imply that you have spent too much too early on your budget, thereby threatening to exhaust the remaining budget even before the project deadline arrives.
Control of Timeline
Anything in work progress can help you assess whether people are performing their duties at an appropriate rate to meet established deadlines. Also, it will tell you if a forecast deadline or time set is realistic.
Risk Diversification
Burn rates can gain early identification of inefficiency or catastrophically severe scope creep.
Communication With Stakeholders
Burn rate is a simple, data-backed metric that you can discuss with your client, finance people, and top management during project reviews.
How to Track Burn Rate with Doinsights
At Doinsights, we make it simple to measure and manage burn rate through intuitive dashboards and real-time analytics.
Key Features That Help:
- 📅 Time Tracking: Log hours worked by each team member across tasks.
- 💸 Budget Monitoring: Track actual spend vs. planned spend with real-time updates.
- 📈 Progress Reporting: Visual burn-down and burn-up charts to show how your team is progressing.
- 🧮 Custom Burn Rate Alerts: Set thresholds to get notified when spending or task completion veers off course.
Example Use Case:
A SaaS company using Doinsights noticed their financial burn rate was increasing week-over-week. A deeper look revealed over-allocation of senior developers on low-priority tasks. By reassigning roles and adjusting the sprint schedule, they were able to bring the burn rate back in line with their original plan — saving both time and money.
