Burn rate is how fast a project is spending its budget - usually money or hours per week. On its own it tells you very little. Compared against how much of the work is actually finished, it is the earliest honest warning you get.
The number that matters is the gap
Sixty per cent of the budget spent is neither good nor bad. Sixty per cent spent with fifty-five per cent of the work done is fine. Sixty per cent spent with thirty per cent done means you will run out with a third of the project left, and you now know that with weeks to act rather than days. Burn rate alone is a fact; burn rate against delivery is a decision.
What to compare it against
The comparison is only as honest as the delivery number.
- Stories actually completed
- The best available measure, because a tracker records it rather than a person estimating it. Best of all when read straight from the tracker instead of retyped into a report.
- Percentage complete, as reported
- Weaker. It is an opinion, and it is famously optimistic in the middle of a project.
- Elapsed time
- Nearly worthless on its own. Being in week six of twelve says nothing about whether half the work is done.
Why it is always found out late
Because spend lives in a finance tool and delivery lives in a tracker, and the two only meet in a month-end report. So the project hits ninety-four per cent with two weeks of plan remaining, and the first person to notice is whoever opened the export. Putting both numbers on the same screen is a boring fix for an expensive problem.
Related figures worth knowing
Budget remaining is what is left. Run rate is what you would spend if nothing changed. Effective hourly rate - fee divided by hours actually worked - is the one that tells an agency whether a fixed-fee project was worth taking, and it is usually only calculated after it is too late to matter.
Frequently asked questions
How often should we look at burn rate?
Weekly is plenty for most projects, as long as the delivery figure next to it is real. Daily adds noise without adding information.
Should the delivery team see the money?
They need the health picture - hours budgeted, spent and left, and whether the project is on track. Rates and totals are usually restricted, which is why tools tend to split those two views by role.
How Spectr helps
See the budget on the same screen as the work
Harvest budget and Forecast hours next to the work they are paying for
Related terms
Spend less of the week on documents
Spectr drafts the spec, the requirement document and the stories from your meetings. You review and approve.
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