Engineering Leadership: The Hard Parts

Chapter 7. Budgeting, Costs, and Vendors

Budgeting is something that most of us never expected to think about as engineering leaders. Most engineering leaders perceive themselves as making technical decisions, and they see finance and budget decisions as “business problems.” Well, solving those “business problems” is how we get the people and resources we need to deliver products and services to our customers (also in the business) and, significantly, help us understand how we get paid, plan for our future needs, and how the business functions. Budgeting is also an anchor in a chaotic environment. It dovetails into your planning and prioritization process to help you understand the resources needed to deliver on your plans.

Budgeting is not just crunching numbers (although I guarantee you that you’ll see a lot of spreadsheets; there is nothing that accountants like more than spreadsheets). Budgeting is a strategic process that enables you and your organization to anticipate challenges, seize opportunities, and maintain competitive advantages. By systematically budgeting for people and resources, you, your team, and your organization can create a roadmap that bridges the gap between your current position and your desired future state.

In this chapter, we explain why budgeting is necessary and discuss the basics of budgeting and cost management (as the other side of budgeting is working out what you’ve overspent on). And we discuss the procurement of products and services and how ...