Published October 15, 2026 · By the Sheaf team

How to track project budgets in a small agency

Most projects that go over budget don’t blow up in one week. They drift, a few hours at a time, and nobody notices until the invoice. A budget you check weekly turns that surprise into an early, calm conversation with the client.

Short answer: Set a budget on every project in the unit you sold it in: hours for capped hourly work, money for fixed fees, and a monthly allowance for retainers. Get an alert at 80%, check every active project weekly, and track cost rates as well as billable rates so you can see profit, not just hours.

Pick the right kind of budget

The budget should match how you sold the work. Otherwise you’re measuring something the client never agreed to.

How you sold it	Budget in	What you watch
Fixed fee	Money	Billable value of tracked time against the fee. Over 100% means you’re working for free.
Hourly with a cap	Hours	Hours used against the cap. Past 100% you need the client’s OK to keep going.
Retainer	Hours or money per month	Hours used this month. Resets each month, so overruns show early.
Hourly, no cap	An estimate, in hours	Hours against the estimate you gave, so the client isn’t surprised.

Hours or money?

Hours are easy for everyone to understand. Money is more accurate when people with different rates work on the same project: 10 hours from a senior strategist uses more of a fee than 10 hours from a junior designer. If your team’s rates vary a lot, budget fixed-fee work in money.

Set alerts before it’s too late to act

An alert at 100% only tells you the budget is gone. The useful one is earlier:

At 50%, check progress. Is about half the work done? If only a third is, you already know where this is heading.
At 80%, talk to the client, or make a plan. This is the last point where you have options: cut scope, agree a change request, or accept the overrun knowingly.
At 100%, stop and decide. Nobody should drift past the budget without someone choosing to.

What to say at 80%

Clients take “we’re at 80% of the budget and here’s what’s left” far better than an overrun on the invoice. Keep it factual:

Where you are: hours or money used, and what’s been delivered.
What’s left: the remaining work and your estimate for it.
The options: trim scope to fit, approve extra hours, or move part of the work to a second phase.

If the overrun comes from something the client asked for (new pages, extra rounds of revisions), it’s a change request, and it’s fair to bill. If it’s your own estimate that was off, decide whether to absorb it, and learn from it for the next quote.

Review budgets weekly

Ten minutes on Monday morning is enough. For every active project, look at:

Percent of budget used, compared with how much of the work is done
Hours logged last week, compared with what you expected
Any project past 80% without a plan
Retainers on track to run over before the month ends

Track cost, not just billable hours

A project can stay inside its budget and still lose money. To see profit you need two rates for each person:

Billable rate: what the client pays per hour.
Cost rate: what that hour costs you, including salary, taxes and overhead, or a contractor’s rate.

An example. A $30,000 fixed-fee website project:

Person	Hours	Billable rate	Billable value	Cost rate	Cost
Strategist	40	$180	$7,200	$90	$3,600
Designer	110	$140	$15,400	$65	$7,150
Developer	90	$150	$13,500	$75	$6,750
Total	240		$36,100		$17,500

The tracked time is worth $36,100 at your rates, so the project went 20% over its $30,000 fee in money terms. It still earned $12,500 over cost. Both numbers matter: the first tells you the quote was low, the second tells you whether you can afford it.

Retainers: decide what happens to unused hours

Agree up front whether unused retainer hours roll over to next month, expire, or roll over with a limit (for example, up to 25% of the monthly hours). Rolling everything over forever builds up a debt of hours that tends to be called in at the worst moment.

How Sheaf handles this

In Sheaf, every project can have a budget in hours, in money, or as a monthly allowance that resets each month. You get an email at 80% and at 100%, and the overview shows the budgets closest to running out. Each person has a billable rate and a cost rate (with per-project rates if someone bills differently on one project), and reports show billable amount, cost and profit by client, project, task or person. It’s free during beta, and if you use Harvest, your projects and budgets come across with a one-click import.

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Questions

Should I tell clients about my internal budget?

Share the budget you agreed with them (the fee, the cap or the retainer), and how much of it is used. Keep your cost rates and margins internal.

What if a project goes over budget?

If the extra work came from new requests, treat it as a change request and agree how to bill it. If your estimate was off, decide whether to absorb it, and adjust how you quote similar work next time.

Should non-billable time count against the budget?

For profit, yes: it still costs you. For the client’s budget, usually not, unless your agreement says internal time is included.