The 80 percent rule for project budgets

Most agencies find out a project is over budget the same way: the invoice is bigger than the client expected, and someone has to explain why. By then the hours are spent. The only conversation left is about who absorbs them.

When we built budget alerts into Copperleaf, the obvious trigger was 100 percent. The budget is gone, so tell someone. We shipped that first, and it was nearly useless. A warning that arrives after the money is spent is a receipt.

Why 80 percent

We looked at a year of logged hours across a few hundred projects. On a typical six week project, the last fifth of the budget goes in about four working days. That is enough time to do something, and not much more.

So the first flag now goes out at 80 percent, by email to the project lead and inside the project itself. The second goes out at 100 percent, for the record.

What teams do with the warning

We asked three agencies what changed once the flag came early. Their answers were close enough to make a list:

• They call the client the same day, while the remaining work can still be cut.
• They move a senior designer off the project and finish it with a junior one.
• They write a change order for the extra rounds instead of absorbing them.

None of this is new advice. What changed is that someone saw the number in time to act on it, without opening a spreadsheet.

Setting your own threshold

80 percent is the default, not a rule. A fixed-fee project with a long tail of revisions may want the flag at 70. A retainer that resets each month can wait until 90. You can change it per project under Budget in the project settings.