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Understanding Budgets

Learn the fundamentals of budgeting in Compass for projects.

Budget Types​

CapEx (Capital Expenditure)​

What it is: One-time investments in assets that have long-term value

Common CapEx categories:

  • Construction & Renovation - Building, structural work
  • Equipment & Furnishings — Office furniture, common area fixtures
  • Technology \u2014 IT systems, software licenses, infrastructure
  • Setup & Launch Expenses — Initial setup costs

Example:

  • Purchase 200 beds for units: $300,000
  • Install new HVAC system: $500,000
  • Buy kitchen equipment: $200,000

OpEx (Operational Expenditure)​

What it is: Ongoing, recurring costs to run the project

Common OpEx categories:

  • Salaries & Benefits - Staff payroll, insurance
  • Utilities - Electricity, water, gas, internet
  • Supplies - Cleaning supplies, office supplies, consumables
  • Maintenance - Regular upkeep and repairs
  • Marketing - Advertising, promotions

Example:

  • Monthly staff salaries: $150,000
  • Utilities per month: $25,000
  • Cleaning supplies per month: $5,000

Service Revenue​

What it is: Income generated from services you provide

Common revenue types:

  • Consulting Fees - Advisory services for projects
  • Management Fees - Ongoing project management contracts
  • Training Services - Staff training programs

Budget vs Actual​

Planned Budget​

Your initial plan of what you'll spend or earn

Actual​

What you actually spend or earn

Variance​

The difference between planned and actual:

  • Positive variance - Spent less than planned or earned more
  • Negative variance - Spent more than planned or earned less

Example:

CategoryPlannedActualVariance
Construction$2,000,000$2,150,000-$150,000 (over budget)
Equipment$500,000$475,000+$25,000 (under budget)

Budget Lifecycle​

  1. Planning - Create initial budget plans
  2. Approval - Get budget reviewed and approved
  3. Execution - Spend according to budget
  4. Tracking - Record actual expenses
  5. Analysis - Compare planned vs actual
  6. Adjustment - Revise budget if needed

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