How to Manage Priorities Using Agile Budgeting


New business models are now embracing Agile Budgeting. This is a technique that debunks the effectiveness of budget forecasting. With fast changing market trends, organisations need to have a budgeting strategy that allows them to act fast in managing threats or in seizing opportunities. Below is a simplified process of managing your priorities using Agile Budgeting.

1. Define your priority roadmap

Define your business roadmap by conducting a simple planning activity. The high-level roadmap could be a one-year set of goals or a five-year strategic plan.  However, this roadmap is expected to change when the business requires it to.

As a simple guide in defining your business roadmap, you can start by looking at the big picture. For instance, if you envision establishing yourself as a leader in innovation, then you can define goals in that direction. For some companies, they define goals per department, then make the intersections the basis of their roadmap priorities.

The roadmap is divided into iterations. You may decide to have a quarterly iteration for a one-year roadmap. The more unknowns you have in your business, the better it is to have shorter iteration to manage the risks early. Every iteration has some defined goals with acceptance criteria.

Defining a business roadmap is a macro-level planning. You analyse the dependencies and the continuity of your iteration goals. Goals are then assigned to a specific team or departments for more specific planning.

With the high-level roadmap planning, the following questions must be answered:

  • What is the frequency and duration of an iteration?

  • What are the goals for every iteration?

  • What are the acceptance criteria for each goal?

  • Who will be assigned as owner of a specific goal?

  • When is the first iteration?

  • How do you make the status of your goals transparent to all?

  • When is the next roadmap assessment meeting?

2. Plan your iteration priorities

For every iteration, several teams in the organisation are working in parallel to achieve the defined business goals. The goal owner (i.e. manager or supervisor) meets his team to plan the details of the iteration goals assigned to them.

The iteration planning is a fast track activity and the duration is your prerogative. For example, a typical Scrum Sprint planning in software development is four hours for a two-week iteration. For non-IT projects, you can experiment with an eight-hour planning for your one-month iteration as a start.  You can adjust the next iteration if you think it’s too short or too long.

The items below are the basic items in the iteration planning. You can add more as you improve your process.

  • Assigned Iteration Goals

  • Goal Acceptance Criteria

  • Iteration Duration

  • Roles and Responsibilities

  • Iteration Start Date

  • Output Assessment Schedule

  • Daily Meeting Schedule

  • Tasks Dependencies and Sequencing

  • Resources Needed

  • Risks and Preventive Actions

  • Task Status Transparency

  • Working Agreement

  • Prioritised Lessons Learned Action Plan

Most of the items in iteration planning are already familiar except for the Working Agreement. In Scrum, for example, the five basic values are Courage, Commitment, Focus, Openness, and Respect. Your team may follow these or you can define your own team values. Once agreed, any member of the team has the right to remind others if one of these values are violated.

3. Perform Agile budgeting

With agile budgeting, forecasting is not useful since the business roadmap could change at anytime. However, the basic expenses like fixed expenses, semi-fixed expenses, innovation expenses, and miscellaneous are still considered.

Fixed expenses like  salary are always part of every iteration budget. However, budget is increased when there is a plan to hire more people. For variable expenses like electricity, the median expense from previous months may be used. Innovation expenses may be a bit tricky, especially if there are many unknowns. If you are currently developing an innovative software, the best way is to have a budget meeting with the Product Owner and the Scrum Master. Top management has the option to change the priorities if the current iteration expenses exceed the budget.

For every iteration, analyse the budgeting per month and see if there’s a big spike in the expenses. If fund allocation is tight, some of the goals may be considered in the next iteration. The aim is to focus more on what's important.

4. Act on your priorities

During the iteration implementation, either you will use fewer resources or you will exceed. Either way, the stakeholders must be promptly alerted on the status of the project. When there is a delay, for example, you can either add budget or reprioritise to keep the budget deviation at a tolerable level.

Agile allows adjustments of scope, but it also means adjustment of budget. Budget priority is given to scope changes that give more value to the business. This is something that top management must understand in agile budgeting.

5. Beyond budgeting: Learn, adapt, act Again

Beyond budgeting means you are dealing much more than financial aspects, and more so with organisational values. It has more to do with what kind of people you have in your organisations. The purpose is to develop a more agile business and focus more on values-based management. It does not mean you do away with rules, it just means that you are a company that focuses on what matters. The more values-based you become, the less rules you need. Thus, a change of mindset is the major challenge you will face.

In values-based management, the team is given autonomy to act responsibly, to continue learning, and to apply improvements in the succeeding iterations. Top management and managers have the transparency of what is going on and are assured that the team will not hide anything from them. This is achievable when you are able to get into the intrinsic motivation of your people.


Agile Budgeting is one way of balancing the competing priorities and constrained fund allocation. It gives businesses the ability to meet the challenges of a volatile market. However, adopting agile budgeting goes beyond financials; it goes deeper into the values of the organisation. It optimises the available resources at hand by focusing on what is important. And, the success of this approach is only possible when the organisation consists of mature, professional, and able people who can both accept and act on their responsibilities.

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AgileLauren Ryder