Building the operating budget

A defensible budget is built line by line from evidence: contracts in force (with escalations), utility trends (usage × expected rates), tax and insurance knowns, staffing, a maintenance level consistent with the building's age, and revenue from the lease database — contractual rents, scheduled escalations, known expirations with realistic downtime and market assumptions for backfill.

State assumptions explicitly (taxes +5%, insurance +8%, occupancy 88%→92%) so review is a conversation about assumptions, not archaeology about formulas. Seasonalize monthly spreads honestly (utilities are not one-twelfth per month) so mid-year variance reporting means something.

Then use it: variance review monthly, comparing year-to-date actuals against the same months' budget — never a full-year figure against a half year of actuals. Timing variances wash out; run-rate variances change the forecast and deserve action.