Budget Management for Projects
The budget is the approved cost structure for a project,
and differs from the cost plan in that it is binding. Having estimated the costs as accurately as possible using the different tools during the planning phase, you then prescribe the funds available for your order in the form of a budget. The budget is the device by which management approves the expected development of order costs over a given timeframe.
The following different budget types exist in the project system:
- Original budgetThe original budget is the originally allocated budget. After a point in time that you specify, this budget can only be corrected using budget updates.
- Budget Updates
Unforeseen events, additional requirements, for example, price rises for external activities, and so on. This may mean you need to update the original budget, in the form of:
- Current budget
The current budget is derived from:
In many companies, distributing the budget is not the same as releasing funds. Therefore the Project System enables you to release the budget successively. The release is based on the current budget, meaning the original budget changed by supplements, returns, or transfers.
This section describes