How budget differs from cost planning, distributing and amending budget, and availability control including commitments.
Contents
A budget sets the limit of what may be spent. It is easily confused with a cost plan, but the two are entirely different things.
Plan compared with budget
Aspect
Cost plan
Budget
Nature
An estimate of what it will cost
An approved ceiling on spend
Set by
The project team
Management or budget holders
Changing it
Revised freely
Requires a formal process
Control
None; exceeding it stops nothing
Real; overruns can be blocked
Transaction
CJ40 / CJR2
CJ30
Distributing budget
Budget categories
Kind
Content
Original budget
What was first approved
Supplement
Additional approved budget
Return
Budget given back to the level above
Transfer
Budget moved between WBS elements
Current budget
Original plus supplements less returns, adjusted by transfers
Availability control
Availability control compares the assigned value against the budget and reacts at configured thresholds. Assigned value includes commitments, not just actual cost.
Example tolerance limits
Usage
Action
80%
Warning message
90%
Warning plus email to the person responsible
100%
Error; the transaction is stopped
Check your understanding
Test what you just read.
Quiz 1
What is the transaction code for initial budget setting?
Quiz 2
What feature monitors whether actuals and commitments exceed the budget?
Quiz 3
Budgets are set on WBS elements.
Quiz 4
Which transaction code is used for budget supplements?
Quiz 5
When Availability Control is set to error on budget exceedance, processing that would exceed the budget is automatically blocked.
Quiz 6
Which statement correctly describes top-down budget distribution?
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