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    Stages of Budgeting & International Norms: Date: 18-APR-2020

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    navpreet singh
    The document discusses various types and stages of budgeting including international norms. It describes different types of budgets such as master budgets, operating budgets, cash budgets, and capital expenditure budgets. It outlines the budgetary process involving setting objectives, analyzing resources, negotiating, and obtaining final approval. It also details the project budget management process including defining, executing, controlling, and updating the budget. Lastly, it discusses best practices for developing budgets and integrated time and cost management systems.

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    Stages of Budgeting & International Norms: Date: 18-APR-2020

    Uploaded by

    navpreet singh
    72 views29 pages
    The document discusses various types and stages of budgeting including international norms. It describes different types of budgets such as master budgets, operating budgets, cash budgets, and capital expenditure budgets. It outlines the budgetary process involving setting objectives, analyzing resources, negotiating, and obtaining final approval. It also details the project budget management process including defining, executing, controlling, and updating the budget. Lastly, it discusses best practices for developing budgets and integrated time and cost management systems.

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    The document discusses various types and stages of budgeting including international norms. It describes different types of budgets such as master budgets, operating budgets, cash budgets, and capital expenditure budgets. It outlines the budgetary process involving setting objectives, analyzing resources, negotiating, and obtaining final approval. It also details the project budget management process including defining, executing, controlling, and updating the budget. Lastly, it discusses best practices for developing budgets and integrated time and cost management systems.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    72 views29 pages

    Stages of Budgeting & International Norms: Date: 18-APR-2020

    Uploaded by

    navpreet singh
    The document discusses various types and stages of budgeting including international norms. It describes different types of budgets such as master budgets, operating budgets, cash budgets, and capital expenditure budgets. It outlines the budgetary process involving setting objectives, analyzing resources, negotiating, and obtaining final approval. It also details the project budget management process including defining, executing, controlling, and updating the budget. Lastly, it discusses best practices for developing budgets and integrated time and cost management systems.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 29

    STAGES OF BUDGETING

    & INTERNATIONAL
    NORMS
    Date: 18-APR-2020
    TYPES OF BUDGETS

     Master Budget  Add-on Budget

     Operating and Financial Budgets  Supplemental Budget

     Cash Budget  Bracket Budget

     Static (Fixed) Budget  Stretch Budget

     Flexible (Expense) Budget  Strategic Budget

     Capital Expenditure Budget  Activity-based Budget

     Program Budget  Target Budget

     Incremental Budget  Continuous Budget


    BUDGETARY PROCESS

    ANALYZING COORDINATING DISTRIBUTING


    SETING OBTAINING
    AVAILABLE NEGOTIATING AND REVIEWING THE APPROVED
    OBJECTIVES FINAL APPROVAL
    RESOURCES COMPONENTS BUDGET
    PROJECT BUDGET MANAGEMENT PROCESS
    Outputs
    Inputs  Cost estimate by activity
     WBS
     The Project Budget
     Project contract or initial budget  The Budget Variance Report

     Resource requirements

     Resource cost estimates

     Activity duration estimates

     Historical information

     Market conditions

     Owner and organization policies

     Chart of accounts structure


    PROJECT BUDGET MANAGEMENT PROCESS
    STAGES OF PROJECT BUDGET MANAGEMENT

     Defining the Budget

     Executing the Budget

     Budget Control

     Budget Update
    1. DEFINING THE BUDGET

     Resource requirement
     Labour

     Equipment

     Material

     Budget Estimate

     Budge Development

     Budget Approval
    1.1 RESOURCE REQUIREMENT

    Human or labour resource


     Consultancy services

     Right people with the expertise and skills needed to complete the activities on the project schedule

     Develop a list of the human resource requirements detailing the expertise level, areas of experience,
    education and language requirements

    Equipment or Material Resource


     Include all the specialized tools needed by the project

     Utility services such as electricity, telephone lines, access to the internet, office material, office space and
    used by the project
    1.2 BUDGET ESTIMATE

    TYPE WHEN WHY ACCURACY

    Get a quick idea of Low


    Rough Pre-Proposal
    project cost -25%, +75%

    RFP responses and Medium


    Contract Initiation Phase
    owner negotiations -10%, +25%

    Monitor Actual costs High


    Definitive Planning Phase
    and purchases -5%, +10%
    1.2.1 BUDGET ESTIMATION TECHNIQUES

    Analogous
     Uses actual cost of previous similar project for estimations
     Less costly, less efforts, less time, less accurate

    Top Down
     Used when total budget is known and the project needs to know the cost of each individual activity
     Fixed budget is broken in WBS levels to fit the limitation

    Bottom Up
     Estimate requires estimating the individual activities and the cost of each input and is adding them up to get the
    project total

    Parametric
     Uses standardize parameter that defines the cost of an activity or task for specific rate or output
     Accuracy depends on the data available and whether or no the model can be scalable to different condition
    1.2.2 BUDGET DEVELOPMENT
    Chart of Accounts
     Is a list of all accounts tracked by a single accounting
     It is designed to capture financial information to make good financial decision
     Account is divided into: Asset, Liability, Equity, Income & Expense
    Budget Report Requirement
     Reporting requirements come from three sources: the owner, management and the project
     Good practice is to develop a table that lists all budget reporting requirements internal and external to the project and the
    dates or periods when these reports need to be available.
    Budget Management Plan
     Is a document that describes how budget variances will be managed at the project,
     The level of authority for approving changes to the budget and the process to request changes to the budget
    Budget Approval
     The completed project budget should be reviewed by the project team and be reviewed by the representative from the
    finance department
    1.2.3 EXECUTING THE BUDGET
    Budget Baseline
     The baseline is a time-phased budget that project managers use to measure and monitor budget performance
     Will be used to compare with the actual costs incurred by the project as it makes progress
    Publishing the Budget

     Approved budget needs to be communicated to all people that will use it to monitor, control and make decisions based on
    the information about the budget
    Budget Execution

     Executing the budget is the action of authorizing the expenses approved in the project budget
    Budget Targets

     By setting budget targets against a schedule the project will be able to have a better opportunity to monitor and control the
    budget
    Authorize Expense

     Authorizing expenses follow the organization's policies that determine who can authorize expenses on behalf of the project
    and the limits of the authorizations
    1.3 BUDGET CONTROL
    Budget Reporting
     Expense Report
     Variance Report
     Burn Ratio Report
    Budget Performance
    Budget performance is the activity to see if the project expenses are being executed according to the
    budget plan and helps identify deviations and develop corrective actions
    Earned Value Management
    1.3.1 EARNED VALUE MANAGEMENT
     A project management technique that measures project progress objectively
     EVM combines measurements of scope performance, schedule performance, and cost performance, within a single
    integrated methodology
     Provides an early warning of performance problems while there is time for corrective action
     Improves the definition of project scope, prevents scope creep, communicates objective progress to stakeholders,
    and keeps the project team focused on achieving progress
     EVM involves calculating below values for each activity or objective from the project’s WBS
     Planned Value
     Actual Cost
     Earned Value
     Cost Variance
     Schedule Variance
     Cost Performance Index
     Schedule Performance Index
    1.3.1 EARNED VALUE MANAGEMENT
    1.3.2 BUDGET ANALYSIS
    Identify the causes for the deviations from plan. Major deviations from the budget baseline need to be
    analyzed to determine what caused the difference so that steps can be taken to prevent the situation from
    happening again in the future, or with similar projects
    Forecasting
     Earned Value enables the project manager to forecast the probable final cost and schedule results of the
    project
     With Earned Value, the project does not have to wait until it is almost complete to know that it has a cost
    problem
    What if Scenario Analysis
     Scenario analysis uses mathematical models to aid the project manager get results based on different
    alternative situations; a project manager can use a spreadsheet and to place different values to determine
    the impact on the budget for different situations that range from increasing personnel to reduce the time
    to complete the project, to the implications for the project budget based on currency fluctuations.
    1.4 BUDGET UPDATES
    Corrective Actions
     A predefined limit by which a project may be under or over budget during the project
    implementation phase
     It is usually set as a small percentage of the total, if the project is above the defined limit
    then the project manager needs to take corrective actions to bring the budget back on track
    Capture Lessons Learned
    Communicate Changes
    INTERNATIONAL NORMS
    BEST PRACTICES: DEVELOPING BUDGETS

     Link budget development to corporate strategy

     Design procedures that allocate resources strategically

     Tie incentives to performance measures other than meeting budget targets

     Link cost management efforts to budgeting

     Reduce budget complexity and cycle time

     Develop budgets that accommodate change


    CAUSES OF COST OVER-RUNS

     Inaccurate Project Estimates

     Serious Project Design Errors

     Not Planning for Change Orders

     Administration Errors

     Poor Site Management

     Not Hiring the Right Team


    INTEGRATED TIME AND COST MANAGEMENT SYSTEM
    INTEGRATED TIME AND COST MANAGEMENT SYSTEM
    INTEGRATED TIME AND COST MANAGEMENT SYSTEM
    DIMENSIONS IN ITCMS
    ADVANTAGES OF ITCMS
    Better outcome through collaboration
    Enhanced Performance

    Optimised Solution
    Greater Predictability

    Faster Project delivery


    Reduced safety risk

    Fits first time


    Reduced waste

    Whole life asset management

    Continual Improvement
    ADVANTAGES OF ITCMS
    EXAMPLES

    SHANGHAI TOWER SHANGHAI DISNEYLAND


    EXAMPLES

    OAKLAND AIRPORT WHIZDOM 101-BANGKOK SMART CITY


    THANK YOU

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