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Published here January, 2006. |
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The Project's Execution Phase
The Project Manager's Project Budget Responsibility
- Once this Approved Project Budget is released to the project manager, a reverse process must take place to convert it into a working control document. That is, the money available must be divided amongst the various WBS WPs that, by the way, have probably by now been upgraded! This results in a project execution Control Budget or Project Baseline Budget, or simply, the Project Budget. In some areas of project management application it is referred to as a Project Cost Plan.
- On a large project where different corporate production divisions are involved, there may be a further intermediate step of creating "Control Accounts" for the separate divisions, so that each division subdivides their allocated money into their own WBS WPs.
- Observe that, since the total Project Budget received formal approval from Executive Management, you, as project manager, must likewise seek and obtain from Executive Management, via the project's sponsor, formal approval for any changes to the total project budget. Often this is only justified and accepted on the basis of a requested Product Scope Change.
- In such a case the project's sponsor will either draw down on the management reserve in his or her possession, or submit a supplementary RFA to upper management.
- Now that we have the Project Budget money allocated to Work Packages we can further distribute it amongst the various activities of each WP so that we know how much money we have as a "Baseline" cost for each activity.
- This provides us with the base of reference for the cost control function. Of course, depending on the circumstances the same thing may be done at the WP level but the ability to control is then at a higher and coarser level.
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Request
for Capital
