Performing Budgeting Functions

Your project for implementing new hardware and software was planned with costs. This type of planning provides you with an estimate of the required funds. You want to assign a budget for your project later, based on this information. The budget corresponds to the approved funds.

As a result, you need to familiarize yourself with the budgeting functions. Since the amount of required and approved funds can differ, you especially want to use availability control so that you are warned before the budget is exhausted.

While you must estimate your project costs as accurately as possible during cost planning, it is in the approval phase that funds are assigned in the form of a budget.

The budget differs from the project cost plan in that it is binding. It is the device by which management approves the anticipated development of project costs over a given period of time.

A range of budgeting views are available as follows to display different values and check the consistency of a budget:

• You can use the Distributed/Distributable columns to check the distribution of the budget throughout the project structure. The budgets within the project must be distributed consistently. This means that the budget of a WBS element must be greater than or equal to the budgets of the lower-level WBS elements assigned directly to it. Sub-projects are the exception here, where budgeting is performed separately.

• Use the Cumulative/Remaining columns to check the distribution of the budget over fiscal years. The total budget of each WBS element must be greater than or equal to the total of the annual values.

• The Assigned column only displays if the availability control is active for the project.

• The Current budget column displays the original budget together with the budget supplements, budget returns, and budget transfers.

• The Release column displays the portion of the current budget made available via the budget release.

• The Planned total column is derived from cost planning and can be transferred to budgeting.

If the allotted funds are not sufficient, you can enter budget supplements in the Project System, enabling work on the project to continue. If your project has more funds than it needs, you can return the excess funds.

It may be the case that one project within a responsibility area is running short of funds while another still has plenty. You can use transfers to make the budget from one part of a project available to another part.

Budget release means that you release the current budget in stages so that available funds are not exhausted at an early stage. Releasing the budget is optional.

The advantage of budget release is that budget assignment is very detailed. The disadvantage is that more work is involved when budgeting.

The budget release has nothing to do with setting the Released status at WBS element level.

You can use the Default Plan Values transaction (IM34) to copy the cost planning data of investment measures (investment projects and investment orders) to the cost planning data of the investment program positions. You can copy the plan versions of your choice.

The positions are budgeted in the investment program. You can use the cost planning data of the investment program as a proposal for budgeting. You can copy the plan versions of your choice to the budget.

You can then distribute the investment program budget values (control parameter: program type) among the investment measures (in our example, the top WBS elements of the investment projects).

The budget values of the top WBS element are then distributed further among the subordinate WBS elements (but only if the individual work packages are to be responsible for their own budgets).