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2.5 : Primavera Learning - Budgets

Budget Consists of quantities and cash flow required to complete a project. In the Planning stage project manager and other stakeholders need to estimate scope and budgets. As the scope changes, budget also needs to be adjusted to compensate. Primavera is helpful in establishing these budgets and tracking the changes in the budgets.

In this Tutorial, let us learn how to establish budgets, establish monthly spending plans, implement changes to it and tracking monthly spending and variances right from EPS to Project and to WBS level.

In the planning stage, we start the budgeting from the top level, like dividing the budget available to the EPS nodes for the duration of the projects. And then respective managers divide this budget to the projects for which they are responsible in each EPS node. Let us consider with an example here. Considering that we have $6000 allotted for an EPS node and it is having two projects and we divide this $6000 equally to these two projects as $3000 each.

Once the budgeting is done at the EPS nodes, and then distributing them to the next level of projects, you need to establish a spending plan to keep track of cash flows for each EPS node and Project.

You can establish budget estimates at the planning stage, then refine them as projects progress

Establishing Budgets:

For Establishing Budgets, Go to the Projects window. Select the EPS Node, here for example let us consider EPS node “SAMPLE”, go to the details in the bottom of the window and choose “Budget Log” tab, enter the total budgeted amount you anticipate for this EPS in the Original Budget field as “$6000”.

After you have entered budgeted totals for an EPS node, distribute this budget to the projects present in this EPS node. As we have allotted $6000 to the EPS node, let us distribute this budget into $3000 each for the two projects present. Enter the Budgeted amount in the Original Budget field as “$3000”

Monthly Spending Plan:

After you have entered budgeted totals for a node and its projects, you can start apportioning anticipated monthly spending amounts for the EPS node and subsequently to each of the projects in the EPS branch. In this example as we have got the project timeline from Feb’16 to Apr’16, let us go to the “Spending Plan” tab in the details section and distribute $6000 as $2000 for each month in the EPS node and $1000 for each month for both the projects in the EPS Branch.

And similarly allocate $1000 for each month for both the projects in the EPS Branch as shown in the below picture.

Now let us go the project “Sample-1” and allocate this budget to the WBS Level also. Open the project and go to WBS Window.

After opening the project. In this example, as we have allotted $3000 for the project and let us assume we have 3 WBS Elements and we distribute $1000 for each WBS Element. Enter the $1000 for each WBS Element’s Original budget field in the “Budget log” Tab as shown below.

Click the Spending Plan tab in the WBS window. Enter total expenditures for each month in the Spending Plan column for all the WBS Elements. In this example, it is as shown in the below table.

Enter into the Spending Plan Tab like shown in the below figure for all the WBS Elements, with the figures shown in the above table. There is no need that we have to allocate only the budget allotted for the WBS node, the actual figures may differ at the monthly spending plans as per the revised planning of the manager involved.

After you are done with this, there is another column “Spending Plan Rally”. The Spending Plan Tally column shows any amounts previously recorded for project spending plans (summation of all the budgets planned for the particular month.). Now go to the Project node “Sample-1” which is root WBS and observe that the spending plan tally is the summation of all the spending plans of the WBS Elements. And the excess amount that has been planned at the WBS elements appears in red ($250 in this example) in the Undistributed Current Variance column as shown in the below figure.

Tracking Budget Changes

As projects progress, changes in scope, resources allocation, funding /withdrawals affects original budgeted amounts. The Budget Change Log available here in Primavera enables you to track modifications that affect the budget; this log also provides a clear indication of the reason for the change in the budget, by this you can maintain a log of all budget changes into categories like approved, pending, not approved.

Approved budget will be added into the current budget and the rest will be shown as the proposed budget.

Only authorized project participants may issue budget changes and mark them as approved.

As per the user access and privileges allotted, you may post a change amount as Pending; the program manager of the affected EPS node, or the project manager of the affected project, must then mark the amount as Approved or Not Approved. And the Module calculates the proposed budget and current budget as per the logic mentioned.

Proposed Budget = Original Budget + (approved + pending) Budget Changes

Current Budget = Original Budget + Approved Budget Changes

Picture shown below is a snapshot on how to add the budget log and mention the status in the respective fields.

Click the Budget Summary tab to track budget and spending totals as projects progress. The Budget Summary tab enables you to see all the details like current budget, unallocated budget, distributed current budget, Variances spending plans and benefit plans.  This would project all the summary details of your project’s financial status.

Funding Sources:

Projects are generally funded by sources outside or within your organization. So you can set up a database of your funding sources, from which you can easily assign the funding sources to the projects or WBS elements as and when required.

To Define Funding Sources, Go to Menu bar, Choose Enterprise, click on “Funding Sources

Select the funding source immediately above and at the same level as the fund you want to add, then click Add. And then maintain your own funding sources dictionary. Type any additional information about the funding source in the description area as shown below.

Tracking and Analyzing Budgets

At the EPS level / Project level, you can customize columns and produce reports to display original budget amounts along with the current variance amounts. This is beneficial in the early stages of your projects to track and analyze your budget changes for all the projects available.

Once you are done with the perfect view of columns, you can save the layout for further future reference, which reduces and save a lot of time.

To create a layout: Open the Projects window, then click the Display Options bar and choose Columns, Customize. You can select any budget-related columns from the list of choices like original budget, current variances columns.

Here is the illustrative video tutorial of the same for your better understanding

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