Budgets

The project budget, which is the final result of the planning cycle of the MCCS, must be reasonable, attainable, and based on contractually negotiated costs and the statement of work. The basis for the budget is either historical cost, best estimates, or industrial engineering standards. The budget must identify planned manpower requirements, contract allocated funds, and management reserve.

All budgets must be traceable through the budget "log," which includes:

• Distributed budget

• Management reserve

• Undistributed budget

• Contract changes

Management reserve is the dollar amount established by the project office to budget for all categories of unforeseen problems and contingencies resulting in out-of-scope work to the performers. Management reserve should be used for tasks or dollars, such as rate changes, and not to cover up bad planning estimates or budget overruns. When a significant change occurs in the rate structure, the total performance budget should be adjusted.

In addition to the "normal" performance budget and the management reserve budget, there are two other budgets:

• Undistributed budget, which is that budget associated with contract changes where time constraints prevent the necessary planning to incorporate the change into the performance budget. (This effort may be time-constrained.)

• Unallocated budget, which represents a logical grouping of contract tasks that have not yet been identified and/or authorized.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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