Examining Funding Limit Reconciliation for Projects
Funding Limit Reconciliation is a method of adjusting, spending, scheduling, and resource allocation in order to bring expenditures into alignment with budgetary constraints.
Most budgets are created on the premise of steady incoming and outgoing flows. Large, sporadic expenditures are usually incompatible with organizational operations. Therefore, funding limits are often in place to regulate the outgoing capital flow and to protect against overspending.
Budgets must be reconciled with such limits. This will affect the scheduling of project work and possibly reshuffle WBS work packages entirely. The schedule, in turn, can affect the distribution or acquisition of resources.
Customers set finding limits for large projects based on internal considerations such as when their fiscal years begin and end and how healthy their cash flows are. A customer who wants to spread the costs of a project over two quarters may authorize $250,000 to be spent during Quarter 1 and $350,000 during Quarter 2.
In response, the project manager will have to align the resources, schedules, and activities so that the project work does not exceed the limit on funding.
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