Article #157 Managing, Monitoring, Evaluating, and Reporting on Funding Requirements for Capital Projects Using the Funding Recap Report

For capital projects, the need for project funding, whether from the project owner side or the contractor, is a must requirement to finance the sizable financial investments that capital projects would usually require. Project owners and contractors need to know the project funding requirements before they commence the project. There are two types of funding management requirements for a capital project. The first is the total project funding requirement, while the second is the period funding requirement. The total funding requirement is defined as the budget cost identified in the approved budget cost baseline, including the project contingency and management reserves. The period funding requirement is defined as the annual and quarterly payments needed by the project. These funding requirements are derived from the approved budget cost baseline and planned budget spending plan.

The budget cost baseline is essential in determining the project funding requirement. It includes the projected expenditures and the anticipated liabilities that may arise during the project life cycle phases. The funding may occur in incremental amounts when managing the project phases. The budget cost baseline should be linked to the approved project cost estimate and the baseline schedule.

Project funding could be from different sources. For example, for public sector project owners, funding will usually be from the government’s ministry or department of finance. On the other hand, private sector project owners’ funding could be from a combination of debt and credit sources. For contractors, project funding could be through agreeing with banks and financial institutions to issue Letters of Guarantee and Letters of Credit and provide direct finance for the project’s funding requirements and general working capital needs.

Using a Project Management Information System (PMIS) like PMWeb, project owners and contractors can have a complete project cost management solution, including managing project funding requirements. PMWeb allows the organization to create multiple funding sources linked to the entire project’s portfolio, program, or even an individual project. This enables the organization to track its funding sources by each fiscal year. The funding records module captures the details of all available funding sources regardless of their type, including federal, state, banks and financial institutions, development agencies, local capital, and own sources. Funding records could be specific to an individual project, a program of projects, or a project’s portfolio. For each funding source, PMWeb allows capturing details of projects, programs, or projects funded by the fund source, including the amount to be financed by the funding source. Funding sources can also be specific for a fiscal year or not. If the project schedule was imported to PMWeb, each funding item can be linked to the relevant project schedule activity and/or WBS level.

Like all other PMWeb records, supportive documents can be uploaded, stored, and attached to each funding source. The same applies to linking relevant PMWeb records and imported MS Outlook emails. Further, each funding source can be assigned a workflow to formalize the review and approval process.

PMWeb funding requests module is an optional module that can be used. Funding Requests allow the organization to add and subtract from the project funding in discrete transactions that maintain a clear audit trail and that may be routed for approval using PMWeb workflow. The captured funding changes will result in having the revised funding requirement. Funding requests can be either posted as original funding or revised funding. If a funding request was posted as “original” funding, then it would only affect the total amount of original funding, nevertheless, if it was posted as “revision” funding, then it would affect the total amount of revised funding, and the amount would appear under the column heading of funding changes.

The third funding module is funding authorizations. This module allows the organization to document the actual release of funds to a project. Any Funding Authorizations can be selected using the Add Funding Codes in the Funding Authorization form details tab. Each project can have multiple Funding Sources. For each funding authorization, the user can authorize funds from the different fund sources available for the project and the program for which the project is part of the project’s portfolio that the project was included. The funding amount from each funding source can be added as a percentage of the total fund source amount or the exact value of the authorized fund amount.

Project funding needs to be linked to the project budget to identify what funds and the number of funds will be used to fund the approved project baseline budget. Each single budget line item with a unique cost account number can be financed by more than a single fund source. The number of funds to be used in each budget cost account can be added as a percentage of the total fund source amount or the exact value of the fund source amount. It should be noted that a single fund source can be used to fund multiple budget line items and the entire approved project budget.

Project funding can also be associated with commitments. This will be needed if the financing is associated with a specific scope of work performed by a contractor, a subcontractor, or a supplier. For each commitment line item, the user can select the fund sources that will be used to fund the chosen item, which will have its unique cost account number by adding the number of funds to be made available from each fund source. The number of funds to be used in each commitment cost account can be counted as a percentage of the total fund source amount or the exact value of the fund source amount.

The funding recap report will capture the details of the different project funding processes. For each project, the report will detail the funding year, funding sources that were made available to the project, the original funding available from the added funding sources, as well as funding requests that were posted as original funding while the approved funding changes that were issued using the funding requests module which was posted as revised funding. The revised funding field is the sum of approved original funding and approved funding changes.

The PMWeb default out-of-the-box Funding Recap report also shows the amount of authorized funding for each project from each funding source. In addition, the report will show the funding amounts linked to the baseline project budget and the approved commitments and approved commitments change orders. The report will also include a column for expended funding which is the actual cost captured from commitment progress invoices, miscellaneous invoices, and approved timesheets. The report will also have a cell to identify if the fund record source or funding request module was closed where the closed check box option was selected. The finding recap report can be for a specific project, a program of projects portfolio, or all projects managed by the organization, depending on the selected report filter values.

About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM, is a Senior Project Management Consultant with over 35-year service record providing project management and controls services to over 100 projects with a total value of over US $5 Billion. Those projects included Commercial, Residential, Education, and Healthcare Buildings and Infrastructure, Entertainment and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication, and Information Technology projects. He is thoroughly experienced in project management, including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training, and business development.

Bassam is a frequent speaker on Project Management, Strategic Project Management, and Project Management Personal Skills. Over the past 35 years, he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe, and South America. He has written more than 250 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for over six years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), an accredited Planning and Scheduling Professional (PSP), an Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE), and a Green Project Management (GPM).

Bassam holds a Master’s in Engineering Administration (Construction Management) with Faculty Commendation from George Washington University, Washington, DC, USA, Bachelor in Civil Engineering – from Kuwait University, Kuwait, and has attended many executive management programs at Harvard Business School, Boston, USA, and London Business School, London, UK.


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