Funding Limit Reconciliation for capital construction projects is the process of comparing the planned expenditure of project funds against any limits on the commitment of funds for the project to identify any variances between the funding limits and the planned expenditures (Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK® GUIDE) – Sixth Edition, Project Management Institute, Inc., 2017). Thus, the funding limit reconciliation is very crucial for every capital construction project to prevent the large variation in the expenditure of the funds for the project to allow the project owner to pay the contractors and other vendors on the projects. This particular project management technique will often lead to the revision of the schedule as well as the allocation of the works to be executed to ensure that funding limit variances are avoided.
To enable the accurate management, monitoring, evaluation ad reporting of the funding limit reconciliation on capital construction projects, there will be a need to have the project’s approved baseline budget for which the budget projection will detail the approved funds available for the project. In addition, there will be a requirement to capture the details of all awarded commitment contract agreements and their projected invoicing as submitted by each Contractor for their planned work in place. The content of those two documents will enable managing, monitoring, evaluating and reporting on the funding limit reconciliation for each project and at each period of the project’s duration.
Using a Project Management Information System (PMIS) like PMWeb, the business processes for budget and commitments are examples of the ready to use business process templates available in PMWeb. The templates for both business processes also allow creating the monthly projection for available fund limit as well as the spending requirement for each commitment contract.
Similar to all cost management related processes, the cost breakdown structure (CBS) levels need to be established to determine the levels where the funding limit reconciliation will be managed, monitored, evaluated and reported on. PMWeb cost code module allows defining up to sixteen (16) levels for the cost breakdown structure (CBS) levels for which each level could be ten (10) digits long.
The left-hand side of the report displayed above shows an example of the cost breakdown structure (CBS) levels that the funding reconciliation limit report will use. This will enable the reader to roll-up or drill-down the reported variance for the funding limit reconciliation for each period of the project’s duration.
For each capital construction project, PMWeb budget module will be used to capture the baseline module as well as all budget adjustments and transfers. In addition, PMWeb commitment module will be used to capture the details of all awarded commitment contracts. The commitment change order module will be used to capture all changes to the commitment contracts.
Both budget and commitment modules allow the project team to define the projection for each cost center. The budget will define the available fund limit whereas the commitment will define the spending requirement for each commitment contract. The difference between those two values will define the funding limit variance for each period.
Similar to all other business processes managed in PMWeb, supportive documents that are usually associated or required for each budget or commitment business process transaction can be attached to their relevant template. It is highly recommended to add details to each attached document to better explain to the reader what is being attached and viewed. In addition, links to other relevant records of other business processes managed in PMWeb can be also linked to the reported progress.
It is highly recommended that all those supportive documents, regardless of their type or source, get uploaded and stored on PMWeb document management repository. PMWeb allows creating folders and subfolders to match the physical filing structure used to store hardcopies of those documents.
To ensure that the submit, review and approve dates of each budget and commitment business process transaction submission are captured, a workflow will be assigned to each business process. The assigned workflow will map the submit, review and approve tasks, role or roles assigned to each task, task duration, task type and actions available for task. In addition, the workflow could be designed to include conditions to enforce the approval authority levels as defined in the Delegation of Authority (DoA) matrix.
When a budget or commitment business process transaction is initiated, the workflow tab available on the relevant template will capture the planned review and approve workflow tasks for each transaction as well as the actual history of those review and approval tasks. The captured workflow data will include the actual action data and time, done by who, action taken, comments made and whether team input was requested.
About the Author
Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services and project management information system to over than 200 projects with a total value in excess of US $100 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment, Hospitality and shopping malls, Oil and Gas Plants and Refineries, Telecommunication and Information Technology projects. He is thoroughly experienced in complete 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 in topics relating to Project Management, Strategic Project Management and Project Management Personal Skills. Over the past 40 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 300 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 more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the Association for the Advancement of Cost Engineering (AACE) and Green Project Management (GPM).
Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.