| # Function: Project budgeting The objective of this main business function is to calculate costs and actual prices by project and by item, and to link additional surcharges to a project. The following fundamental distinction can be made between two types of costs: Direct costs: Used to input or calculate a cost such as labor and materials. Calculated costs: Surcharges based on budget-lines, typically including all overhead and burdens that are usually referred to as derived costs. Process: Project budgeting, process (code: MPR03a) In this process flow, resources can be allocated to the elements of the work breakdown structure. If a relationship exists with an organizational breakdown structure, the budget is automatically assigned to the elements of that structure. The types of budgeting are top-down budgeting and bottom-up budgeting. Top-down budgeting means a budget amount is assigned to the top of the structure and allocated to the lower level elements. The amounts can be based on the actual cost of a previous, similar project. Top-down budgeting is frequently used to budget total project costs when there is a limited amount of detailed information about the project. Bottom-up budgeting means that the costs of individual work items or grouped cost items are allocated, combining the individual elements to attain a project total. With this method, the costs of individual work packages or grouped cost objects are budgeted and summarized, or rolled-up to the individual elements, to get a project total. These costs include direct costs, for example, labor or materials, and indirect/calculated costs, for example, overhead surcharges on direct costs. If the budget is linked to an Organization Breakdown Structure (OBS), the budget is automatically assigned to the various OBS elements, which enables departmental responsibility for a specific budget. Assumptions: ERP Enterprise Project will serve as the supporting functionality. IT support: ERP Enterprise Project, Budgeting Process: Project budgeting, product (code: MPR03b) In this function, you can set up a budget and also enter budget details into the system. The objective of this process is to provide updating possibilities for the initial estimate that is calculated during the quotation phase. After a quotation is accepted and has become a project, the budget must be updated. At this point, the budget can be finalized/frozen. Assumptions: Manufacturing project control functionality will serve as the supporting functionality. IT support: ERP Enterprise Manufacturing, Project Control |