In accordance with the Royal Institute of Chartered Surveyors (RICS), Post-Tender Budget, also known as Budget to Build or Project Budget, is an evolution of the project’s cost estimate, updated to reflect information not available when the estimate was first produced; an estimated plan of the cost to complete the project following the contract award, based on actual costs incurred, plus the project team’s planned procurement and delivery methods.
To achieve this, the post-tender budget should be continually updated until project completion. This update or budgeting could be done on a monthly basis or every quarter, depending on each project requirement. This will cover adjustments for tender addendums, contract variations, procurement strategy, update to project’s deliverables or outputs, update to labor and equipment resource rates, update to material cost rates, changes to prelims and site overhead strategy, risk mitigation, value engineering proposals, opportunity recognition among others.
Similar to any other commercial process to be managed when delivering capital construction projects, budget adjustments should be implemented in a governed process that ensures transparency and accountability. For each adjustment proposed and approved, all data relevant to the adjustment needs to be communicated along with all supportive documents, including links to other related project management processes and email communications. In addition, each budget adjustment needs to be formally submitted for review and approval in accordance with what has been set in the commercial management plan. This will not only ensures that all needed reviews and approvals had been secured but also ensures that the set approval authority levels had been respected. Only then, the monitoring, controlling, and reporting of those post-tender budget adjustments would achieve its desired objectives for a single real-time version of the truth reporting.
Using a Project Management Information System (PMIS) like PMWeb will provide the commercial management team with a single 100% web-enabled platform to manage all procurement and commercial processes across the completed capital construction projects’’ portfolio. This will include the budget adjustments, which will be used PMWeb ready-to-use module for budget requests. It is critical all details associated with each adjustment, including the reason, type, scope of work, among others. In addition, a detailed breakdown of the adjustment, whether those were additions or omissions, also needs to be captured. The post-tended budget adjustments will be assigned to their relevant cost breakdown structure (CBS) or cost account. Adjustments could be made in any currency if needed as well as a budget adjustment could cover adjustments to different projects if this permitted.
One of the critical requirements when creating the project budget or adding budget adjustments is to identify when each adjustment item is planned to be spent. Although PMWeb allows assigning each adjustment line item to its relevant project schedule activity, which was imported into PMWeb, nevertheless, PMWeb provides the option to distribute the planned spending of each adjustment by defining the start and end date along with the spending projection curve. Of course, there is also the option to manually distribute the adjustments over the project periods. Those projections will be the basis for updating each project’s budget planned spending (PV) cashflow.
The budget adjustment form tab allows attaching all supportive documents to the required budgeting. Although documents can be directly uploaded and attached to the form, nevertheless, as a best practice, this requires uploading and storing those documents into the PMWeb document management repository. PMWeb allows creating file folders and subfolders to upload those documents in an organized and controlled manner. Access permission rights can be set to each folder or subfolder to restrict viewing or editing those documents. In addition, PMWeb allows linking relevant transactions to each record, whether those transactions were other PMWeb records or imported emails.
Enforcing accountability when it comes to performing the budget readjustment processed is a must and requires assigning a workflow for executing the process in alignment with the requirements defined in the commercial management plan. The workflow will map the submit, review, and approval tasks for the budget readjustment process detailing the responsibility for each task, allotted time, actions available task, the sequence for performing the tasks, and alerts rules. In addition, the PMWeb workflow allows adding conditions to enforce the approval authority levels, which is a must requirement when it comes to performing the different commercial management process. Those workflows can be specific to each project, program, or common to all projects managed in PMWeb.
In addition to the many ready-to-use budget adjustments forms and reports that are available in PMWeb, there is no limit to the number of forms and reports that can be created to report on the project rebudgeting any desired form or format. One of the ready-to-use reports is the Budget Request Analysis report which details how each budget adjustment has impacted the approved budget baseline. The report consolidates those adjustment values by the cost breakdown structure (CBS) level.
In addition to the many ready-to-use budget adjustments forms and reports, there is no limit to the number of forms and reports that can be created to report on the project budgeting. One of the ready to use reports is the Budget Request Analysis report, which details how each budget adjustment has impacted the approved budget baseline. The report consolidates those adjustment values by the cost breakdown structure (CBS) level.
