Project Budget Definition and Explanation
Projects are long term and may stretch over several annual budget periods. The term ‘project’ is used to indicate, for example, the construction of a building rather than a one-off major purchase, normally covered in the capital budget. The long-term project budget has many difficulties, among the cost escalation and design changes. No project will go exactly according to plan. Flexibility and possible re-planning have to be built into the project budgeting process. The project budget is essentially a control mechanism to give early warning of cost and time overruns.