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Efficient budgeting of major engineering and construction projects

1229459030_mfi_052c.jpgProject budgeting is executed by «ARMO-LINE» experts on the basis of actual market prices for equipment and services, in which connection application of the most profitable for the Customer engineering solutions, maintainability and operating costs minimization is taken into account. Project costs are calculated and provision thereof with financial means is analyzed at the budgeting stage.


Budgeting is understood as determination of costs of work execute within the framework of the project and the project as a whole, formation of the project budget containing prescribed (approved) costs breakdown by works, cost items, works execution time, cost centers or other pattern. In this connection the budget structure is determined by the chart of accounts of a specific project cost accounting.


The unique chart of accounts based on well-established management accounting figures and taking into account the project special features and categories of construction projects as a whole is used in each specific project. In the event that projects are parts of any larger projects, «ARMO-LINE» experts are ready also to consolidate the project budget.


The project costs are calculated and provision thereof with financial means is analyzed at the budgeting stage, in which connection the forthcoming works schedule and the resource allocation matrix are taken as a basis for calculations. The results of the budgeting stage are the developed project budget and the respective cost histogram.


Efficient budgeting permits to solve successfully the following problems:

  •         efficient planning of financial resources allocation by projects / by work types;
  •        control over proper use of funds;
  •         monitoring any project figures for the project as a whole, and over time;
  •         project portfolio analysis for any analytic profiles (for a group of projects);
  •         financing distribution by projects with various priorities;
  •         cost distribution by projects of various types and complexity;
  •         financing distribution by various contractors (customers); and so on.


Depending on the Customer’s needs and a specific project particularity, different types of budget may be prepared.


After completion of feasibility studies «ARMO-LINE» prepares provisional budgets, which are rather estimative than directive. Such budgets are agreed upon with all concerned persons and ultimately are approved by the executive of the business Customer. For large projects, especially the same financed on account of external sources, «ARMO-LINE» experts develop the cash flow budget, CFB.


After acquisition by the budget of the official status it becomes a benchmark, with which the actual results are compared. Departures from the previously planned figure take place fairly often in the course of project implementation, which should be timely reflected in current budgets. Later on, upon completion of all works, the actual budget is created as a final document, wherein the actual financial figures are reflected.


cost each stage of working and possible departures in order to make the right decision regarding expediency of the project implementation. The construction project budgeting should be executed by a company knowing peculiar features and possessing practical experience in implementation of such projects. The initial time schedule can be adjusted, and the decision on the project alteration permitting to dispose of the available funds in the most cost efficient manner can be made on the basis of financial budget, income and expense budget and cash flow budget analysis.

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