To use a top-down budget

The total project cost, subdivided for individual activities, based on historical costs and other project variables. The purpose of a top-down budget is to get an overview of budget possibilities and to see whether the project is feasible from a budget point of view. To work with this budget, you must create a time-phased budget.

A top-down budget is used to distribute amounts across an activity structure. The constraint of a top-down budget is that the amount check for lower level elements for the distributed amount is used, and therefore you cannot enter lower level amounts that are higher than the distributed amount.

If the budget for each activity and the cost for each individual activity are uncertain, but the approximate distributed amount is known, you must begin a project with a top-down budget. For the top-down budget version, enter the contract amount, the profit fee, and the management fee, and the amount left is distributed among the activities. You can use this amount for budgeting. In the top-down budget version, the activity structure is linked in the Generate Structure and Top-Down Budget (tpptc5210m000) session, and you can allocate the distributed amount across the activities in the Top Down Budget Data (tpptc5510m000) session. The version has a derived structure. You can enter new data in a new version if the preliminary version is Final.

You can time phase the bottom-up activity budget by creating top-down budget data using the Generate structure and top-down budget session (tpptc5210m000) session. As a result, the bottom-up budget becomes time phased.

For example, a project has a top activity and two child activities such as ACT1 and ACT2,. The bottom-up budget amount for the top activity is $600, for ACT1 is $300, and for ACT2 is $300. A budget version also exists with budget $500 for the top activity, $300 for Activity1, and $200 for Activity2. Using the Generate Structure and Top-Down Budget (tpptc5210m000) session an activity structure is created with Top, ACT1, and ACT2 as part of the top-down structure. The total budget amount $600 is distributed first to the Top activity and later to the child activities ACT1 $300 and ACT2 $300. The total amount that is distributed, exceeds the budget version amount $500.

If the bottom-up amount is to be considered using the Copy Activity Budget Lines option in the Generate Structure and Top-Down Budget (tpptc5210m000) session, the budget amount for top activity totals to $600. This amount is more than the specified budget version amount of $500. LN calculates the profit amount of $100, which is a negative amount in this case. This amount is calculated only if the If exceeding Budget Version Amount field is set to Continue.