cost management - funding

Submitted by vijayavadrevu on Fri, 03/29/2013 - 12:10

 If more funding is needed for additional customer requested work on a contract, the project manager’s preference for the additional funding would be:

A)    

A funded contract change

B)     

Tapping into management reserve

C)     

Using the undistributed budget

D)    

Tapping into profits

I have chosen ( C) but the answer is given as (A)

Can someone explain the concept please?

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Renji2013

Fri, 03/29/2013 - 13:29

 


Look at this link to see the Contract cost distribution


https://dap.dau.mil/acquipedia/Pages/ArticleDetails.aspx?aid=8ad48081-26fe-43f9-b65e-9538b89dbcee


As you see,  TAB ( Totally allocated Budget ) is the  fund the contract can use.  It is actually the COST element. Distributed budget means, the budget is now associated to a Control Account, means the work is happening now and is getting billed. Undistributed budget is a kept aside fund for performing already authorized work, but not yet planned. Hence it is not allocated to any control account. So we can eleminate this option.


Regarding A, my idea is Additional customer requested work  needs to be be first authorized . So a Contract change order is required to allocate proper funds for the same.


regards


Renji


 

sspawar

Fri, 03/29/2013 - 15:15

refer about change 

 http://www.pmzilla.com/reserve

vijayavadrevu

Fri, 03/29/2013 - 17:56

 Thankyou Renji and Pawar sir