Question for Saket Sir

Hi Saket Sir,


 


Please guide me/us on what is funding limit reconciliation in PCostM?


 


Thanks,


KK...

The basic issue with understanding Funding Limit Reconciliation is that all popular PM books including PMBOK have explained “Funding Limit Reconciliation” using the word “Reconciliation” without explaining what “Reconciliation” means. Its like the definition of cold season i.e. in cold season the weather is cold.


 


If you understand accounting concept “Reconciliation”, you will understand this in real life. In accounting, reconciliation refers to a process that compares two sets of records (usually the balances of two accounts i.e. debit and credit) to make sure they are in agreement.


 


The short story is that to determine project budget you do not run what is best rather you have to restrict yourself to fulfill the best as per the budget you have.


 


Let’s take a real life example. I need to design and develop Web based portal. Say, I need 5 resources and my budget is $500. The cost of resource for this task is:


Very high experienced resources like Tech Leads: $150


Senior experience resources (Sr. Engineers): $100


New entry working resources (Developer): $60


I can plan various options now:


 



































 


Tech Leads


Sr. Engineers


Developer


Total cost


Case-1


5


0


0


$750


Case-2


2


2


1


$560


Case-3


1


2


2


$470


Case-4


1


1


3


$430



 


Case-1/2 have highly skilled resources, so I can expect my product to have very high quality deliverables, but I cannot move ahead with as I do not have budget.


 


Case-4: I can save lots of money here, but I cannot move with lesser skilled resource and save my money. I have to make sure I try my best to utilize the available money and get best out of it.


 


Case-3: This is the BEST possible option, with the budget I have, I have tried my best to bring in high skilled resources.


 


Try to understand the various discussions I did, I did not try to give the BEST, but I tried to give the BEST with the budget I have and this is Funding Limit Reconciliation process i.e. reconsidering my plans with the money I have.


 


Let’s hope, some PM Books author read this and add to their PM Books or at least not use the definition of cold season i.e. in cold season the weather is cold.


 


Saket, PMP


 

admin's picture

Hi Saket


I can add this to PMZilla Knowledge base, just assure me that this is not copied from anywhere.


Regards


Admin

Thanks Admin, please go ahead and add this to PMZilla Knowledge base. I assure you that its mine analogy and my own example.


Saket, PMP
 

Thank you for the detailed explanation on this topic. I totally get this now.

prashant.spce's picture

Ohh.. i too had a confusion/dfficulty understanding this. but Saket sir has explained it nicely with an real life example.

 

In short Funding Limit Reconciliation is nothing but making optimum use of budgeted money for optimum advantage.

Thank you very much sir..

Thanks and Regards

Prashant

 Nice clarification