Funding Limit Reconcilation & S-Curve

in this video we are exploring something called funding limit reconciliation and we will also see how the expense when they get aggregated in a cumulative fashion they start taking a shape of something called S curve so we get more details about creating the budget or determining the budget and how do we reconcile the funding limit spirit so I am taking a simple case assuming that we are running a ten days long duration estimated project which has two days of analysis six days of development and two days of deployment so like I am starting it on day one finishing the analysis on day two one person is working on it then I am starting development on day three and I finish you could on day eight three people are working on it and I am starting the deployment on day nine and I'm finishing on day 10 and one person is working on it so it's the ten days work initially two days one person working the next sex says three people work so next which makes the total eight days and the remaining two days only one person working so this is how it is now when we look for the simplicity sake I am putting the value of $100 per person as an expense rate per day so person working on a day one and person doing a development everybody has the same rate so we are keeping the complexity symbol so if this information I put into a tabular format I can say that I have a day from 1 to 10 and I am saying that analysis day 1 one person is working and I am spending hundred rupees on it because rate for one person is hundred on day two also I am doing analysis one person working on it and I am putting 100 rupees on day three I am doing development I am putting 300 rupees to it because there are three development this work is over again day for development 310 day 8 we are spending 300 and again when deploy we are spending 100 and so this is like an estimation per day for this particular project now if I put a cumulative number to it which is simple just keep finding out till - how much money I have spent so day 1 plus day to makes two hundred cumulatively by day three I have spent five hundred rupees because 200 plus three hundred makes five hundred by day four 500 plus 300 makes 800 day five 500 plus 300 makes eleven hundred so this particular column is primarily showing the cumulative money so by by a given point of time how much money I would have spent because we are working on the budgeting part of it now if I put this thing on an on a graph that we're at a one axis I have a day's like one to ten and on another axis I have this cumulative estimate this cumulative estimate which is coming in there this particular column so at the end of a day one I am done with hundred rupees so a hundred dollars so I put hundred here one dot by end of a day - I am done with 200 so I put a 200 here so this is like by end of two days by end of three I am done with 500 so I will come somewhere here so this goes like this by end of a day for I am done with 800 something like this so by end of day of five I am done with 1100 so day five somewhere here 1100 you can see the Sun level light like this line keeps coming in 1100 by day by the end of a day eight I am done with 2000 so if I if I put our day eight I am I am at at two thousand so something like this so this is like a straight line and then I four remaining I becomes like this because then I use 2100 and day 10 it is 2200 so slope is is reducing now this kind of curve may emerge in most of the projects and sometime it becomes more s it's like becoming something like like this yes now what is the significance of it the idea here is initially we might be involving less number of people and that is why in the initial duration of a project we may spend less money as we get into execution we are expected to spend lots of money because more and more three people start working on it and there are $300 they are spending every day so our curve goes steep in between but as we reach towards the end again it is expected to have less number of people working on it because it's just a deployment the main work is already done and curve goes down and that's the kind of a mark we see in our s-curve so this is how our cost estimations are going against their the time so you will see this graph again and again and we will use it for monitoring and controlling purpose as well now their topic comes how do we reconcile the funding limits so as a project team I am spending money like I am expected to spend money like this I may have some variance from this line but I am spending money every day does it make sense that every day I go to the sponsor and says give me 100 give me 200 give me 500 because I need to spend it today so your expenses are every day but you may not request the fund from external parties or fund from sponsors on a daily basis you may take some money and then you run your project for a while then you take another money and you run the project for a while I can give an example of the way I used to stay in hostel so when I was staying for my studies in a hostel I have to spend my money on a daily basis but I kind of keep asking my parents to transfer money on a daily basis so there was a clear idea that in the beginning of the month I get X amount of money and that X amount of money is expected to last for a month and before my month gets over I get another X amount of money so that is the same thing we are doing in a funding limit reconciliation for project basis so we take the money we run our project for awhile and we identify the next milestone by that we get another money and we run our life again now how does it look in this particular trap so you may say that okay I am in the beginning and there is no rule for it it is all about your understanding the the flexibility of acquiring fund of many time when I worked as a external project a person as a contracted project manager and project team these were our payment terms with with the customers so this funding limit rincon solutions were more like a payment term we get some money at one a sign off we run with that money for a while and then we request another money on the milestone we get that money and then we run our money our project for a while so it could be linked with your payment milestone when you are working with in a external project context so just for a for example sick I say that in the beginning itself give me the money a hair on the day one I need 800 okay so it means on the day one I am asking give me 800 so I am taking this money till 800 now this 800 is good enough till day four so I will say that I have this 800 till here so give me the 800 on a day one and I won't ask more money Tim therefore but on day four I will ask another 2,000 so by this give me twelve hundred more so I will reach to a two thousand so if I do that it will become like walking on day four I get two thousand which is sufficient for some more time something like this so and then maybe on a two thousand on the days here you ask that do you me the remaining two hundred twenty two hundred so that I can finish my project so this is your funding limits so your expense is happening on a daily basis but the request of money inflow is happening on on a periodic or milestones basis so when you're determining Burchard it is not only about figuring out how are you going to spend your money or how is urs how are you estimating to spend your money overall for your project but you also need to figure it out how the money is going to come to you and how should you balance the incoming money and outgoing money so that project work can return without without any blockages related to getting out of money and you have been doing it as a as a as a student when you study in the hostels or anywhere this is such a simple concept sometime it becomes confusing when you just see this particular graph what is this funding limit so yeah this is all I wanted to talk about in funding limit reconciliation

Channel: iZenBridge Consultancy Pvt Ltd

Views: 9,932

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Keywords: PMBOK® Sixth edition, PMBOK, PMP, Determine Budget, Funding Limit

Id: 4n6sRGqpPtE

Length: 9min 27sec (567 seconds)

Published: Wed Jan 17 2018