UK Budget reporting question

[francohoops]

Hi

A project that I started work on recently had a budget of £400k. The forecast came it at £221k - therefore a underspend against budget of £179k which we were reporting to the Board.

The scope of the project has changed mid-way through and certain work has halted. We are expecting to spend £106k. Given that the work won't now complete it is not correct to compare the £106k back to the original budget of £400k and declare an underspend of £294k.

My thinking is that for reporting I should revised the budget down from £400k by £115k (the value of work halted) and report a spend of £106k aganist a revised budget of £285k - against an underspend of £179k

Does this logic make sense?

Thanks
F

 

[Fidget]

Presumably, the board know about, or approved the original £400k budget.

So, if the £115k has been actually been channelled off elsewhere, then you would need to revise your budget down to account for the fact that that amount is no longer in your budget.

If it hasn't, then don't revise your budget down. Any variations will have to be explained in the report to the board, which is where you'd point out that £115k of the underspend relates to the project work that didn't go ahead due to the whatever the change in scope was.

 

[Kobe]

You need to finalise the actual costs against the expected cost of £400k.

If the board is happy that you have underspent and that there will be no future spend on the project then revise the budget to the actual amount spent.

There has to be a reason why it was set at £400k.

Revise the costs down and explain why it has been lower than the initial budget.