PROJECT PLANNING,

MANAGEMENT AND
COSTING
BSC302C
Assessment # 2

Lecturer: Manjula Nanayakkara

Wind Turbine
Critical Path
Budgeting
Pert Analysis
Analysis to control the cost

Gurjit Singh
Amrit Thakur
Siraj Baig
PART 1

Critical Path
Critical Path means the minimum amount of time to complete the project.
As per the project chosen which is wind turbine the critical path is stated in the upcoming slide.
Which will clearly tell which path is the best for installing the wind turbine from scratch.
Bottom Up Approach :

Basic process for bottom up approach is it runs through down to up

management. Each department have to fulfil the required things needed to be
done for the project to carry out to and get a clear picture about cost and other
finance related work.
The Ingredients for bottom approach are given below:

• The main components of the company needed to be identified in order to get

the estimated cost. For instance wages of employees, fittings, equipment
purchases and hires, administrative costs, conference fees, etc.
• After preparing the list of the department’s cost, individually, all that cost
need to be added into the total budget for the project.
• The final step is submission of the all departments cost to the head of the
company to get it passed for budget. If the management committee is
satisfied with the proposed departmental budget then it will be approved
else department head’s need to make changes in the proposed budget.
Advantages:
Bottom-up budgeting calculates its cost from very departments this is very
democratic approach for budgeting which estimates from the lowest level.
Moreover, it creates more accuracy and accountability of the budget. Each
department plays very vital role on its own by providing there own costs and
expenses.
Top-Down Budgeting Process:

Contrary to the bottom up budgeting top down starts with senior management. They discuss
and determine high-level targets for the company in terms of sales, cost and profits for the
departments.
The Ingredients for top down approach are given below:

• First management prepare the targets, the for the each department and then passed on to
the finance department.
• On the receivals of the targets form the management finance team will allocate all funds
to the departments after having everything into consideration.
• Funds may be higher or lower as depends upon the senior management. After the
allocations designated head’s of the department makes their budget as per the allocated
funds.

Advantages:
It saves time and energy of the lower management as all work done by higher management.
Budget will be more growth oriented not only particular departments.

Disadvantages:
Managers do not take part in the preparation of the budget it can effect their performance.
Conventional budgeting:
• When instead of proposing whole new budget for year funds can be added in
previous year budget that is called as conventional budgeting.
• Adding funds to the previous year’s budget to expand or complete projects is
more efficient and simple way of budgeting.
• This method of budgeting is more flexible over the use of resources, depending
on expenditure details like the amount of money an operation consumes.
• The main drawback of this style of budgeting that it does not consider any
changes in the current year. It assumes that the circumstances are same as
previous year.
New budget without previous year consideration:

• This method of budgeting is more modern which also known as zero base budget
that means last year budget will have no relation to the current year budget and the
management will make a budget from the very scratch.
• Zero-based budgeting is very tight, aiming to avoid any sought of expense which
can be considered as waste expense for the company or can hinder the profit of the
company.
• The zero-based approach is really effective when there is an urgent need for cost
containment. For instance if a company going financial restructuring or a major
economic or market downturn that requires it to reduce the budget dramatically.
• The main drawback of this approach is that it is really time consuming approach as
one has to start building up from the every scratch.
The problems to face if there were to be a mistake in budgeting:

• One of the silly mistake is when management does not consider the changes in the
circumstances and keeps the same budget for all months. Even its good to be
consistent but it is important to round up the special occasions when expenses can
be higher than usual. For, instance if company want to expand the project then this
need to be considered while making new budget.
• Keeping record of every single entry that company make regarding budgeting is
really essential. Else it will be really difficult to keep track and for future
budgeting.
• Do not go over bord with the budget. Budget itself means that gives you room to
spend the money as you need and as your resources. For instance if your
employees wages are $20000 per month however under budget it allocates only
$15000 per month then at the end company will be having short of budget after
paying wages to the employees.
• Not even a single company can make perfect budget there will be always a room
for error. So, it is really important to keep an emergency budget in case company is
in need of extra fund in the case of urgency.