HKSM
Funding Limit Reconciliation
A review that compares the projects time-phased spending plan with the authorized funding caps to find differences between planned outlays and available funds.
Key Points
- Compares the cost baseline (planned spending by period) to funding limits or caps set by the organization or sponsor.
- Identifies timing or amount variances between planned expenditures and available funds.
- May lead to rephasing work, shifting procurements, updating the cost baseline, or requesting adjusted funding.
- Used during Determine Budget and Control Costs to prevent cash flow shortfalls or stop-work conditions.
Example
A project plans to spend USD 650,000 in Q2, but the sponsor limits quarterly funding to USD 500,000. Through funding limit reconciliation, the PM defers noncritical activities to Q3 and staggers procurement deliveries so Q2 spending fits within the USD 500,000 cap while maintaining overall scope and timeline.
PMP Example Question
During budgeting, you find the plan requires USD 1.2M in month 5, but the sponsor allows only USD 900k per month. What should you do to align the plan with the funding cap?
- Funding limit reconciliation
- Cost aggregation
- Reserve analysis
- Earned value analysis
Correct Answer: A — Funding limit reconciliation
Explanation: Funding limit reconciliation compares planned expenditures to funding ceilings and drives adjustments to align spending with authorized limits.
