What is CAPEX & OPEX for a Project or running activities...??? What is the difference between Budget & Funds...??? How CAPEX-OPEX relates to a budget & funds....is there any relationship between all of them....???
kindly describe in details with proper example. Saving Changes...
The physical equipment making up your oil & gas operation would be considered capital (unless those are leased) and could be depreciated over its useful life whereas the costs you incur to plan a project are normally considered an operating expense.
As far as Budget & Funds goes, budget is what we have estimated a project will cost and usually what we have been approved to spend over the lifetime of the project. Funds refers to what we have been actually given to spend on the project over a fixed amount of time.
So for example, my project budget might be $1 Million over a year, but I am receiving that in four installments of $250K each quarter. The funding I've received in the first quarter is $250K whereas my budget is $1 Million.
Kiron Saving Changes...
Thomas WalentaGlobal Project Economy ExpertHackenheim, Germany
Hi Ishan to add on what Kiron rightly says:
Capex/Opex are categories needed by the finance guys of your organization to produce the balance sheet, file taxes etc. Any spending of your organization is either Capex (Capital expense or investment) or Opex (Operational expense) but is handled differently in evaluating your company finances.
A project spending may be Capex or Opex, or a mixture, then the finance department will ask you to keep track of the type of spending and they should tell you what they want to see in either. (day to day software development is mostly seen as Opex, but if you build a SW product, the total cost of it could be seen as Capex).
Funding is the money you can spend, it is mostly approved year over year by Finance, sometimes milestone by milestone. Your project funding should include a buffer to be able to spend more than you planned for. It is also fun to have different funders (sources of money) - like the Olympic games.
The budget is merely what you as project manager plan for. If you have your budget approved, you still have to chase the funding. Interestingly the budget may come in a money currency or a person-hour currency (or both). The latter is better to track performance of the team, your sponsor will ask you about the former.
There are different stages of budgets, as a PM you have a distributed budget in order to track your performance and progress. Distributed over your control intervals, phases and work-packages. Then the budget is not only an amount of money, but also how you plan to spread it over the project duration (see earned value, PV and BAC). Without this, you cannot track your budget (plan) vs expenses (actual cost).
If you add undistributed budget (for things you did not plan yet), cost for material and tools, and contingencies, you have the budget baseline that you are responsible for. And if the finance guys add management reserve you have the funding requirements. The budget figure in a charter is rather a budget limit, a constraint imposed on your planning. Saving Changes...
Manuel PerezProject Management Coordinator| Las Vegas Valley Water DistrictNorth Las Vegas, Nv, United States
Very good way to explain it Thomas. I might want to add that when a project is approved, it typically is approved with a Budget assigned. For example, a 5 year project might have a budget of $5M when approved. That means, that the approvers of the project gave the project the green light to proceed with a not to exceed amount of $5M. Also, the project will include cashflow for the duration of the project. It might be $1M the first year, $2M the second year, etc.
Every year, the PM (or designated representative) will request funding for that project. The total funding requested do not necessarily have to match the initial budget baseline and will vary depending on project status. Funding is the cash in your pocket! You can use it until you run out and then you need to find additional sources of funding to continue spending. Saving Changes...
If a woman has to choose between catching a fly ball and saving an infant's life, she will choose to save the infant's life without even considering if there is a man on base.
