Project Budgeting & Budget Validation

Overview

Project Budgeting in DIGITZ ERP is performed after project creation and establishes the planned cost limits for the project across the three core cost categories that directly affect project execution:

1. Purchase (Material & subcontract procurement)
2. Expense (Operational, indirect, petty cash, service-related)
3. Labour (Timesheet-based labour cost)

This budget forms the financial baseline for the project.
During execution, DIGITZ ERP performs real-time validation on every project-related transaction to ensure that actual cost does not exceed the approved budget. This prevents uncontrolled spending, avoids cost overruns, and enforces strict project cost discipline.

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Purpose

To set total planned cost limits for Purchase, Expense, and Labour, and to ensure that every actual transaction posted against the project remains within approved limits—either by warning the user or blocking the transaction based on company policy.

This ensures complete financial control and ensures the project remains profitable throughout its lifecycle.

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Budget Categories

DIGITZ ERP supports budgeting across the following fixed categories:

1. Purchase Budget

• Covers material procurement, subcontracting, external services.
• Based on BOQ, Estimate/Costing, or internal planning.
• Updates automatically when users post:
  • Purchase Orders
  • Purchase Receipts
  • Purchase Invoices

2. Expense Budget

• Covers operational expenses such as:
  • Petty cash
  • Travel
  • Tools and consumables
  • Indirect service expenses
• Reduced by:
  • Expense Entries
  • Additional Expenses

3. Labour Budget

• Based on estimated manpower usage.
• Can be defined using:
  • Total estimated labour hours
  • Role/employee hourly rate
• Reduces automatically from:
  • Timesheet entries
  • Labour cost allocations

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Budget Approval & Control

• Budget can be reviewed and approved internally before project execution.
• Once approved, it becomes the baseline.
• System can optionally alert when nearing budget limits.

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Automatic Budget Impact

Every project-related transaction updates actual cost automatically:

Purchase Actuals

• Purchase Order
• Purchase Receipt
• Purchase Invoice

Expense Actuals

• Expense Entry
• Additional Expense

Labour Actuals

• Timesheet posting
• Labour calculations

These actuals are continuously compared against the approved budget.

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Real-Time Budget Validation During Transactions

DIGITZ ERP validates all financial and operational transactions in real time.

Validation Logic

During a transaction, the system checks:

Actual Cost (spent so far)

• New Transaction Amount

Budget Amount

If this condition is true, the system takes action based on configuration.

1. Purchase Budget Validation

Triggered during:

• Purchase Order
• Purchase Receipt
• Purchase Invoice

If exceeded:

• System warns or blocks based on settings.

2. Expense Budget Validation

Triggered during:

• Expense Entries
• Additional Expenses
• Petty cash expenses

If exceeded:

• System alerts or refuses submission.

3. Labour Budget Validation

Triggered during:

• Timesheet entry
• Labour cost updates

If exceeded:

• System warns or blocks depending on company policy.

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Validation Modes (Configurable)

A. Soft Validation (Warning Only)

• Allows the transaction.
• Warns the user that budget is exceeded.
• Useful for flexible operations or urgent requirements.

B. Hard Validation (Block Transaction)

• Prevents saving or submitting the transaction.
• Enforces strict cost control.
• Recommended for contract-driven, margin-sensitive projects.

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Real-Time Monitoring & Reporting

All validated and posted transactions update:

• Budget vs Actual Report
• Project Profitability Report
• Project Progress Report

This ensures continuous visibility, accurate forecasting, and total project financial control from start to finish.