This lesson describes:
• Bottom-Up budgeting.
• Top-Down budgeting

[MUSIC PLAYING]
Budget Planning requires that you establish the total cost of each project in the plan. There are two methods available to do this. Top-Down Budgeting, where the portfolio managers sets the budget, and Bottom-Up Budgeting where the project manager sets the budget. Let's take a look at both methods.

    
1. Bottom-Up budgeting.
Let's start with bottom-up budgeting. These costs are driven by project need. Expand each project to view dates and budgets. These budget values can also be planned at a more granular level using Capital and Expense sub-costs. The total cost is spread over the life of the project. If costs fall outside the range of the portfolio planning horizon, they are displayed in the past or future columns. Costs are entered by the project manager on the Cash Flow page. Click the project link to view the page for more details.
If budgets set by the project manager are good, the portfolio manager accepts the costs by linking the data. The linked values become the proposed budget for each project.

2. Top-Down budgeting.
Now, let's look at top-down budgeting. These are costs driven by the organization. To propose a budget for the project, the portfolio manager enters a total cost and spreads the cost values over the duration of the project. When adjustments are complete, the portfolio manager sends this scenario to the project managers to collaborate and negotiate on the proposed budgets. The project manager reviews the proposed changes using the cash flow page. And can accept the budget or request changes
[MUSIC PLAYING]