Answer to Question #87350 in Finance for sahil

Question

You are at the midpoint of a project and have used only 30% of your budget. Does this mean that you will be under budget at the end of the project? Explain your answer.

Answer 1

It is not a fact that we will finish the project under budget.

At first, it depends on the terms of spendings. If we expect the biggest payments in the final stage of a project (like purchasing of equiplment or buildings), we can run out of budget.

Secondly, the meeting of budget depends on exchange rate and the settled currency of project plan. If currency rate changes, we can overrun costs.