Let us apply this budgeting process to the General Foundry problem. The Gantt chart for this problem, shown in Figure 11.9, illustrates this process. In this chart, a horizontal bar shows when each activity will be performed, based on the earliest times. To develop a budget schedule, we will determine how much will be spent on each activity during each week and add these amounts to the chart in place of the bars. Lester Harky has carefully computed the costs associated with each of his eight activities. He has also divided the total budget for each activity by the activity’s expected completion time to determine the weekly budget for the activity. The budget for activity A, for example, is $22,000 (see Table 11.5). Since its expected time (t) is 2 weeks, $11,000 is spent each week to complete the activity. Table 11.5 also provides two pieces of data we found earlier using PERT: the ES and LS for each activity.

Looking at the total of the budgeted activity costs, we see that the entire project will cost $308,000. Finding the weekly budget will help Harky determine how the project is progressing on a week-to-week basis.

The weekly budget for the project is developed from the data in Table 11.5. The earliest start time for activity A, for example, is 0. Because A takes 2 weeks to complete, its weekly budget of $11,000 should be spent in weeks 1 and 2. For activity B, the earliest start time is 0, the expected completion time is 3 weeks, and the budgeted cost per week is $10,000. Thus, $10,000 should be spent for activity B in each of weeks 1, 2, and 3. Using the earliest start time, we can find the exact weeks during which the budget for each activity should be spent. These weekly amounts can be summed for all activities to arrive at the weekly budget for the entire project. This is shown in Table 11.6. Notice the similarities between this chart and the Gantt chart shown in Figure 11.9.

Do you see how the weekly budget for the project (total per week) is determined in Table 11.6? The only two activities that can be performed during the first week are activities A and B because their earliest start times are 0. Thus, during the first week, a total of $21,000 should be spent. Because activities A and B are still being performed in the second week, a total of $21,000 should also be spent during that period. The earliest start time for activity C is at the end of week 2 $\mathrm{(}\text{ES}=2$ for activity C). Thus, $13,000 is spent on activity C in both week 3 and week 4. Because activity B is also being performed during week 3, the total budget in week 3 is $23,000. Similar computations are done for all activities to determine the total budget for the entire project for each week. Then these weekly totals can be added to determine the total amount that should be spent to date (total to date). This information is displayed in the bottom row of the table.

Those activities along the critical path must spend their budgets at the times shown in Table 11.6. The activities that are not on the critical path, however, can be started at a later date. This concept is embodied in the LS for each activity. Thus, if latest starting times are used, another budget can be obtained. This budget will delay the expenditure of funds until the last possible moment. The procedures for computing the budget when LS is used are the same as when ES is used. The results of the new computations are shown in Table 11.7.

Compare the budgets given in Tables 11.6 and 11.7. The amount that should be spent to date (total to date) for the budget in Table 11.7 is smaller in the first few weeks. This is because this budget is prepared using the latest start times. Thus, the budget in Table 11.7 shows the latest possible time that funds can be expended and still finish the project on time. The budget in Table 11.6 reveals the earliest possible time that funds can be expended. Therefore, a manager can choose any budget that falls between the budgets presented in these two tables. These two tables form feasible budget ranges. This concept is illustrated in Figure 11.10.

The budget ranges for General Foundry were established by plotting the total-to-date budgets for ES and LS. Lester Harky can use any budget between these feasible ranges and still complete the air pollution project on time. Budgets like the ones shown in Figure 11.10 are normally developed before the project is started. Then, as the project is being completed, funds expended should be monitored and controlled.

Although there are cash flow and money management advantages to delaying activities until their latest start times, such delays can create problems with finishing the project on schedule. If an activity is not started until its latest start time, there is no slack remaining. Any subsequent delays in this activity will delay the project. For this reason, it may not be desirable to schedule all activities to start at the latest start time.