A Change Budget in PRINCE2 7 is a sum of money allocated within the project budget specifically to fund the implementation of approved changes to the project scope, requirements, or deliverables. This budget is established during project initiation and is held separately from the main project budge…A Change Budget in PRINCE2 7 is a sum of money allocated within the project budget specifically to fund the implementation of approved changes to the project scope, requirements, or deliverables. This budget is established during project initiation and is held separately from the main project budget to provide flexibility when handling change requests throughout the project lifecycle.
The Change Budget serves several important purposes within the Issues Practice. First, it enables the Project Manager to respond to approved changes in a timely manner by having pre-allocated funds available. This prevents delays that would occur if funding approval was required each time a change was needed. Second, it provides a controlled mechanism for managing scope changes while maintaining financial governance.
The Project Board typically delegates authority to the Project Manager to spend from the Change Budget up to specified tolerance limits. When a change request is raised through the issue and change control procedure, the Project Manager can approve changes that fall within their delegated authority and fund them from this budget. Changes exceeding the delegated limits must be escalated to the Project Board for decision.
The Change Budget is closely linked to the Issues Practice because change requests are a type of issue that requires assessment, decision-making, and potentially funding for implementation. When evaluating a change request, the impact assessment should include the cost implications and whether sufficient Change Budget remains available.
Not all projects will have a Change Budget established. In some cases, particularly smaller projects or those with very stable requirements, the organization may decide that changes will be funded through exception procedures or by adjusting the overall project budget. However, for projects where changes are anticipated, establishing a Change Budget provides a pragmatic approach to managing the financial aspects of change control while maintaining appropriate governance and oversight throughout the project.
Change Budget in PRINCE2 Foundation V7
What is a Change Budget?
A Change Budget is a specific sum of money allocated to the project that the Project Manager can use to fund requests for change or to address off-specifications. It is set aside during project initiation and is separate from the main project budget.
Why is the Change Budget Important?
The Change Budget is crucial for several reasons:
• Enables flexibility - Projects rarely go exactly as planned, and having a dedicated fund allows for necessary adjustments • Speeds up decision-making - The Project Manager can approve certain changes within the budget limit rather than escalating every change request to the Project Board • Maintains cost control - It provides a controlled mechanism for handling changes while keeping the overall project finances transparent • Reduces escalation - Minor changes can be handled at the Project Manager level, freeing the Project Board for strategic decisions
How Does the Change Budget Work?
The Change Budget operates within the Issues practice as follows:
1. Allocation - The Project Board allocates a specific amount during initiation, documented in the Project Initiation Documentation (PID)
2. Authority - The Project Manager has delegated authority to spend from this budget for approved changes up to agreed tolerance limits
3. Usage - When a request for change or off-specification is raised and approved, costs come from this budget rather than the main project budget
4. Monitoring - The Project Manager tracks spending against the Change Budget and reports to the Project Board
5. Escalation - If the Change Budget is exhausted or a change exceeds tolerance, the matter must be escalated to the Project Board
Exam Tips: Answering Questions on Change Budget
• Remember who sets it - The Project Board allocates the Change Budget, not the Project Manager
• Remember who spends it - The Project Manager has authority to use the Change Budget within agreed tolerances
• Know what it covers - Change Budget covers requests for change and off-specifications, not general project costs
• Understand the difference - Do not confuse Change Budget with Risk Budget (which funds risk responses) or contingency funds
• Link to tolerance - Questions may test your understanding that exceeding Change Budget tolerance requires escalation
• Connect to documentation - The Change Budget is defined in the Project Initiation Documentation
• Watch for scenario questions - If a scenario describes a situation where a change needs funding and the Project Manager can approve it, the Change Budget is likely the answer
Common Exam Question Patterns:
• Questions asking who has authority to allocate versus spend the Change Budget • Scenarios where you must identify whether the Change Budget or another fund should be used • Questions about what happens when the Change Budget is depleted