The difference between project settlement and budgeting

　　Many people may find it difficult to distinguish between project settlement and budgeting. The reason they can’t tell them apart is that our understanding of the underlying concepts isn’t clear enough. Once we’ve grasped these concepts, distinguishing between the two becomes quite straightforward. So now, let’s take a closer look at the differences between project settlement and budgeting.

　　I. The Difference Between Project Settlement and Budget

　　1. Project budget: It is prepared based on the “construction drawings” according to budgetary rates and is generally used before the start of construction.

　　2. Project settlement: It is prepared based on the “as-built drawings” according to budgetary rates and is generally used after completion of the project.

　　3. The main difference between project budgeting and project final accounting lies in:

　　(1) “Construction Drawings” and “As-Built Drawings”: Construction drawings are prepared before construction begins; in contrast, as-built drawings are created on the basis of construction drawings, after incorporating design changes—both additions and reductions—as well as on-site verification factors that arise during the course of construction.

　　(2) The project budget serves as the basis for the construction unit to disburse progress payments to the contractor during the construction process.

　　(3) The project settlement serves as the basis for the construction unit to pay the contractor the project funds after the completion of the project.