In PMBOK terminology, what is the difference between a funding limit and the project budget?

• A. The project budget is the total authorized amount; funding limit is the maximum amount that can be allocated from funding sources at a given time.
• B. The funding limit is the total approved amount; the project budget is the sum of all funding.
• C. The project budget is the monthly expense; funding limit is the annual.
• D. The funding limit is the total project cost; budget is the income.

Answer: (A)

In PMBOK terms, the difference comes down to cash flow versus total cost authority. The project budget is the total authorized amount for completing the project—the sum of all planned costs (including reserves) that the project is allowed to spend. The funding limit, on the other hand, is the maximum amount that can be allocated from funding sources at a given time, reflecting how much cash is actually available to fund work now or in a specific period. This means you can have a large project budget, but you can only spend up to the current funding limit until more funds are released.