In whatever condition the economy is, projects are subject to budgetary pressures. In booming times a high level of risk is accepted in respect of the budget adequacy because cost estimates are the primary tool in arriving at budget figures and it is difficult to predict the market during these times. Increased demand relative to market supply forces prices to regularly change and in many cases tender prices were customary coming at much higher than the estimated budget. On the other hand in times when there is a downturn in the economy, budgets cuts will become the norm and risk of budget/project failure will increase. Therefore, it is important for project managers to not only be aware of such risk but also to actively plan remediation measures in the event of a budget failure or budget slash.
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