[3] The capital budget processes of large corporations and governmental entities are chiefly concerned with major investment projects, which typically have significant upfront costs and benefits realized over the long term.
[3] Projects (which may be independent undertakings or occur as part of a larger program) differ from a company's routine activities in a number of ways: they frequently involve efforts across departmental boundaries, and their budgets may be revised many times over the course of their execution (which can range from days to years).
Funding advances, and budget-to-actual-cost variances, are calculated using the project budget adjusted to percent-of-completion.
[7][9] While the percentage-of-completion method permits companies to track profits while progress is made toward completing projects, this method cannot be used effectively when uncertainties exist about the percentage of completion or remaining costs.
Furthermore, the cost of equipment is assigned over the course of the contract, rather than directly, unless title to the supplies is being transported to the customer.