What is budget hierarchy in SAP PA-PM - Budget Management?

SAP Term: budget hierarchy

• Component: PA-PM

• Component Name: Budget Management

• Description: A structure showing the hierarchical relationships between budget structure elements. Funds Management PSM-FM: For German Government agency customers, the budget structure elements are mapped using commitment items. To represent the budget plan, the structure of the commitment items can be adjusted to suit the requirements of your organization in the Customizing of Funds Management.

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• Key Concepts: 
  Budget hierarchy is a feature of the SAP PA-PM Budget Management component. It allows users to create a hierarchical structure of budget elements, such as cost centers, projects, and activities. This structure can be used to define the budget for each element and to track the budget’s progress. 
  
  How to use it: 
  To use the budget hierarchy feature, users must first create a budget element hierarchy in the SAP system. This can be done by creating a parent element and then adding child elements to it. Once the hierarchy is created, users can assign budgets to each element and track their progress. 
  
  Tips & Tricks: 
  When creating a budget hierarchy, it is important to consider how the different elements will interact with each other. For example, if one element has a higher budget than another, it may affect the overall budget of the parent element. It is also important to consider how changes in one element will affect other elements in the hierarchy. 
  
  Related Information: 
  For more information on using the budget hierarchy feature in SAP PA-PM Budget Management, please refer to the official SAP documentation. Additionally, there are many online resources available that provide tips and tricks for using this feature effectively.