The budget of a public project: approval, appropriations and funding law

The budget of a public project is not just an envelope, it is an authorisation to spend. Until the appropriations are voted, the contracting authority (pouvoir adjudicateur) cannot commit itself; once voted, they set the limit of what it can pay without a new decision. The logic is the same for the municipality and for the State, with different bodies and thresholds.

This logic changes the role of the estimate. In a private project, an estimate that exceeds the budget opens a trade-off between the client and their architect. In a public project, it may require a new council decision, or even a law. The quality of the estimate put to the vote is therefore a question of governance, not only of technique.

Articles 144 to 148 of the implementing Grand-Ducal Regulation (règlement grand-ducal d'exécution) of 8 April 2018 organise the budget path of municipal works. They assume two decisions of the municipal council (conseil communal) before any contract, an approval for any significant departure, and a vote on the final account.

Step	What the text provides	What it means for the budget
Decision in principle (Art. 144 and 145)	the municipal council first decides the principle, approves the designs and provides the appropriations; the appropriations voted at the decision in principle must be sufficient at least for the design and study costs	the first vote funds the studies, not yet the works
Detailed final design (Art. 146)	the council approves the detailed final design (projet définitif détaillé); for a general contractor, a specification "accompanied by an overall cost estimate" (unofficial translation) takes its place	the approved estimate becomes the project's budget reference
Departure (Art. 147)	"Any later significant departure from the detailed final design must be approved by the municipal council and the supervisory authority."	changing the project after approval means going back before two bodies
Final account (Art. 148)	the final account (décompte) is drawn up under Article 47 of the law and submitted to the municipal council for approval	the final cost is compared with the estimate and voted

The first vote does not yet set the cost of the works. Article 145 asks only one thing of the appropriations voted at the decision in principle: that they be sufficient at least for the design and study costs. That is logical, since at this stage the project does not exist. But the envelope announced during this first debate often becomes, in the minds of councillors and the public, the project's budget. If it is not presented as a dated intention, together with its assumptions, the detailed final design will later look like an overrun.

The second vote is the real budget vote. Approval of the detailed final design is the moment when the municipal council settles what it intends to build and for what amount. The estimate accompanying that design must be dated, separate works from other expenditure, and include an explicit contingency. It is the basis for the contracting authority's estimate (devis), the estimate the Regulation prohibits from being disclosed to tenderers (Art. 45 (5)) and which Article 47 of the law requires to be compared with the final cost. This role of the estimate is covered in the article on the contracting authority's estimate in a public contract.

With a general contractor, the overall estimate takes the place of the design. When the municipality uses a general contractor, the council approves a specification accompanied by an overall cost estimate. The estimate is then less detailed, since the project is not fully drawn, which strengthens the case for a justified contingency.

Article 147 is the rule that makes the municipal budget rigid. Once the detailed final design has been approved, any significant departure must be approved by both the municipal council and the supervisory authority (autorité supérieure). The text does not define what a "significant" departure is; that assessment is made case by case.

For the budget, two consequences. First, changes of brief are decided before the detailed final design is approved, not after: that is the moment when they cost only a study. Second, amendments to the contract in progress, governed by Article 43 of the law, may be legally possible and still be subject to this approval if they amount to a significant departure from the approved design. The note preparing that council decision sets out the priced gap, its causes and the options, like any trade-off note.

Between council votes, it is the college that runs the procedure. Outside the case of the small contracts in Article 20 (1) a) of the law, use of a restricted procedure without publication of a notice or of a negotiated procedure must, for municipalities, be justified by a decision of the collège des bourgmestre et échevins (the college of mayor and aldermen) (law, Art. 21). Within the limits of Article 151 of the Regulation, namely 79,000 euros excluding VAT since the Grand-Ducal Regulation of 29 May 2024, the college may proceed on the basis of statements, purchase orders or simple invoices (Regulation, Art. 141).

This role has an indirect budget effect. Small items of expenditure handled by the college draw on the same appropriations as the main contract. Tracking them in the same table as the contracts, rather than separately, avoids discovering at the final account that the sum of small orders has eaten into the contingency.

Above a certain cost, a State project must be authorised by a law. The amended law of 8 June 1999 on the State budget, accounting and treasury provides in Article 80 (1) c) that the following must be authorised by law: "any construction for the benefit of the State of an infrastructure project or of a building whose total cost exceeds the sum of 60,000,000 euros". This amount corresponds to the value 1,037.72 of the annual construction price index and may be adjusted by Grand-Ducal Regulation (Art. 80 (2)).

The threshold applies to the total cost, not to the works alone. For a project close to this amount, the question of the budget's scope is no longer just a question of method: it determines whether a law is needed. A budget that underestimates ancillary costs or leaves out a contingency can push the project across the threshold along the way.

The final account of these projects is scrutinised. For a State project whose cost exceeds the Article 80 amount, Article 48 of the law of 8 April 2018 on public procurement requires the final account to be sent to the Minister for the Budget and to the Chambre des Députés (the Chamber of Deputies) within one year of handover, with justification of overruns exceeding the statutory increases (hausses légales); the Cour des comptes (the Court of Audit) examines this final account.

For the municipality as for the State, the final account is the test of the voted budget. Above 20,000 euros excluding VAT at index value 100 of the consumer price index (an indexed amount to be updated), Article 47 of the law requires a final account "including a comparison with the estimate drawn up for the contract award procedure and a comparison, by trade, of the awarded price and the final cost of the whole contract, additional contracts included". Where there is an overrun, statutory increases are shown separately, and overruns exceeding them are justified.

This final account is prepared from the moment the project is voted. If the approved estimate is not broken down by trade (corps de métier), the comparison required by Article 47 will have to be rebuilt after the event. The method is set out in the article on the final account against the estimate.

Five precautions make the voted budget defensible all the way to the final account. They follow the stages of the project, from the decision in principle to the vote on the final account:

1. Present the first figure as an intention. At the decision in principle, announce a dated envelope, with its assumptions and its margin of uncertainty, and have the study appropriations voted.
2. Have a complete estimate approved. At the detailed final design, present a dated estimate, broken down by trade, separating works, ancillary costs and contingency.
3. Decide changes before approval. Everything that can be settled before the vote on the detailed final design avoids a departure within the meaning of Article 147.
4. Track statutory increases separately. They are shown separately in the final account; separating them from the start of the works makes it possible to justify the rest.
5. Keep the table that will feed the final account. Estimate, awarded price, amendments, statutory increases and final cost, by trade, updated at each stage.

The timetable matters as much as the amount. The intervals between council decisions, permits and tendering lengthen the project and shift the price base date; the subject is covered in the article on the timeline of a project. The differences between public and private contracts, beyond the budget, are set out in the article on public and private contracts.