Performance Controller

Reports  shows that, of the top 100 stock listed companies, the average time used for planning and budget preparation is not long at all. But this is  in stark contrast to the time taken on analysis of budgets and revisions. This latter phase  iterates over a much longer time as and discussion takes  place as to how and if it is well coordinated to accommodate the companies’s strategy.

 

After top down business PLANS and budget ASSUMPTIONS are set, generally there are three budgeting phases. The first is a  bottom up estimate of MANPOWER REVENUE and OPEX and CAPEX. This is  then followed by ALLOCATIONS, and an operational PRIORITIZATION phase and finally the Capital  FUNDING phase for approval review.

 

There are also many schools of thought that the budget step should be eliminated as it seems to waste so much time. This may good if rolling forecasts are well defined to place the annul budget but generally this only replaces the first phase.  Many also subscribe the the thought that to much short term focus limits the organisation ability to focus and can cause it to falter. Doing budgets in the traditional way tends to allows greater focus also on the 3 year plan and draws a distinct line in the sand in on commitments by operations.

 

But either way, make no mistake, the budget is a vital process to get alignment for the organisation The better this is done the better the result. The final document is underpins the agreements reached for performance for the ensuing year and it a solid reference point to measure against and  provides for consideration by external stakeholders . People such as shareholders, business partners, creditors and banks and financing institutions enjoy a much greater degree of confidence when budgets are well thought through and are likely to remain or increase any involvement.