BUDGET MODEL FORMATION TOOLS FOR ACTIVITY AND PROJECT-BASED BUDGETING
Journal: ADMINISTRATION
Volume 3 № 4
, 2015
Authors:
Type:
Article
Pages:
from 49
to 54
Status:
Published
Received:
15.12.2015
Accepted:
18.12.2015
Published:
18.12.2015
Language:
Russian
Keywords:
activity-based budgeting, project budgeting, budget model, standard project budget, center for financial
responsibility.
Abstract (English):
Activity-based budgeting (ABB) and project-based budgeting (project budgeting) are important trends of budgeting at an enterprise level. The paper authors have systematized factors of formation for directions of the activity-based and project-based budgeting, have characterized these directions’ budget models and revealed their specific features. The main specific features of activity-based budgeting model are the matrix (or more complex, multidimensional) structure of the budget model, interrelation of business processes’ budget items with key performance indicators and balanced scorecards (thus the model focused on strategy), simultaneous incorporation of financial indicators describing a business process into the budgets of business processes, budgets of CFR (Centers for Financial Responsibility) units, or project budgets, and a number of other specific features. The most important particulars of the project-based budgeting model is the integration of master budgets, operational and support budgets with project budgets within a budget model, the use of project budgets as a link between project management and budgeting as a management technology, and others particulars. The paper authors have developed a tool for the ABB budget model formation, which includes two algorithms. The first one is the algorithm for ABB model formation based on the budgets of CFR acting as expense providers, from the perspective of CFR units. The algorithm relies on the budgets of expense-providing Centers for Financial Responsibility. These Centers control the expenses of all CFR by certain business processes and items. The second one is the algorithm for the more detailed ABB model formation based on the budgets of business processes that are structured for analytical purposes (other than CFR units). This algorithm is intended for building a more detailed ABB model and implies the allocation of analytical sections like “CFR”, “Business Processes” and other analytics. It has been proposed to use a standard project budget a as a tool to solve the problem of matching the individual projects implementation time with the budget period. The standard budget is developed for the project’s entire life, in conjunction with the Project Budget, the indicators of which describe the project in a certain budget period.
Activity-based budgeting (ABB) and project-based budgeting (project budgeting) are important trends of budgeting at an enterprise level. The paper authors have systematized factors of formation for directions of the activity-based and project-based budgeting, have characterized these directions’ budget models and revealed their specific features. The main specific features of activity-based budgeting model are the matrix (or more complex, multidimensional) structure of the budget model, interrelation of business processes’ budget items with key performance indicators and balanced scorecards (thus the model focused on strategy), simultaneous incorporation of financial indicators describing a business process into the budgets of business processes, budgets of CFR (Centers for Financial Responsibility) units, or project budgets, and a number of other specific features. The most important particulars of the project-based budgeting model is the integration of master budgets, operational and support budgets with project budgets within a budget model, the use of project budgets as a link between project management and budgeting as a management technology, and others particulars. The paper authors have developed a tool for the ABB budget model formation, which includes two algorithms. The first one is the algorithm for ABB model formation based on the budgets of CFR acting as expense providers, from the perspective of CFR units. The algorithm relies on the budgets of expense-providing Centers for Financial Responsibility. These Centers control the expenses of all CFR by certain business processes and items. The second one is the algorithm for the more detailed ABB model formation based on the budgets of business processes that are structured for analytical purposes (other than CFR units). This algorithm is intended for building a more detailed ABB model and implies the allocation of analytical sections like “CFR”, “Business Processes” and other analytics. It has been proposed to use a standard project budget a as a tool to solve the problem of matching the individual projects implementation time with the budget period. The standard budget is developed for the project’s entire life, in conjunction with the Project Budget, the indicators of which describe the project in a certain budget period.
Keywords:
activity-based budgeting, project budgeting, budget model, standard project budget, center for financial responsibility.
activity-based budgeting, project budgeting, budget model, standard project budget, center for financial responsibility.
1. Kubyshkin I. Bjudzhetirovanie v nestandartnyh organizacionnyh strukturah [Budgeting in unconventional organizational structures]. Konsul´tant [Сonsultant]. 2007, I. 15. (in Russian)
2. Trachenko M.B. Razvitie metodologii processnoorientirovannogo i proektno-orientirovannogo bjudzhetirovanij a [Development of methodology of process-oriented and project-oriented budgeting]. Vestnik MarGTU. Serij a «Jekonomika i upravlenie» [Herald MarSTU. Series of "Economics and Management"]. 2011, I. 3. (in Russian)
3. Trachenko M.B. Bjudzhetirovanie kak universal’naja tehnologija upravlenija [Budgeting as a universal control technology]. Germany, Saarbruchen: LAP Lambert Academic Publishing, 2013.
