The Best Practices Of Determining A Budget

2059 Words9 Pages
Every company relies on accurate budget estimates in order to provide the correct amount of allocated dollars in a budget plan that the company develops. Most companies develop budgets that look at least two years into the future. Each company is different, however typically most expect their projected budgets to be within 10% less or 25% more of the projected budget (Schwalbe 281). In order to do this, managers must allocate project costs to individual work items over the lifetime of the project. Project managers will create a cost baseline (time-phased budget) in order to measure and monitor the performance of their projects over the projects duration. Any changes or updates that are needed should be changed and reflected in a newly updated budget. Real time budget updates are vital in order to avoid financial problems. Ultimately, budgeting provides a prediction of the projects funding requirements. This article will go into detail about the best practices of determining a budget, and how they can be innovated for a better approach in the future. In his book, Tactical Issues & Best Practice Solutions in Budgeting, Stephan Hunt discusses five focus areas that make up the best practice of determining a budget. These areas include: rolling forecasts, increased participation of operational owners, link detail to accountability, end user analysis, and driver based forecasting and budgeting (Hunt 3). First, this paper will explain why rolling forecasts are considered a

More about The Best Practices Of Determining A Budget

Open Document