ABSTRACT
Budgeting involves sharing limited resources among several project groups or functions contained in a project. A budget
analysis
can serve as any of the following:
• A plan for resources expenditure • A project selection criterion • A projection of project policy • A basis for project control • A performance measure • A standardization of resource allocation • An incentive for improvement
Top-down budgeting involves collecting data from upper-level sources such as top and middle managers. The figures supplied by the managers may come from their personal judgment, past experience, or past data on similar project activities. The cost estimates are passed on to lower-level managers who then break the estimates down into specific work components within the project. These estimates may, in turn, be given to line managers, supervisors, and lead workers to continue the process until individual activity costs are obtained. Top management provides the global budget, whereas the functional-level worker provides specific budget requirements for project items.
