Preload budget line items

It takes a considerable amount of time for a department manager to fill out a blank budget form that outlines his estimates of expected costs during an upcoming budget period, for the following reasons:

  • Completing the form takes managers away from their usual operational responsibilities
  • Some of the required information may involve researching information that is not readily available
  • Managers do not believe the budget will be used, and so are unwilling to submit any information

You can reduce this delay by issuing a pre-loaded budget form to the department managers. This form contains the budgeting staff’s best estimate of what a department will expend, based on its historical results and as adjusted for expected changes in activity levels and the inflation rate. This approach works well in most situations, since the bulk of expense line items are essentially fixed or at least do not vary much over time.

When a department manager receives a pre-loaded budget, all that he has to do is make a few adjustments and return the completed document. The adjustment will likely involve step costs, such as the hiring of new staff or the acquisition of new equipment, which the budgeting staff might not have been aware of. The only problem with the pre-loaded budget concept is that department managers might try to avoid responsibility for their budgets on the grounds that they were following the dictates of the budgeting staff.