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Budgeting The Type Of Budgeting Essay

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Zero-based budgeting is used for entirely new projects and programs, including a recent investment in a new development platform and series of applications based on the Software-as-a-Service (SaaS) model. These investments are zero-based and provide for the development of technologies that are often patentable, which create significant barriers to entry in new markets the company is entering. Often the zero-based budgeting is substantiated with the potential of creating patentable products over the long-term.

The frequency of budgeting varies by the level of the organization. Often the strategic budgets are set once a year, using the base level approach to ensure consistency and also attain predictability of results. At the business unit...

These are often very involved and quite intense in the level of scrutiny applied to financial results, and where General Managers of divisions have to defined their spending and sales achieved. Departments evaluate their budgets on a monthly basis, mostly by department directors and managers who are given a bonus structure that gives them motivation to deliver results under budget and within cost variances. The monthly reviews of budgets take often only 30 minutes or less, while the quarterly review with the CEO and board can take up to three hours. These meeting at times have lead to a resetting of the base…

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