Budject Project Budget Project the

Budject Project Budget Project The capital budgeting process is extremely complex as it involves virtually all organizational dimensions, from specific departments to specific tasks and projects. At an overall level, the processes can be divided into two major categories -- strategic and administrative and functional. At the strategic level, the following are noteworthy: a) the number of budget periods is of 12, divided according to the 12 months of the calendar. The overall annual budget is united in a single document, which contains 12 monthly budgets, further divided into 52 weekly budget periods.

b) the budget targets and objectives are established through a comparative analysis of the organizational goals -- such as implementing a stronger marketing campaign in order to enhance the competitive power -- and their alignment with financial constraints. c) in the construction of the budgets, assumptions are made by the chief financial officer as well as by the managers of the projects to be financed and implemented. The assumptions refer to the customer response, the success of the project or the response of the competition.

Relative to environmental factors such as inflation, these are constructed based on the statements of the central bank as well as other national and international financial institutions. Aside these three strategic dimensions of capital budgeting, several other administrative and operational elements are addressed. For instance: a) the monthly budget is completed within the month prior to it. Specifically: i) the process is initiated as a new need for financing is identified, such as a new project is to be implemented and it requires funds.

ii) the financial team presents the departments with the information they specifically need. The managerial team is presented with complete financial data, such as estimated expenses, estimated revenues, the destination of the expenses, the sources of the revenues, the estimated costs of proposed projects, the estimated return on the proposed projects, the cash flows and so on. iii) the budgets are constructed based on the standards imposed by the legal system. iv) Revenues and expenses are estimated based on the identified necessities as well as the trends in sales.

v) the meetings between the financial and the rest of the other departments are often tense due to the sense of financial impositions and constraints on proposed budgets. The meetings are generally attended by all organizational managers and by the financial staffs. During the meetings, the indirect costs are allocated to departments proportionally to the registered direct costs. b) the budget construction is virtually an ongoing process. As one budget is completed, another is commenced.

As one particular budget is completed by the financial staff, it will be thoroughly reviewed by the chief financial officer. When the CFO approves the correctness of the data used in the construction of the budget, she forwards it to the chief executive officer. Upon his own analysis as well as based on the input retrieved from the financial staffs, the CEO will approve the budget. c) in terms of implementation, this is completed throughout the entire organization.

At the small scale of the organizational departments, the implementation is ordered and supervised by the department managers. At the level of the entire organization, the implementation of the budget is ensured by the CFO and by the CEO. These two are also in charge of the ongoing process of control and monitoring. Once the technical dimensions of the budget are addressed, it is important to take an overall look at the capital budgeting process.

From this angle, the following elements are noteworthy: The organizational budget is generally fixed, but the company strives to become more adjustable and flexible in order to better meet emergent requirements; it however focuses on consistency and the budget is mainly fixed New or discontinued services and procedures are assessed upon the specific and entitled requirement of an organizational party. The actual assessments depend on the characteristics of each service or process. The strengths of the budget process revolve.