Importance of Good Budgetary Practices in the Formulation of Organizational Strategies

¶ … Efficiency, and Balance Budgeting

Budget process allows public administrators to improve the efficiency and effectiveness of their projects. It provides them with result-orientated practices when managing the projects. This allows them to remain focused on the goals of the project and develop alternative strategies for addressing factors that might impede the success of the project. It also provides them with the desired flexibility to ensure the success of the project. This includes flexibility in the devolution of the fiscal and functional responsibilities in ensuring effective coordination in the use of the allocated resources.

The budgeting process is also important because it provides administrators with methods used in strengthening the competitive pressures influencing the success of the project. It entails the adoption of processes like privatization and accommodating competitive processes affecting the performance of the project. Besides, the budget process can support the realization of the organization's strategic planning efforts. Strategic planning provides the direction of the program while the budget process provides resources for implementing the plan. The budget process links the strategic plan to the fiscal reality. Strategic planning and budget process are interactive.

The budget process influences what can be achieved by executing the developed plan. It permits the assessment of trends, strategic issues, and demand factors likely to affect the performance of the project. The process of achieving a balance between planning, management, and control orientations determines the effectiveness and efficiency of the project. It ensures timely management of potential risks that are likely to affect the budget adversely. The control also allows minimization of the opportunities that are likely to predispose the project to unintentional errors and early discovery of the errors that might hinder the process. Managers consider the potential benefits associated with the control and the possible impacts associated with failure to implement the control before establishing a control among the above factors. Therefore, achieving this balance will program efficiency and effectiveness (Schick & LoStracco, 2000).

PP520 UNIT 3 SEMINAR

Budgeters are duly responsible for ensuring that the project' success is realized. A budgeter takes the responsibility of preparing plans relating to resource allocation for the project. The budgeter determines the amount of financial support required by a project, thereby preventing mismanagement of the allocated resources. The budgeter works in collaboration with other members of the project in assessing, planning, monitoring and evaluating the success of the project. This helps in ensuring inclusion and transparency on issues related to the use of the allocated resources. In addition, the budgeter correlates the appropriations for some programs, including the items required for responding to project emergencies.

The budgeting officer also coordinates and directs the activities of the personnel involved in the formulation, monitoring, and presentation of the budget required for controlling and implementing the program. The success of the organization/project relies on the coordination of the inputs required for administration and operation of the plan of the project. The budgeter plays this role alongside preparing the budget showing the overall expenditure of the project. In addition, the budgeter manages and analyzes the transactions the project management undertakes. This includes purchasing the essential requirements of the project and paying the coordinators of the project.

In a relationship with the budgetary requirements, the budgeter analyzes the overall expenditure and requirements of the key institutions involved in ensuring the success of a project or an organization. In addition, the budgeter takes responsibility for providing training opportunities for the other accounting staff, work scheduling, transfers and performance ratings. This ensures promotion of personal and professional development of the other staff. Other functions of the budgeter that ensure success of a project or an organization include reviewing the operational budgets of the project and preparing a comparative analysis of the operating programs to determine their effectiveness (Le & Werner, 2001).

PP520 UNIT 4 SEMINAR

Budget decisions and budget cycles are related. Budgetary cycle allows project planners to absorb and respond to ideas that are likely to affect the decision process. This creates the need for ensuring accountability in the use of the allocated resources. The cycle ensures that the management of the organization adheres to the stated organizational policies guiding the use of the organizational resources. The process guides the decision making process by enabling the key stakeholders to take into consideration the institutional factors that affect organizational performance. Early decision making during the initiation of the project facilitates smooth implementation of the project's key programs. This suggests that the budgetary cycle prevents over-estimation of the project's impacts and expected costs.

Budgetary practices and concepts like performance management, performance measurement, performance budgeting, and mid-session revision of the progress of the project influence making of decisions by the organizational/project management team. The budget cycle comprises of phases like preparation, agreement, execution, audit, and evaluation. Each of the activities carried out in these steps influences organizational decision making. Preparation and submission guides in the identification and estimation of the required resources to ensure the success of the project or an organization. The approval stage ensures that the adopted intervention is cost effective to the project and the organization.

Execution guides in the assessment of the key resources required to ensure success of the project. Audit and evaluation provide insights to project success and failures. It provides key lessons that can be used for future planning and decision-making. These concepts differentiate the roles that all the management team must have when assessing, implementing, monitoring, and evaluating a project (Besley & Brigham, 2011).

PP520 UNIT 6 SEMINAR

Financial reports are good because they enable project managers to understand the facts relating to the presentation of a project. He challenges identified are also useful because they affect the decision making process. Financial reports are fundamental tools used to make the long-term decision on issues related to project management. Financial report acts as a tool for communicating financial information required for making decisions related to credit, investment among other business decisions. The income statement, equity reports, balance sheet, and cash flow are some of the communication tools that facilitate the process. The report represents the financial regulations and standards of the organization.