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While additional sales might be classified as a relatively 'happy' change in circumstances, budget overruns are a more common unexpected occurrence. Budget overruns can occur for a number of reasons -- unforeseen technological or weather problems, bureaucratic red tape and delays, or a sudden rise in input costs. To ensure that such excesses are allowed for, it is a good idea to have as realistic a view as possible of the overall project, and plan for the possibility of cost overruns. For example, budget overruns are endemic to certain professions, such as the defense industry and construction, and it would be unrealistic to assume that every project will meet its budget target in these industries.
When forecasting, the likelihood of overruns should be assessed, using similar projects in the past as a point of comparison. Approval of overruns is more likely if the excesses are planned for and shown to be due to external environmental changes, rather than rooted in the incompetence of the project manager. But no matter how inevitable cost overruns may be, it is still essential that controls are put in place to reduce the risk of shortfalls. Having short-term...
Frequent meetings and facilitating communication between staff improves project coordination efforts and ensures that the legal, human, and technological aspects of the project are moving forward as planned, in a joint effort.
References
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Different types of budgets. (2009, May 1). Types of budgets.
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Financial budget. (2010). Accounting Dictionary. Retrieved April 12, 2010 at http://www.answers.com/topic/financial-budget
Operating budget. (2010). Accounting Dictionary. Retrieved April 12, 2010 at http://www.businessdictionary.com/definition/operating-budget.html
Marginal analysis. (2010). Economics 104. Retrieved April 12, 2010 at http://sorrel.humboldt.edu/~economic/econ104/marginal/
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Certain specialists in the field have agreed upon the two most important principles that the budget, whether it is a governmental or corporate one, should follow. One of the two principles consists in the fact that the budget should be designed as a tool for planning and monitoring (Andrews, 2007). Similarities between the Federal Budget and the Corporate One As mentioned above, the two types of budgets are very distinct in areas like the development process, budget
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