Program budget and definition

Xion Ltd. It receives multiple orders from different clients every year. One of these clients, Noble Ltd. Here, Xion Ltd. No other project shall be considered while preparing the budget for Noble Ltd.

Thus, the program budget focus is only on individual projects. Program budgets form an important part of any large organization these days. It not only lays down accountability, but also brings efficiency and effectiveness to the organization.

It helps to divide the activities under different subprograms for a particular project. Many may point to the disadvantages of the program budget, but the pros outweigh the cons, and such budgets help in achieving the goals and objectives of a business in the desired manner. Your answer:. Budgeting is a technique used to plan for the financial activities of an organization.

Many organizations have departments or programs within the larger organization. Each department or program may perform activities requiring a budget. A budget lists all revenues and expenditures and helps a program control the financial activities in which it takes part. A school, for example, has different programs within the organization. A human resource committee is a common program within a school that has a program budget.

The program nature can further define the budgeting goals in financial or non-financial terms such as achieving profits or objectives. This type of budgeting by definition is the identification of expenses and revenues linked with the program or project. In practice, the method differs from traditional budgeting with a focus on achieving the end results of the program efficiently rather than cost reductions.

The broader definition of this budgeting remains the same. However, the prime difference in the program based budgeting will arise from the objectives of the program. A commercial project would set the target profit and revenue as a target.

A community project or event would set the effective achievement of services offered through the program. Thus, its evaluation will heavily depend on clearly defining the program objectives. Organizations can take a formal step-by-step approach for creating program budgets.

The focus of the program based budgeting should be to take into account only program relevant activities and resources. If the organizers are running a for-profit program such as a commercial project, they should add the profit targets in the estimation process.

For not-for-profit events, the organizers can define the program objectives on service and other CSF basis. Let us consider an organization Star Green builds a private educational campus set up in a community. The organization aims to make surplus cash from the program, so that it may continue with its revenue stream.

The organization estimates the building set up, procurement of equipment, furniture, staffing, marketing, and other expenses in details as below. In addition, the organization also sets a membership registration fee for participating students.

The program budget for the educational campus can provide the management with a starting point for the cost and revenue linked with the campus program.