Activity Budgeting vs Program Budgeting

Thus far we have discussed one facet of an organization's philosophy of budgeting. Another facet has to do with the degree to which a budget is activity-oriented or program-oriented, a distinction we have mentioned before. The traditional organizational budget is activity-oriented. Individual expenses are classified and assigned to basic budget lines such as phone, materials, personnel-clerical, utilities, direct la-■ bor, etc. These expense lines are gathered into more inclusive categories, and are reported by organizational unit—for example, by section, department, and division. In other words, the budget can be overlaid on the organizational chart. Table 7-1 shows one page of a typical, activity-oriented monthly budget report for a real estate project.

With the advent of project organization, it became necessary to organize the budget in ways that conformed more closely to the actual pattern of fiscal responsibility. Under traditional budgeting methods, the budget for a project could be split up among many different organizational units, which diffused control so widely that it was frequently nonexistent. It was often almost impossible to determine the actual size of major expenditure categories in a project's budget. In light of this problem, ways were sought to alter the budgeting process so that budgets could be associated directly with the projects that used them. This need gave rise to program budgeting. Table 7-2 shows a program-oriented project budget divided by task and expected time of expenditure. In an interesting paper, Brimson |6] critiques both systems separately, and then combines them.

Table 7-1 Typical Monthly Budget for a Real Estate Project (Page 1 of 6)

Current

Table 7-1 Typical Monthly Budget for a Real Estate Project (Page 1 of 6)

Current

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Responses

  • RUARI
    What is the different between category Budgeting and program Budgeting?
    2 years ago
  • negisti
    What is the difference between category budgeting and program/activity budgeting?
    2 years ago
  • Toivo
    What is difference between activity and category oriented budget?
    2 years ago
  • laila rautavaara
    What is the difference between project and categoryoriented budgets?
    1 year ago
  • janet
    What is the difference between project and category oriented budgets?
    10 months ago
  • lindsey
    What is difference between project and category oriented budgeting?
    6 months ago
  • Tobold
    What is the difference between Activity Based Budgeting and Output Based Budgeting?
    1 month ago

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