PPBS was developed in the late 1960s through then Secretary of Defense Robert McNamara's efforts to deal rationally with the budget of the Department of Defense. PPBS is basically a program budgeting (and planning) system oriented to identify ing, planning, and controlling projects that will maximize achievement of the organization's long-run goals. The system focuses on funding those projects that will bring the greatest progress toward organizational goals for the least cost. The PPBS budgeting process entails four major steps:
1. The identification of goals and objectives for each major area of activity. This is - the "planning" portion of PPBS.
2. Analysis of the programs proposed to attain organizational objectives; multi-year programs are considered as well as short-term programs. This step re- -quires a good description of the nature of each project so that its intent and the • character of its proposed contribution to the organization are understood. This is the "programming" part of PPBS.
3. Estimation of total costs for each project, including indirect costs. Time phas- » ing of costs is detailed for multiyear projects. |
4. Final analysis of the alternative projects and sets of projects in terms of ex-4
pected costs, expected benefits, and expected project lives. Cost-benefit analy- <
ses are performed for each program so that the programs can be compared with j, one another in preparation for selecting a set of projects (i.e., a "portfolio," forM
PPBS was mandated by the Department of Defense for contractors, and at theS time was deemed useful and effective. With the advent of cost/schedule control sys- J" tems criteria (see Chapter 10) in the late 1960s, PPBS has fallen from grace and nowf enjoys only limited use by a few state and local government agencies and some so-J; cial service organizations. Its precepts, however, have been embodied in the bud- A geting procedures of many organizations. *
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.