Get Rid Of The Constraints Of Calendar Year And Financial Year.

The budget usually takes 12 months as a cycle. In principle, this is very necessary and reasonable. However, not all jobs can be completed within 12 months. If we try to do this, there will be a danger of natural and logical links between the fragmented things. If a budget is to be completed within a number of cycles, a multi cycle rolling budget should be an improvement in the 12 month fixed period budget. But no matter how Organization Rolling budgets, we have to make artificial, (largely) arbitrary cycles.

Cause a lot of Cost overruns The main reason is not lack of discipline and extravagant waste. control Lax or relaxed, but did not take into account the subsequent cost of the project. This is why people find themselves suddenly trapped in the mire of funds. After making a decision, we should bear the consequences of ourselves. This is one of the main reasons for the failure of the board of supervisors and the board of directors to approve the budget.

We have no say in this matter, but we are forced to accept everything that follows.

The most typical example of budget errors is the previous behavior of the US Department of defense, which is typical in various government departments and many other organizations. When purchasing a new weapon system, his budget includes only the expenditure of the new year. However, the result is that the cost of start-up is recorded, but no one knows about its subsequent cost. Only after the introduction of the life cycle budget during Mcnamara's tenure can we understand its subsequent costs. Today, the whole cost of the new weapon system in the life cycle (including maintenance and service, accessories, training, operator and system scrapping) has been included in the budget.

Of course, there will also be errors, because budgeting must be based on various assumptions. However, compared with the budget for the next 12 months, this budget forces us to seriously consider all relevant aspects in a more practical way.

Generally speaking, we should always take the following assumption as a guide: a lot of costs are not spent on failed projects, but on successful projects, because they generate high follow-up costs. Therefore, we need to prepare for the successful follow-up cost especially. Project failure does cause enterprise death. But those who have gone through success but failed because they can not afford to succeed are more tragic.