Miguel Cabezudo
Nicolas Laflesselle
• Financial
plans are called budgets and the process of
making, monitoring and adjusting them is called
budgetary control.
• The
budget may be expressed in tabular or graphical
format such as S curves.
Harris and McCaffer identification :
*Operating budget
*Annual sales budget
*Capital expenditure budget
*Cash flow budget
*Master budget
Prepare
forecast
Accept master
budget
Prepare forecast
data
Accept the
budget
Consider
policy
Consult
management
PREPARING
THE BUDGET
Review
Assess
resources
Assess resources
and impact on
forecast
Convert to
monetary budget
Prepare
forecast
Management
Action
Prepare forecast (sales,
cumulative value and
cash flow)
Comparitor
period
Quarterly,
Monthly,
weekly or daily
Compare
forecast/actual
Compare
Forecast with
Actual
performance
Action and
implement
THE CONTROL
CYCLE
Analysis of
Variance
Report to
management
Analyse and
report
*It is an essential function of management to prepare
forecast in order to establish a plan for the future of
the business.
*The company has to plan for the next year’s
*Estimating, planning and quantity.
*Bar chart
Money or resource allocations against time
*Graphical display
Value-time curve forecast
MAN
WEEKS
60
50
40
Man weeks
30
20
Variance
10
0
0
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
13
Project duration
(weeks)
14
12
11
10
9
8
7
Expenditure
(£000)
6
5
4
Variance
3
2
1
0
0
1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
13
Project duration
(weeks)
14
0
5 400
3 700
50
47 400
40
Expenditure
(£000)
39 800
32 500
30
25 700
19 400
20
22 000
14 000
10
0
0
4
8
12
16
2
0
Project duration
(weeks)
*Must be established in order to monitor the budget at
clearly defined time intervals. (daily, weekly, monthly,
quarterly or annually)
*Management must act where variances are apparent at
each review date, whether they are positive or
negative.
*Cooke, Brian, & Williams, Peter.
Construction, planning, programming &
control. Blackwell Publishing