Performance Budgeting

Performance Budget may be defined as a budget based on functions, activities and projects. Performance Budgeting may be described as a budgeting system, where under input costs are related to the end results, are related to the performance. Performance Budgeting is defined as the process of analyzing, identifying, simplifying and crystallizing specific performance objectives of a job to be completed over a period, in the framework of the organizational objectives, the purpose and objectives of the job. It involves evaluation of the performance of the organization in the context of both specific as well as overall objectives of the organization.

Operational Steps in Performance Budgeting

  1. Formulation of objectives of the agency/department.
  2. Identification of various programmes projects, which will, help, the Agency to, achieves its objective.
  3. Evaluation, of the programmes in term of the benefits, that they produce compared to the resources that-they consume.
  4. Selection of the programmes on the basis of cost benefit analysis in order to utilize, the funds in optimal manner
  5. Development of performance criteria for the various. Programmes (suitable work measurement units, norms, yardsticks, standard and other performance indicators).
  6. Preparation of long-term physical as well as financial plans.
  7. Preparation of the annual budget.
  8. Assessment of performance of each programme and by each responsibility unit and comparison of the same with the budget.
  9. Undertaking periodical review of programmes with a view to assess the strengths and weaknesses and make modification, if necessary.