Programme Budgeting

Programme Budgeting is mainly useful to government departments and non-profit organizations. In Programme Budgeting special emphasis is laid on formulation of different budgets for different programmes. It utilizes a planning and budgeting process in an output-oriented programme format; which is oriented to its objectives to facilitate developing and evaluating alternatives. It leads to the allocation of resources over a planning period. Programme Budgeting integrates all of the organizations planning activities and budgeting into total system.

Programme Budgeting Process

First, programmes are identified for achieving different goals of the organizations. Then, each programme is divided into different elements. Resources such as materials, men, machines, utilities, etc., are allocated to various programmes over the period. The emphasis is continuously placed on analysis of alternatives (including existing programmes) and estimating cost of accomplishing objectives and fulfilling purposes and needs. The steps involved in the programme budgeting may be listed as follows:

  1. Identification of programmes required for the mission.
  2. Identification of programme elements.
  3. Allocation of resources to programme.
  4. Utilizing forecast studies analysis. Mostly multi-year forecasts are considered in programmed budgeting.
  5. Measuring the actual performance of approved programmes and comparing with budget performance.

In the case of non-profit organizations, output indicators are to be developed because output cannot be measured in monetary terms. For example, for training programme the output indicator may be in terms of number of employees trained for health programme, output indicator may be reduction in diseases. The programme budget, however, does not eliminate the need for traditional budget. It adds only a new dimension to planning and budgeting system. A traditional budget can be divided into a number of programme budgets.

Traditional Budgeting Vs Programme Budgeting

Traditional budgeting involves establishment of functional budgets and their integration into master budget. It works well, in profit-oriented organizations, while, it emphasizes the method and means used, the programme budgeting stresses the purpose and objectives of the programme. Programme budgeting is not only  a linkage system for planning and budgeting but also a strategic decision-making for allocating resources. It provides the decision makers with relevant data appropriately structured to object-oriented format and analysis into decision making mode.