lect11b - BUDGETING OVERVIEW What are the purposes of...

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Nigel H.M. Wilson 1.259J.11.542J/ESD.227J, Fall 2006 slide 1 Lecture 11 BUDGETING OVERVIEW What are the purposes of budgeting systems? What is program budgeting? What can it accomplish? What are the potential pitfalls of instituting such a system? What strategy was used to implement it at the MBTA? What happened? A cautionary tale about organizational change.
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Nigel H.M. Wilson 1.259J.11.542J/ESD.227J, Fall 2006 slide 2 Lecture 11 Purposes of Budgeting Control Efficiency Resource Allocation/Planning Team-Building Public Education and Accountability
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Nigel H.M. Wilson 1.259J.11.542J/ESD.227J, Fall 2006 slide 3 Lecture 11 Program Budgeting Program budgeting is a decision-making process that helps an organization consider how different budget options would affect its performance Program budgeting focuses on the efficiency and resource allocation functions of budgeting. It can contribute to control and team-building as well.
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Nigel H.M. Wilson 1.259J.11.542J/ESD.227J, Fall 2006 slide 4 Lecture 11 Program Budgeting’s Benefits Compared to conventional incremental budgeting, program budgeting promises: -- more reasoned decisions -- probing of the organization’s “base budget” -- logical connections between budgeting and other key management processes -- improved capacity to explain and defend budget choices -- improved team-building
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