Budgeting is extremely important, whether for personal or business reasons. Budgets are of many types and are the main tools used for planning, control, and decision making in almost every organization. These can also be used to force organizations to plan for future communication, coordination, resource allocation, profit control, and performance evaluation.
Many professional service firms rely heavily on the use of time budgets. For example, architect firms know on average how long it takes to work with commercial clients on the design of a building or with individuals for a house. Based on these estimates, management assigns clients to architects within the firm and estimates the fees that will be charged. If one architect has five clients assigned to him or her and each design is budgeted to be completed in ten hours, this means that fifty hours of work have been delegated for completion by that architect. Additional work will not be assigned to this architect until all other architects are equally assigned the same number of hours. Additionally, if it takes this architect ninety hours to complete the designs, as against the assigned fifty hours, this may be a sign there are issues with the productivity of this architect that need to be examined.
In the assignments you will get an opportunity to examine how budgets are used to analyze performance and set incentives for employees and management within an organization. You will also make recommendations for improving the effectiveness of such systems.