Budgeting Budgeting methods Budgeting Techniques

1. VENKATESH G
Assistant Librarian
Institute of Health Management Research
Hulimangala Rd, Electronics City Phase 1, Bengaluru,
Karnataka 560105
Email: venkateshgvenki987@gmail.com

2. 1.Introduction of Budgeting
2.Methods of Budgeting
2.1 Line Items /Incremental Budgeting …….
2.2Formula Budgeting
2.3 Programme Budgeting
2.4 Performance Budgeting
2.5 Zero Base Budgeting (ZBB)
2.6 planning Programming Budgeting System (PPBS)
3.Conclusion

3. The Budgeting is one of the best and most important monitoring
devices.
Every library, no matter how small, has to operate with a budget.
In most of the libraries, the librarian and her/his senior staff
prepares the budget, according to budgetary norms issued by the
authorities
 Budgeting helps in utilizing the funds in the best possible manner
for the effective running of the information organization

4. 2.1 Line Items /Incremental Budgeting …….
 It is also called Historical or Object-of-Expenditure Type
Budgeting
It is the most common type of budget
Divides items of expenditure, line-by-line, into broad categories
such as
Books and journals
Salaries and allowances
Equipment
Supplies
Capital expenditure
Contingencies and so on.

5. It Is Relatively Easy To Prepare, Present and
Understand.
It ensures that the funds provided are spent for
the purpose stated.
It is extensively practiced.

6. Simplicity
Easy Justification
Administratively straight forward
It is not required to study long and detailed
budgetary documents

7. Lack of Analysis
Does not allow for overall performance overview
Does not help managers identify budgetary
‘slack’
Backward looking – focus more on previous
budget than future operational requirements and
objectives
Inconsistent with new priorities

8. Based on financial norms and standards
this method tries to relate some inputs like users served,
academic programmes supported and ratio of book stock
to total funds of parent body.
The formulae are used for financial estimation as well as
budget justification
This appears to be a broad and quick method and hence
saves a lot of time.

9. This method propounded originally in the Hoover
Commission Report (1949) has three steps.
Statement of agency (i.e., library) objectives,
Full consideration of alternative ways and
Logical selection of the best based on effectiveness
and efficiency.
this method tries to answer the questions for
-what purpose the money is being spent?
- how have the resources to be deployed for each
programme?

10. The focus in this method of budgeting is on the
library’s activities and the funds are to be earmarked
for programmes or services.
Each of these services may be organised through
departments such as acquisition, classification and
cataloguing, reference and bibliographical services,
documentation and information services
In this type of budget, provision is made for various
activities of each departments to gauge their
requirements and watch their expenditures

11. This budgeting method is similar to programme budgeting but
the emphasis shifts from programmes to performance.
The expenditure is based on the performance of activities and
the stress is laid upon operational efficiency.
Management techniques such as cost-benefit analysis are used
to measure the performance and establish norms.
The advantage of the method is the emphasis on the service
mission of the library.
However, it is difficult to quantify service quality and
activities.
In fact, the budget allocation for a service institution like a
library has little direct relationship to the degree of
satisfaction users receive from library services.

12. This approach requires that all activities be identified
and developed as "decision packages" and that there
should be a systematic evaluation and ranking of these
"decision packages" preferably using a computer.
It does not take into account of the past but places
emphasis on current activities.
In India, almost all libraries follow the conventional
historical method of budgeting.

13. Activities/programmes are grouped to
lowest level entity
Objectives and activities of each programme
examined and alternative methods evaluated
Programmes are then grouped into a series
of "decision packages" with their statement of
purpose
Programmes are then grouped into a series
of "decision packages" with their statement of
purpose
Cut-off point corresponds to the total
budget allocation.

14. ZBB improves the plans and budgets of libraries and
helps to develop good management teams
It also helps to add follow on benefits over the years.
Advantages of zero-based budgeting
Focuses the budget closely on objectives and outcomes
Can lead to better resource allocation
Can be adaptive to changes in circumstances and
priorities
Actively involves operational managers and everyone
rather than handing them down a budget from above

15. More time consuming
Need for specialized skills/training
Difficulties can arise in the identification of suitable
performance measures and decision criteria
May be difficult to cost and estimate resource
requirements for options different from the current
practice

16. This method of budgeting was first proposed by
United States Department of Defense - US-DOD (1961).
As an extension of programme budgeting, PPBS
involves systems analysis, and/or other cost-
effectiveness processes to provide a more systematic
and comprehensive comparison of costs and benefits
of alternative approaches to the programme objective
Two - key elements of PPBS are budgeting and
systems analysis.
It begins with the establishment of goals and
objectives and ends with the formulation of
programmes or services

17. This method combines the functions of planning
activities, programmes and services, translating
them into tangible projects and finally presents
the requirements in budgetary terms.

18. Hence budget is a play very important role in
library
Budgeting helps in utilizing the funds
in the best possible manner for the
effective running of the information
organization