Session 7: The Budgeting Black Hole: Predicting the Unknowable
Johanna Rothman
Does budgeting waste your time? In many organizations, the finance people are frustrated with the managers? inability to predict the budget accurately. Managers feel frustrated by having to predict a budget they are held accountable to?but the budget is fiction within weeks, if not days.
An organization cannot run well without a budget. But a budget doesn?t have to be a time-consuming annual frustrating futile exercise in prediction?knowing that the budget isn?t worth the paper it?s written on. Incremental budgeting, along with incremental delivery of work provides the finance people with the data they need, and the product developers with the framework they need.
So if incremental budgeting is such a nirvana, how do you get there? How often do you budget/rebudget? What are the triggering actions for rebudgeting? We will explore these questions in the context of a project, where we will periodically deliver value to the organization. We will see which work actually delivers value and can help predict budgets, and which work does not deliver value that helps with budgets. We?ll explore how management actions and delivering increments of work enables incremental budgeting.
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