Consulting Example:Creating a Budget
Creating a Budget
- A newly established organization needed to create its first budget.
- We started by defining a budget building structure that combined a "top-down" and a "bottom-up" approach.
- The "top-down" approach found comparable organizations and analyzed their budget per person for many general budget categories (e.g., supplies). We used those ratios as a guide to multiply by our planned staffing to estimate our own expenses for those budget categories.
- For the largest and most unique budget categories, we used a "bottom up" approach to estimate what those would be over each month. The main category here was personnel - i.e., how many people would we hire and retain each month by each of the 40+ offices planned for in the organization.
- To build the "bottom up" estimates, we built a standard "fill in the blank" worksheet and then met with all of the office heads to fill in their sheet with their best guesses.
- To keep track of the resulting totals of the "bottom up" estimates, we built in automated charts to show us what the totals were adding to. We could then track those totals against our total limits and other comparable benchmark organizations.
- To make the final result as fair as possible, we laid out a highly iterative and participative process where we shared information frequently and equally.
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