What is Test Budgeting?

Budgetting

A budget is nothing more than a written estimate of how an organization — or a particular project, department, or business unit — will perform financially. If you can accurately predict your company's performance, you can be certain that resources such as money, people, equipment, manufacturing plants, and the like are deployed appropriately.

The best kind of budget is the one that works. You can choose from three key approaches to developing a budget:

· Top down: Budgets are prepared by top management and imposed on the lower layers of the organization. Top down budgets clearly express the performance goals and expectations of top management, but can be unrealistic because they do not incorporate the input of the very people who implement them.

· Bottom up: Supervisors and middle managers prepare the budgets and then forward them up the chain of command for review and approval. These budgets tend to be more accurate and can have a positive impact on employee morale because employees assume an active role in providing financial input to the budgeting process.

· Zero-based budgeting: Each manager prepares estimates of his or her proposed expenses for a specific period of time as though they were being performed for the first time. In other words, each activity starts from a budget base of zero. By starting from scratch at each budget cycle, managers are required to take a close look at all their expenses and justify them to top management, thereby minimizing waste.

· Expert Judgment: Based on the experience person will plan budget
Sample: