Budgets never work out exactly – some things cost more,
occasionally less than you think. If you can convince those
who are providing the money, try to build in an extra 5%
for “unforeseen expenditure”
Budgets never work out exactly; you need to be flexible,
perhaps saving in one area to cover extra costs in another
If you are over budget, don’t try to hide the facts – present
the problem as clearly as you can to those in charge
Build in a financial review into every progress review
The Portfolio Improvement Program (PIP) was launched by the World
Bank about a year ago to improve the performance of its project portfo-
lio. Within that review, the performance of social funds was evaluated
for such things as efficiency, targeting, and sustainability.
As the largest multilateral development finance agency, the World Bank
lends about US$20 billion annually for development all over the world.
Its portfolio of 1,500 projects under implementation accounts for close
to US$120 billion of commitment on the part of the World Bank.
In this chapter, the learning objectives are: Explain the strategic role of capital-investment analysis, describe how accountants can add value to the capital- budgeting process, provide a general model for determining relevant cash flows associated with capital-expenditure projects, apply discounted cash flow (DCF) decision models for capital-budgeting purposes,…
CHAPTER 10 The Basics of Capital Budgeting
Should we build this plant?
What is capital budgeting?
Analysis of potential additions to fixed assets. Long-term decisions; involve large expenditures. Very important to firm’s future.
The aim of this text is to explain the meaning and use of
the principal accountancy statements,models and activities
in business life.
The word ‘statements’ includes balance sheets, profit and
loss accounts, cash flow statements and budget reports.
The word ‘models’is used to mean the exercises of costing,
cash flow forecasting, capital expenditure appraising and
other modelling which is essential for sound business
The word ‘activities’covers the topics of accounting systems
and controls, record keeping (book keeping) and the
operation of the budget process.
Policy implementation is about creating a different future. An implementation plan must provide a clear
picture of that future as it is the basis for the outcomes and delivered benefits of the new policy.
A clearly articulated vision and description of the desired future are vital to the buy-in, motivation and
alignment of effort and expenditure of the large number of people involved in any new policy implementation.
This element of implementation planning sets the framework for dealing with the “expectations” part of the
objective “on time, on budget and to expectations”.
in the face of an economic downturn and spiraling nancial markets, marketers examine their marketing budgets for the upcoming year
This e-book highlights the marketing budget trends for 2009 as shared by leading marketing blogs and web sites. No matter what you may do with your marketing budget for the new year, it’s always a good idea to take a macro-view of the marketing climate at large to learn what other industries and marketing executives plan for their 2009 marketing expenditures
188 Understanding the Numbers
Capital Expenditure Budget (26) The capital expenditure budget is one of the components of the financial budget. Each of the components has its own unique contribution to make toward the effective planning and control of business operations. Some components, however, are particularly crucial in the effective management of businesses, such as the cash and capital expenditure budgets. Capital budgeting is the process of identifying, evaluating, planning, and financing an organization’s major investment projects.
We will assist you in managing the financial affairs of your property by providing monthly
financial statements. These statements will show how your current month’s income and
expenses compare to your annual budget. This information will allow you to monitor
expenditures to ensure that your budget plan is followed. It will also provide you with
warning signals if certain expenses are being incurred faster than anticipated and have a
potential of exceeding what was budgeted.
Korea’s experience also illustrates how good crisis management can accelerate structural adjustment. The Asian financial
crisis of the late 1990s led to significant down-sizing among large firms in Korea. This process was characterized by mass
lay-offs of highly-skilled personnel, and large reductions in corporate R&D spending. The response of the Korean
government, in addition to boosting education expenditure, was to increase its R&D budget, to offset the decline in
corporate R&D spending.