- What are the four subsystems of budget execution?
- Describe the purpose of each one briefly, and then choose one of these and identify its principal objectives, benefits, and challenges.
The four main elements that make up a budget are operations and analysis, planning, programming, and evaluation. Operations and analysis are the first steps in the planning and execution of a budget. Planning is what denotes the way your budget will work and when you’re going to spend your money on various projects. Programming comprises the preparation of the budget for execution. Evaluation is after the execution of a budget and consists of making sure that what was initially approved is going in the right direction. Operations involves confirming how much money is needed for a particular project, how long it’ll take, what equipment will be needed, and other important factors, while analysis then deals with finding out where money can be saved or which area needs attention.
According to Zhang and Li (2022), the principal objectives of operations and analysis are to determine what is necessary to execute the resources and to make sure the budget will be used efficiently. Operation objectives are to determine what is necessary for the operational staff to do daily (Porras‐Gómez, 2020). This includes general requirements, like access or security levels, and how many resources will be needed to complete a specific task. The analysis objective is to determine what budget will be used for, such as general goals, budgeted costs, and resource requirements in different areas of operation (Mao et al., 2019). Specific objectives of operations and analysis include determining the extent the current budget will be used, including what sort of production is planned and if it is utilizing the allocated budget efficiently (Salkuti, 2021). This analysis concerns both actual results and expenditures.
Also, the benefits of operations and analysis are determining the number of things, such as how much the product will cost when it will be done, and what effect it will have on other parts of the organization. Operations are used to determine the required level of planning to control day-to-day operations, including needed resources and performing work at a specific level of service consistent with an organization’s goals (Mao et al., 2019). The analysis is used to determine the efficiency levels in all areas under review, including determining how effectively each resource is used. This can assist in determining the most effective methods and producing the highest quality work (Zhang & Li, 2022). The benefits of operations and analysis also include determining how much time is spent by resources, including humans and computers (Porras‐Gómez, 2020). Additionally, this analysis can determine whether or not the budgeted resources are being utilized efficiently.
Nonetheless, some challenges are associated with operations and analysis. The first challenge of operations and analysis is determining what requirements are needed to complete the operational tasks. This can be achieved by constantly scheduling and re-scheduling resources, which can be difficult to manage (Porras‐Gómez, 2020). Another challenge is determining what level of service the organization is providing to its consumers, which can be misinterpreted as an easy target for budget cuts (Mao et al., 2019). It is also challenging to determine the level of productivity that employees are getting by always monitoring them. Therefore, this will have a direct impact on the morale of the employees, which can lead to inefficient work. Significant challenges that are associated with operations and analysis are more so in the future rather than in the present (Salkuti, 2021). This is due to changes in technology and market trends, which have led to a lot of budget cuts necessary for the organization to remain competitive.
Operations entails determining how much money, how much time, what equipment, and other critical aspects required for a specific project, while analysis focuses on identifying areas where money can be saved or that require attention. They are two of the four main elements that make up a budget, along with planning, programming, and evaluation. Operations and analysis are important in the budgeting process to determine what is needed to execute a budget. This also assists in determining how efficiently the budget is being used by allocating funds to its most important purpose.
Mao, J. X., Wang, H., Fu, Y. G., & Spencer Jr, B. F. (2019). Automated modal identification using principal component and cluster analysis: Application to a long‐span cable‐stayed bridge. Structural Control and Health Monitoring, 26(10), e2430. https://onlinelibrary.wiley.com/doi/abs/10.1002/STC.2430
Porras‐Gómez, A. M. (2020). The control pyramid: A model of integrated public financial control. Financial Accountability & Management, 36(1), 73-89. https://onlinelibrary.wiley.com/doi/abs/10.1111/faam.12221
Salkuti, S. R. (2021). Energy storage and electric vehicles: technology, operation, challenges, and cost-benefit analysis. International Journal of Advanced Computer Science and Applications, 12(4). https://pdfs.semanticscholar.org/1cc3/c2cf78be578df0507b857506451054d3a0e4.pdf
Zhang, Y., & Li, Y. (2022, December). Research on the Big Data Collection Mechanism of University Economic Management. In 2022 International Conference on Bigdata Blockchain and Economy Management (ICBBEM 2022) (pp. 916-925). Atlantis Press. https://www.atlantis-press.com/proceedings/icbbem-22/125979198