The findings of this research will provide insight to describe some ways which organizations can use to ensure whether budget holders are motivated to achieve organizational objectives or not. Budgeting pays an important role in motivating behaviors within organizations. …
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The intention of this study is a budget as a financial plan expressed in terms of money that helps budget holders achieve organizational goals and objectives in an appropriate manner. In construction industry, budget helps companies in the process of financial analysis. Through budgeting, management of the organizations can know the financial position of the organization. They can know what is actually going on in terms of capital use for business activities. Budgeting helps in providing the management with the information regarding available capital, current financial position, and future expenditures of the ongoing business activities. Through efficient budgeting, the organizations can save money and related expenditures regarding various business activities. Budgets help in cutting off the extra costs and make money available for use in other financial activities.Proper planning plays an important role in the success of a construction company. Budgeting plays a very important role in this regard. Planning is the second function of budgeting. After forecasting the financial position, a company decides its future activities, such as, investment decisions, loan decisions, and buying or selling decisions. Communication is another major function of budgeting. If an organization makes some sort of financial deal with another organization, budgeting is that technique which can resolve the issue related to use of capital between the two parties. Priorities can be set between the two organizations regarding the financial issues. An effective budget would help the organizations in communicating with each other for the purpose of discussing where the money should be spent and how much money should be spent. 2.4 Motivation Budgeting plays an important role in motivating staff of the company. After analyzing the financial position of the company, managers can develop such plans for the employees that are able to improve their efficiency and motivation. For example, if a company develops effective compensation plans, it can result in favor of the company because employees like to work for a company which values their performances and provides them with the compensation and rewards that they deserve. However, development of compensation plans is directly related on the available budget of a company. If a company will have enough budgets for developing and implementing such plans, only then compensation plans can be developed which will ultimately result in motivating employees and improving their individual and group performances. 2.5 Evaluation In construction industry, evaluation of financial and other business processes plays a very important role. Budget represents the target performance which managers measure with the actual
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However, the way to report should adhere to set international financial reporting standards. A financial reporting system is unique to a company and should be made in such a way that it does not contravene the set standards. A financial reporting system uses financial statements thus encompasses characteristics and components of such financial statements.
However, having a budget without instituting budgetary controls is useless. Budget controls are necessary to ensure that the company utilizes its finances as planned and to help detect deviations for correction purposes (Wiseman, 2010). Monitoring of a budget is something that is assiduous and must not be ignored at any particular time of the financial year.
A budget is always prepared on the basis of money for a future period of time. A budget is made for a full year - divided into months. Budgets are made for a specific amount of activity. For instance, if the limiting factor is capacity then the budget will be made based on this factor; likewise, if the factor of limitation is the demand in the market, the budget will be made on sales.
As such, a budget is tied to business goals and objectives, current and expected financial capability, and management strategies. In a business environment where there are uncertainties, budgeting is a means of managing risks. Issues in budgeting arise from the influence and confluence of internal and external factors that create anticipated and unanticipated risks.
Budgeting Introduction:Budgeting plays an important role in a business. It is very significant for the reason that it permits the firm to ensure of how much credit it may provides to consumer before it begins to have liquidity troubles. “Cash budget is an opinion of inflow and outflow of the business of an organization for a particular period of time” (Foley 2009).
It generally provides considerable assistance in identifying the dimensions of business functions that need more attention to be upgraded and delivers a rational idea regarding the unnecessary expenses incurred within a particular organization with the motive of preserving financial effectiveness.
Moreover, in times of today budgets are not to be considered static, over a period of time they need to be reviewed and rolled over.
There is no denial of the fact that 'failing to plan' results in 'planning to fail'. Budgets prepare organizations to anticipate the future and plan accordingly, which eases their anticipation for the future and day to day needs are already planned earlier.
According to Levensaler (2008), “performance management is an organizational process, which entails creating a favorable environment for employees to perform their jobs to the best of their abilities” (p. 3). Performance management captures almost all aspects of
Preparing a monthly budget includes recording of all possible incomes in the month, and listing of all fixed expenses like rent, telephone and utilities, and then last is the listing of variable expenses. This way, you can find the
In order to determine achievable budgetary targets, both the organisation and managers should sit together and determine realistic and achievable budgetary targets. For this purpose, the managers should show their consent for achieving the
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