What is the bottom -up budget?

Bottom budgeting is a way of accounting in which each individual department determines the amount of money necessary to complete the projects. This amount includes the individual tasks involved in each project and all the necessary materials or equipment, as well as the costs of work and the operation of the department. The numbers from each department are then added to determine the overall budget. In some cases, the bottom -up budget distributes the amount into monthly costs and then these costs are added to come up with an annual budget. Although this is considered to be a relatively accurate budget method for small and large organizations and companies, there is often a risk that individual employees or departments polish the budget, leading to waste. These tasks are then assigned an estimated cash amount, resources, materials and equipment needed to complete the task. This may include office supplies, purchase of new equipment and building materials as welle expected for each project or task.

A large part of the bottom -up budget is a department determining the cost of running itself. This includes the salaries and benefits of current employees and the potential added costs of hiring other workers as needed. In this part of the budget, the budget also includes maintenance of equipment and buildings occupied by the Ministry. Once each department determines the total cost of meeting the expected objectives and the operation of the department, the head of each group usually connects to the control of the upper level to determine the overall budget. When budding from bottom to top, estimates from each department are reviewed as a group and together for the total amount of money.

The way the budget is divided depends largely on society and its needs. In some cases, each department can determine the budget on the basis of expected expenditures of each month and then submit these numbers to a group. Companies that control or carry out large projects in which monthly expenses will differ drastically depending on how far the project is, they usually add project expenses and operating costs for the annual budget. Then the numbers from each department are compiled to determine the total budget of the company.

bottom -up budgeting is often much more accurate, for a project than a budget from top to bottom, in which the upper level administration determines the amount of money available for each department or project. Yet it is not without errors. If it is not carefully monitored, there is a risk that each department will add additional line items, projects or operating expenditure to provide a pillow department. In cases where each department does, there is a risk of waste.