Bottom-Up Budgeting: Disadvantages

The major disadvantage of bottom-up budgeting is the reduced role played by top management in the initiation and control of the budgeting process. In other words, the impetus for developing project budgets must now come from lower level managers, while top management's role is limited to analyzing individual budgets presented to them. Such a reduction in top management's role in the budgeting process has the potential to create a significant divide between the strategic thrust and the operational level activities in the organization. It is for this reason that bottom-up budgeting approach is less popular. The budget is the most important control tool for the project organization. Consequently, senior level mangers are reluctant to relinquishing control to inexperienced junior level mangers and personnel. In addition, budgetary game playing by junior levels managers of overstating their budget requirements is yet another disadvantage of bottom-up budgeting. The bottom-up approach can also be a time-consuming process for top management due to the repetitive fine-tuning, adjustments, and delay associated with budget re-submission.