5.5 Program Budgeting

The proliferation of project-based organizations has necessitated the organization of budgets in a manner that more closely conforms to the actual pattern of fiscal responsibility. With the traditional budgeting methods, the budget for a project may be spread over different organizational units. Consequently, it was very difficult establish control and determine the actual amount of major expenditures. The need to rectify this problem led to the creation of program budgets. In program budgeting, income and expenditures are aggregated across projects or programs. This aggregation usually is in addition to aggregation that is done across organizational units. Each project has its own budget that is divided by task and the expected time of completion (Merdith and Mantel, 2003).