Performance budgeting is a budget that reflects the input of resources and the output of services for each unit of an organization. This type of budget is commonly used by the government to show the link between the funds provided to the public and the outcome of these services.
Performance budgeting was designed as an improvement on incremental budgeting. It is based on incremental line-item budgeting but incorporates efficiency measures into the budgetary process. Middle managers must list not only the specific expenditures on various line items but also basic operational activities in relation to money spent.
The benefits of performance budgeting are that it provides information to managers on the activities of a given unit enables managers to assess the efficiency of a given department/agency or office/branch over different years enables managers to compare the efficiency of different bureaucratic units and apportion funding accordingly.
The main weaknesses of performance budgeting are that efficiency ratings are rudimentary because they measure bureaucratic activity quantitatively rather than qualitatively not all bureaucratic activities are easily quantifiable.
Performance budgeting was designed as an improvement on incremental budgeting. It is based on incremental line-item budgeting but incorporates efficiency measures into the budgetary process. Middle managers must list not only the specific expenditures on various line items but also basic operational activities in relation to money spent.
The benefits of performance budgeting are that it provides information to managers on the activities of a given unit enables managers to assess the efficiency of a given department/agency or office/branch over different years enables managers to compare the efficiency of different bureaucratic units and apportion funding accordingly.The main weaknesses of performance budgeting are that efficiency ratings are rudimentary because they measure bureaucratic activity quantitatively rather than qualitatively not all bureaucratic activities are easily quantifiable.
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