Define and discusses top down and bottom down budgeting for project management, and also the different types of project networks. Includes APA formatted references.
Project management involves expectations and outcomes. It is crucial that a project manager is able to establish a budget in order to meet the expectations of the client and generate the anticipated outcome. Budgets are defined as "cost estimates that have been approved by management and formally established for cost control" (Dinsmore & Cabanis-Brewin, 2011). Managing the budget during a project is key since resources are generally limited and must be optimized. There are two approaches of budgeting: top-down and bottom-up. These approaches use different methods and have different risks and opportunities.
Top-down budgeting is the most widely used approach in contemporary project management. In this form of budgeting, all directions come from the top, beginning with establishing project objectives by the top management. Top management is responsible for providing direction, guidelines, information and plan to project participants. The advantages of top-down budgeting include the ability of top management to handle all budget allocations completely. This ensures that the budget remains on track as specific accounting processes are followed. This is an effective method for ensuring the project has clear direction and is aligned with the organization's goals and resources. However, top-down budgeting can lead to ambiguity, resulting in a higher chance of project failure, unless there is open and clear ...
This solution discusses top down and bottom up budgeting and project networks for project management. Includes APA formatted references.