Aicp Budgets And Project Managment

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budget

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The allocation and expenditure of funds to provide service to the public. A budget serves to set spending priorities.

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operating budget

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This budget includes everyday expenditures of an organization, such as supplies, personnel, and maintenance of office space.

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capital budget

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A one year budget that includes long-term purchases, such as a new building, recreation center, water main, or major equipment.

A Capital Improvements Program (CIP) is a longer range (5-10 year) look at the capital needs of a community. A CIP includes project descriptions, estimated costs, construction timelines, and sources of funding.

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Line-item Budgeting

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Emphasis placed on projecting the budget for the next year while adding in inflationary costs.

Pros: Does not require any evaluation of existing services; easy to prepare and justify.

Cons: Lack of flexibility and a lack of relationship between budget requests and the objectives of an organization. This tone year budget has a short-term focus and is not linked with strategic, comprehensive, or capital improvement plans. It lacks focus on programs, looking at individual expenditures rather than how those expenditures fund programs and/or the results of those programs.

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Planning, Programming, Budgeting Systems (PPBS)

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Type of managment focused on planning through accomplishing goals set by a department.

Pros: This method helps departments place their programs in perspective and evaluate efforts and accomplishments.

Cons: Time-consuming to prepare and requires that goals and objectives be stated in measurable terms. For example, a department may evaluate the number of permits that are issued per month rather than the satisfaction of applicants.

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Planning, Programming, Budgeting (PPB) includes the following components

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•Budget organized by program areas (includes program mission statements, objectives, and indicators of success);
•Long-range planning of goals, programs, and required resources;
•Policy analysis, cost-benefit analysis, program evaluation.

PPBS has limited success because of its heavy information requirements and the incompatibility of program format with control mission.

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Zero-Base Budgeting (ZBB)

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This budget emphasizes planning and fosters understanding within all units of an organization.

Pros: Requires a department to consider every aspect of its operation and concentrate on why it does things the way it does. This is also the disadvantage, because it is time consuming to justify every activity.

Cons: Has limited success because of its intensive information requirements and limited benefits to managers.

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Performance-based budget

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This budget is focused on linking funding to performance measures. For example, funding could be tied to the amount of time it takes to process plat applications or building permits. Meeting performance goals results in funding increases.

Pros: Helps departments develop and evaluate performance standards.

Cons: Time-consuming to prepare and requires that goals and objectives be stated in measurable terms. For example, a department may evaluate the number of permits that are issued per month rather than the satisfaction of applicants.

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Performance-based budgeting includes the following components

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This type of budgeting includes the following components:

•Use of traditional function/object budget;
•Performance information on workload, productivity, outputs, and outcomes;
•Performance and spending may be linked through cost analysis, and program evaluation

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Financing: Pay-As-You-Go

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This type of financing uses current funds to pay for capital improvement projects

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Financing: Reserve Funds

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These types of funds are ones that have been saved for the purchase of future capital improvements

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Financing: General Obligation Bonds

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These bonds are voter-approved bonds for capital improvements. GO Bonds use the tax revenue of the government to pay back the debt

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Financing: Revenue Bonds

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These bonds use a fixed source of revenue to pay back the debt. For example, revenue bonds could be issued to pay for a new water main. The debt would be paid back through the water use fees. Revenue bonds are commonly used to finance utility improvements and special facilities, such as baseball stadiums.

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Financing: Tax Increment Financing (TIF)

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This type of financing allows a designated area to have tax revenue increases used for capital improvements in that area.

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Financing: Special Assessments

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This type of assessment allows a particular group of people to assess the cost of a public improvement.

For example, in Columbus, Ohio, the City has a plan to have every street lit by 2020. Property owners are offered the option of having regular street lights for free or ornamental street lights at their expense. In the latter case, all of the property owners on the street are assessed a fee to pay for the ornamental street lights.

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Financing: Lease-purchase

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Lease-purchase allows a government to “rent-to-own.” The benefit is that the government does not have to borrow money to finance the acquisition of a major capital improvements.

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Financing: Grants

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Grants allow for all or a portion of the cost of a public facility to be paid for by someone other than the local government. Grants are available from all levels of government, private sector, and foundations. Typically, grants require a match from the local government.

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Taxes: Progressive

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The tax rate increases as income rises. For example, the federal income tax system taxes those with high incomes a higher tax rate than those with low incomes

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Taxes: Proportional

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The tax rate is the same regardless of income. For example, a property tax rate is the same regardless of the price of your home. A person who owns a $50,000 home pays the same proportion as a person who owns a $250,000 home

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Taxes: Regressive

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The tax rate decreases as income rises

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When considering the implementation of a tax there are several criteria that should be considered:

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Fairness, Certainty, Convenience, Efficiency, Productivity, Neutrality

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Cost-benefit analysis

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This type of analysis estimates the total monetary value of the benefits and costs to the community of a project(s) to determine whether they should be undertaken. Typically, this is used for public projects such as highways and other public facilities.
Originated by the French engineer Jules Dupuit in 1848.

In the United States, cost-benefit analysis became common as a result of the Federal Navigation Act of 1936. This act required that the U.S. Army Corps of Engineers undertake waterway system projects when the total benefits exceed the costs of the project

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Cost-effectiveness analysis

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A method for selecting among competing projects when resources are limited, was developed by the military.

For example, if a community has $50,000 to spend on park improvements then several different projects can be prepared, such as adding playground equipment or purchasing a new lawn mower.

The cost-effectiveness ratio is CE Ratio = (cost new strategy - cost current practice)/(effect new strategy – effect current practice

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Goals Achievement Matrix (GAM

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A comprehensive way to evaluate a project. The GAM is a chart that shows the anticipated attainment of a project’s goals and the assignment of accomplishing a goal to a group

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Gantt Chart

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Developed in 1917 by Charles Gantt. This chart focuses on the sequence of tasks necessary for project completion. Each task is represented as a single horizontal bar on an X-Y chart. The X-axis is the time scale over which the project will endure. The length of each task bar corresponds to the duration of each task. The relationship usually shows dependency, where one task cannot begin until another is completed

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Linear Programming

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A project management method that attempts to find the optimum design solution for a project. This system takes a set of decision variables within constraints and comes up with an optimum design solution.

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Program Evaluation and Review Technique (PERT)

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A scheduling method that graphically illustrates the interrelationships of project tasks. PERT is a good choice when precise time estimates are not available for project tasks.

U.S. Navy developed this method in the 1950s and it is now used widely in the defense industry. The PERT planning process involves the following steps:
• Identify the specific activities and milestones;
• Determine the proper sequence of the activities;
• Construct a network diagram;
• Determine the critical path;
• Update the PERT chart as the project progresses.

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Critical Path Method (CPM)

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a tool to analyze a project. The analysis results in a “critical path” through the project tasks. Each project task has a known amount of time to complete and cannot be completed before the previous one is completed. The longest pathway is the critical pathway

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PERT and CPM

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PERT and CPM work when a project is of a large-scale. Typically, project management software is used to perform this kind of analysis. Over time these two methods evolved and are now considered one method, PERT/CPM.