Periodically, you and your division officer
should discuss the division’s progress toward the
division’s goals. And every year before submitting
your budget, you should decide on where to focus
your energies in the coming year. Do the
strengths, weaknesses, opportunities, and threats
analyses for your division. This is the first step
in preparing your budget.
ESTABLISHING. —You and the division
officer have now identified the areas of your
division that require attention. Now you should
prioritize your goals. Obviously, high-priority
items will need the greatest resources and
attention. This is where you and the division
officer need to make some sound decisions.
If at all possible, have your subordinates
contribute to the planning during this stage.
Present what you and the division officer perceive
as problems and let the subordinates present
solutions. Subordinates are closer to the work and
may identify additional problems and alternatives
that you and the division officer may have over-
looked. This process lets the subordinates become
involved and personalizes the goals.
You and the division officer should evaluate
the problems and proposed solutions. Select the
best solution for each problem and re-prioritize
the goals if required. Place your goals in writing
and post them where your subordinates can see
them. Communication of goals and priorities is
extremely important to your success.
At this point you know what you want to do,
how you want to do it, and the priority you have
set. You should now budget time, materials,
people, and costs to meet your goals. This is the
second step in preparing the divisional budget.
The third step in preparing your budget is to
examine recurring cost. You should be able to
produce a fair estimate for the cost of necessary
supplies, repair costs, and so forth, that have
occurred over the last 3 years. The supply officer
can supply the information required.
The fourth step in preparing your budget is
to combine the cost of reaching your goals with
your recurring costs. You are now ready to submit
your budget request to the department head.
Goals, objectives, recurring costs, and priorities
should be outlined to provide the department head
with the ammunition required to achieve the
desired level of funding for the coming year.
You and the division officer should reevaluate
your goals after the command has decided on
funding. Unfunded goals and objectives may
require initiative and resourcefulness on your part
if they are to be achieved. The importance
of establishing your divisional goals has been
achieved. You now have set a course of action
and a method to measure your progress.
MONITORING. —The final step of the
budget process is to use the budget to monitor
divisional progress throughout the year. Monitor-
ing is important because it lets you know when
to shift resources. Monitoring can be done by any
number of control types or methods, such as feed-
forward, concurrent, feedback, inventory control,
or quality control.
Types of Budgeting
Two types of budgeting are in use in the Navy.
You will find it useful to use both types in
estimating your annual budget.
INCREMENTAL. —Incremental budgeting is
the primary budget used by the Navy. You have
a certain amount of money as a beginning budget
and then increase the amount of money received
in later years. A good way to visualize this type
of budget is to think of the budget as increasing
by the amount of inflation each year. The
incremental factor could be tied to growth,
operating schedule, increase in personnel, or any
number of factors that may increase (or decrease)
the amount of funds budgeted.
In your budget, the incremental method of
budgeting would apply to your recurring cost. As
the cost of inflation drives up the cost of
consumable and repair parts, your budget would
increase to match inflation.
ZERO-BASED. —The Navy uses zero-based
budgeting when figuring the cost of major
material purchases, such as a ship or airplane.
Congress authorizes and appropriates the money
in the first year, and then the Navy is able to make
a draw against the account to pay for work being
done. This type of budget eliminates worry that
an authorized purchase will not have appropriated
money in follow-on years.
In general, zero-based budgeting is starting
from zero every year and figuring out the cost of
doing business in the coming year. The dis-
advantage of this type of budget is the great deal
of time and accuracy required to perform
economic forecasting analysis so that all expenses
can be predicted.
You should use this type of budgeting for one
time expenses. The divisional goals and objectives
4-4
