Being a budget manager or a budget officer of a medium-sized property management firm can be a real challenge because there are simply a lot of things to consider. According to Shim and Siegel (2009), “the first step in creating budget is to determine the overall or strategic goals and strategies of the business, which are then translated into specific long term goals, annual budgets, and operating plans” . If there will be a particular aspect of budget management that I want my property managers and budgeting staff (assuming that I have been appointed as the General Manager of a prominent property management company) to focus on, this will be it—the first step.
I would first enlighten them about the real purpose of budget management. According to Shim and Siegel (2009) the fundamental purpose of budget management is to show to the corporate stakeholders that the current lineup of officers have the capability to make both ends meet (the income and expenses) and that they can communicate such findings easily without having to have a masters or a doctorate degree in financial management. Additionally, I would want my budget officers and staff to be educated about the essential characteristics of effective budgeting.
According to Shim and Siegel (2009), these are: 1. Predictive Ability; 2. Clear channels of communication, authority, and responsibility; 3. Accounting-generated accurate, reliable, and timely information; 4. Compatibility and understandability of information; and 5. Support at all levels of the organization: upper, middle, and lower. As the general of the property management firm, these are the key information that I wish to impart and instill to the minds of my subordinates, even forcefully if necessary. I also would want them to follow a standardized format in presenting the respective budget reports for the buildings they are assigned to manage. It is important to note early at this point that the format that will be presented below is dynamic and can be changed over the course of the next fiscal years. Every year, all building property managers will have to attend a meeting with the general manager so that they can discuss the things that they can do to improve the budget management processes implemented the previous fiscal year. This way, we can ensure that the firm continuously improves its budget management processes and mechanisms, preparing it to handle larger budget responsibilities along the process.
In the property management budget formal below, each property management’s report will be divided into four: one for each quarter. We have decided to try a budget management approach that computes for the expenses on a per-quarter rather than on a per-month basis in order to give the property managers a considerably amount of time to consolidate all expenses. This is also due to the fact that most property management processes recur on a quarterly rather than on a monthly basis. Another reason why we decided to present the information on a per-quarter basis is because most corporate organizations prefer to do it this way in order to communicate the corporation’s outcome to its shareholders better . Rarely have we seen, in the entire time that we have reviewed corporate annual reports, corporations that list down their expenses and budget management forms on a per-month basis.
As the current general manager of the firm, I will release a filled-out budgeting form using the format below. That filled-out form which will be given to all property management heads contain information stating how much they are allowed to spend for every particular aspect of property management. For example, if the value of $100,000 is placed in the bonuses section under the 1st Quarter column that means that project managers are only allowed to spend up to that stated amount for employee bonuses and that anything in excess to that amount would be considered unconstitutional as described in the company’s by-laws and budgeting standards. The same principle applies to all other areas we failed to use as an example.
At the end of each quarter and ultimately at the end of every fiscal year, each property or building manager will be asked to submit a copy of their overall expenses using the same format below. The task of the general budgeting manager’s office by then would be to determine whether all property managers successfully made both ends meet or if there were a few of them who failed (i.e. they did not follow the budget allocation released by the general manager’s officer prior to the start of the fiscal year). It is important to note that each property manager is given the freedom to focus on spending for a particular aspect of the property or building they are assigned to manage using the budget allocated for the miscellaneous fund. The individual project managers can use this and only this part of the budget given to them any way they want to. For example, they can spend it on bonuses, on the beautification of the property, or any aspect of property management that they think needs additional attention.
Shim, J., & Siegel, J. (2009). Budgeting Basics and Beyond. John Wiley and Sons Inc.
Walkden, M. (2014). A to Z of Corporate Communication. Report Watch.