Budgeting for Research and Deveopment.
In some manufacturing companies,a substantial amount of money is spent in research and development.
This cost segment of the operating budget is so unique, so differant from the other areas of the budget, that it demands its
own concideration. Infact for a very basic reason, it demands its own special budgeting approch.(matthews 1976).
Among the problems inherant in R&D budgeting are the following: 1) There is no detailed body of practice and experiance
in R&D budgeting such as that avialable to us in manufacturing cost budgeting or even in service industry budgeting. As
a result, most companies are "cutting and trying" and slowly evolving the procedures that seem best to fit their particular
conditions and needs.
2) Because of the many intangibles involved, it is frequently very difficult to predict the money needs of a specific
developmental programs. You just cannot say with certainty,at the start of the year, in what areas the R&D funds can be
most frutfully spent. As a result, reallocation of money and thus and revisions to the R&D budget can be more important
and numerious then the other parts of the operating budget.
3) Points-of- progress measurments for R&D programs may be difficult to state in objective terms. As a result, it
can be difficult to measure program performance as specific intervals within the budget year and evaluate how effectively
the programs are utilizing there funds.
( In accounting Fraud by Madura ) ---( the IRS has put new restrictions in and has asked for more information of
intangable assets in the last couple of years and this is something to think about when you relate to the what Tinkerbell
thinks they call the corporate formation. ).
4). R&D is a highly tecnical area. Often, it can be an area rife with esoterics that raise fear and doubts
in the minds of managers in other areas such as operations,finance,and accounting,and even in the mind of the cheif executive
officer. As a result, they may doubt the ability to participate in the R&D effort. Also, the R&D manager is placed
high in the organization, as he (or she) should be, and may be even higher in the political structure then some other management
fuctions. In fact, he may be so highly placed that his judgements remain,in effect unquestioned. As a result a real psychological
barriers can exsist against effective inputs to the R&D budget from the managers of other fuctions within the enterprise.
5). The organization of the R&D effort is frequently a combination of indivigual development programs and scientific
disciplines such as the chemestry lab,mettallurgy lab,electronic microscopy,etc. Time and cost reporting of services rendered
by specific disciplines for many progams can be difficult to collect.
6) Top management's time and attention is needed for effective allocation and control of R&D funds. Such time is
always in short supply.
Because of these inherant problems, you find a wide divergence in budget practices between companies,
in the R&D area. For example, in some companies the budgeting for R&D is done by the budgeting that does the rest
of the operating budgeting. In other companies, R&D budgeting is done by a separarte group which reports to the executive
in charge of the R&D. In effect it is self budgeting. In still other companies,R&D budgeting is administerd by
a group under R&D management , but the company budget director and cheif executive officer ( or a delegate)
participate with R&D management in periodic budget reviews.
Some companies do a most primative job of budgeting their R&D effort. They allocate
corporate funds for R&D, and then R&D management simply doles out funds as needed. Program managers are not told how
much is apportioned to their specific programs.
In these cases, there is usually a monthly report that shows for the total R&D effort the monthly budget allowance
by cost account and the actual expenditures.
Some companies go one step futher and apportion the total R&D allocation out to specific programs. A monthly report
of actual expenditures versus budget allowance is then issued to the managers for their indivigual programs.
( So Tinkerbell he wonders hes got the ability to draw the basic nature of his spaceship idea ( the man at the radio
station called them renderings they show some of Tinkerbells ideas and there are diferant stages or aspects of it 1). If you
show them a picture of the space ship airplane on the ground and without gravity containers in its channel hanger is it the
early varient that you are sort of processing for the emergency mission to capture the asteroid with two Christafer Robins
vehicals and a large net that don't have the gravity containers or are you showing the large stage vehical with in its hanger
and has a special jacking and apu operation to see how the systems are fuctioning along with this is the concept of the smaller
training vehicals built to take off or just approch take off speed and then shut down at the end of the twenty mile runway
training and operating and R&Ding its development).
Including this you see you have to concider the mutual relation ships of the various large buildings and their
construction and their design which one, first which one or imput stage is there in the facility as the operations enhances
itself.