Revising the budgeting model: challenges of implementation at a university

Abstract

Purpose The purpose of this paper is to review the challenges of implementing a new activity-based budgeting model in a university setting. Design/methodology/approach The authors have conducted heuristic inquiry and content analysis to provide an in-depth examination and overview of the process of budget change at a not-for-profit institution. Findings Despite attempts to design a process where resource allocation is guided by principles of revenue generation, cost attribution, measures of quality and fit with strategic plan, overarching issues such as complexities of implementation and a lack of continuity of key personnel made it difficult to implement a new budgeting system. Research limitations/implications As it is a single case study, there may be some concerns regarding reliability and replicability. Subsequent work on a larger scale may mitigate some of these concerns. Practical implications The study demonstrates the challenges of implementing a new budgeting system where strategic choices may differ from revenue generating opportunities and when there has been significant turnover in personnel. The authors provide a perspective on how budgeting can be used to support an organization’s mission in addition to supporting revenue generating prospects, the empirics reinforce the implementation challenges and the need for continuity of key employees to implement change effectively. Originality/value The study suggests a new approach to incentive-based budgeting where resource allocation is informed by a number of activities (revenue generation, cost attribution, fit with strategic goals and quality of programs). It is not formula-driven and it stresses the importance of judgment to determine final resource allocation. Furthermore, the authors provide some support for the change management literature for implementing change in a complex organization.

Implementing responsibility centre management in a higher educational institution

“…The traditional incremental budgeting approach, which slightly modifies historically allocated amounts, may be difficult to justify in a more dynamic environment due to the differential and changing needs across organizational units. In contrast, activity-based budgeting (ABB) “… is a resource-based budget model that focuses on generating a budget explicitly from the activities and resources of the organization” (Kenno and Sainty, 2017, p. 497). A critical requirement of an activity-based model is an understanding of the activities, the resources and the basis for allocating resources and costs.…”

“…A critical requirement of an activity-based model is an understanding of the activities, the resources and the basis for allocating resources and costs. Recently, Kenno and Sainty (2017) documented the challenges of implementing ABB at a Canadian university. Understanding budgeting in HEIs is critical because these institutions are organizations like any other decentralized corporation or public institution and a critical component of society.…”

“…The concept of new public management (Pollitt and Bouckaert, 2000) has been adopted by many public sector organizations across the world (Brignall and Modell, 2000; Christensen, 2011; Angiola et al , 2018), including higher educational institutions (HEIs) (Alach, 2017; Kenno and Sainty, 2017; Mourato and Patrício, 2019). According to Dobija et al (2019), “this … change has often been associated with a rise in new public management and a growth in managerialism in the application of private sector methods within the public sector” (p. 751).…”

“…The focus of our paper is on the TABBS model in terms of its design, development, implementation, enabling mechanisms and challenges. In doing so, it directly builds upon the work of Kenno and Sainty (2017) who studied the implementation of a new activity-based budgeting model at a different Canadian university.…”

An Exploratory Study of Performance-Based Budgeting Practices in Indonesian Private School

“…Other issues related to budgeting such as participation rates, budget gaps, and performance indicators have been the focus of many researchers. These studies are, among others, carried out by [8], [9], [10], [11]. Other researchers have studied the budget by adopting contingent approaches, among others, by [12], [13].…”