The Triple Budget

Three budgets are better than one

A budget is an estimate – an educated guess – a target for the year ahead. Yet there is enough detail required that it seems more concrete than it really is. Therein lies one of the key challenges – how do you make your best guesstimate? And how do you defend it to management, finance and the budget reviewers?

I’ve found that 3 budgets are better than 1. Now I hear you starting to whine about tripling the time it takes to come up with the budget but hear me out – it might save you time in the long run.

Work out the following 3 scenarios:

  1. Baseline operations – what is the minimum required for your department to function and do good quality work? Nothing less and nothing more.
  2. Realistically raise the bar – now add in key improvements that will help your team do a better job toward a key metric. What additional investment (i.e. time and/or money) needs to be made to guarantee these improvements? The key here is to focus. You want to see a measurable difference. So be optimistic AND realistic. Create a solid plan to ensure the success you want. One more thing — choose wisely. It’s best if your goals align with the strategic goals of the organization.
  3. Aim high, Hit high! – finally reach higher. Can you add a stretch goal? Is there a new procedure you’d like to try? Take on a new task? Experiment with a new technology? What additional resources will be needed?

With a triple budget, you have a range from worst case to best case. This gives you a reality check — a framework to evaluate the numbers. Each scenario will have incremental cost and gain. If not, your estimates may need adjusting.

Best of all, you will be ready to discuss your plan with the people who have the ability to invest in you. Speaking from experience, I will always invest more in the individuals who have a well thought out plan and can articulate the risk/reward of it. Although you may not get your best case investment (because the funds simply aren’t available), you will certainly get the admiration of management as a creative, competent employee.

by Marilyn Marchant, MS, CPHIMS

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