Budget Time: Stretching the truth 2

[controlnovice]

Well, time to do next year's budget for projects.

There are 5 plants total, fighting for the largest piece of pie they can get. A part of this is a review of each plant's DCS system.

Each plant has a Process Control System and each is performing a life-cycle analysis of best time to replace, based on cost, loss of production, and frequency of failures. All are using the same tool, however, the base numbers, such as new system cost (usually estimated $/point), cost of production loss, etc...can change.

I reviewed the analysis tool with another plant who had already completed the analysis. I feel the numbers used were greatly exaggerated and thus, the analysis indicated a change in DCS was necessary much sooner.

Asking the engineer about this, the reply was, "well, we discussed this as a team and really feel they are the best numbers. Plus, when we talked to plant X, their numbers were even higher than ours."

Their new equipment estimates($/point) are 50% more than mine (I have 10 yrs experience in this, and my estimates were within 5-10% actual). Their loss of production number is based on full capacity (but they are only running 50%). And the MTTR for a DCS is 6 months (granted, they assumed worst case - but their fix for worse case was to install a new DCS, not find parts for existing).

I'm really struggling with this. They aren't helping the company any, only themselves (by giving them projects).

If I use 'true' numbers, I don't get project funding because the analysis indicates I can live longer with what I have. If I use 'their' numbers, I'm no better than they.

Talked with my manager about these concerns, the answer was, "they might be able to do that once, but they won't get away with it."

Ya, right. What are the repercussions? Nothing.

Guidance in the next step would help.

______________________________________________________________________________
This is normally the space where people post something insightful.

 

[zdas04]

Your boss was either trying to calm you down or he just fell in from Mars. I fought those sorts of budget battles for 23 years with a major Oil & Gas company and never saw anyone get any part of their anatomy slapped for making up crap on a budget. One time a manager kept a copy of the slides the project team used for authorization. The project was approved and built--costs were 40% over authorization, time was 7 months longer (four month build took 11 months), uplift was 20% of projection. At the post mortem the manager pulled out the original projections and they were compared to actuals. He asked for a detailed report on the differences. The project team side-stepped him for about 3 months and then he transferred to somewhere else. The comparison was never written and the team went on pull this crap time after time.

Budgeting Sucks. Budgeting games suck more. The winner sucks the most.

David

 

[MacGyverS2000]

One would think an email to a few board members (or at least a high up who is held responsible when the budget gets out of whack) explaining how resources aren't being appropriately allotted because certain groups are lying (must use that word to grab more than their fair share of the budget, in essence scamming and/or stealing (more must-use words) from the company.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[JLSeagull]

The next level of approval will either accept or challenge the assumptions. If challenged you need to be able to defend the numbers - else appear foolish. Find projects that the approvers want to lessen the challenges. Budget issues are helped by really great financial assumptions. Tie the projects to safety and most companies find a way to do them.

 

[jmw]

Budgets always have and always will be a problem area.

Not just getting a budget to spend but spending it.

Having inflated the budget request, sometimes simply because whatever is asked for will be hacked back, and received a budget that is either over ambitious or less than enough to start some project or other, come end of the year all sorts of stupid expenditures are made "to use up the budget" otherwise next years budget will be slashed.
The same nonsense often applies to forecasts of performance because sales will know never to forecast poor sales because that just results in grief.

So you have an overinflated budget based on overly confident (nonsense) sales projections.

Then sales start to slip and salesmen are hauled off the road so they can have lots more meetings about why they aren't selling and then they spend more time producing short term (end of the month) forecasts.

Then budgets get slashed and before you know it, people are being laid off.

I think this is all based on management autonomic reflex actions.

JMW

http://www.ViscoAnalyser.com

 

[MikeHalloran]

Well, some of them might have _two_ neurons.



Mike Halloran
Pembroke Pines, FL, USA

 

[djs]

Another issue is that management does not like maintance costs. These are expenses. They do like capital cost as these are not expenses. Makes the balance sheet look good.

End result, throw out the old and in with the new.

 

[GregLocock]

"One would think an email to a few board members (or at least a high up who is held responsible when the budget gets out of whack) explaining how resources aren't being appropriately allotted because certain groups are lying (must use that word to grab more than their fair share of the budget, in essence scamming and/or stealing (more must-use words) from the company. "

Well, that's a fast way to find out how much the organisation values your opinions. Make sure you have another job lined up before you press send.



Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[DRC1]

Sounds like having your kids decide how much allowance they should get.