5 Important Budgetary Items Needed in a Department-Level Budget

by Bert Markgraf

When all department-level budgets balance and departments keep their expenses in line with budgeted amounts, the company overall meets its projected operating result. Among many possible budgetary items, a departmental manager has to pay special attention to a few major ones, important because the sum of these items for all the departmental budgets represents a large part of a company's overhead expenses. If a manager can prevent overruns in the big-ticket items, his overall budget will come close to balancing.


Paying employee wages and salaries is a large item in the budget of any department. While payroll is a major cost, you can predict the amount with high accuracy. Basic pay is fixed, and pay increases are comparatively small and predictable within a given range. If you have to fire an employee or employees leave, you can hire a replacement at the same salary. While overtime may be a budget factor in some departments, increased overtime usually means more work and higher revenue for the company.


Employee benefits are a smaller budget item but are more variable. You can budget accurately for certain fringe benefits such as company cars or meals, but if your company offers health insurance or similar plans for employees, your broker may impose unexpected premium increases. To meet your budget, you may have to cut the benefits or perks you control to compensate for increases in the cost of other benefits.


You can control IT costs and meet your budget predictions by managing equipment use and replacement. If you lease your computers, the costs are predictable; for example, you may be on a two- or three-year replacement cycle that is included in your budget. Application licensing costs are stable and predictable, and you can manage the unit cost of resources by implementing policies on reducing storage of obsolete data and Internet use.


While fixed-line telephone costs have decreased and alternate technologies such as VoIP further reduce in-office communication costs, the cost of mobile worker communications continues to increase. Smartphones and tablets using large amounts of data are replacing cellphones. The communications budget item in departments with mobile workers is difficult to control. You can manage costs with policies that limit the type of mobile communication plans or services your department will pay for, but you must ensure that such policies don't reduce worker productivity.


Travel costs vary depending on the department's function, but you can manage them by controlling trips. You have to establish the travel that is essential, such as inspections of remote facilities or visits for negotiations of major contracts. You can rank the remaining travel based on the results you expect from the trip. If travel costs rise unexpectedly and threaten to go over budget, you can postpone or cancel travel that is not critical. This allows you to avoid some travel costs completely and push other costs into the budget for the following quarter or year.

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