An exceeding budget comes with a lot of problems and sometimes there is a lot that is at stake if the two parties cannot work it out harmoniously.
Sometimes one may make a procurement transaction or even sign a contract after making the budget but end up having a budget that exceeds it.
This may end up getting noticed when the work has commenced and in most cases it is hard to be adjusted because it is something that both parties agreed upon before they could sign a contract.
Fact that the budget is exceeding does not mean that the person is reckless in their expenditure but there could have been a miscalculation somehow somewhere.
levi Logiro, a procurement officer says in such situations, blame games should be avoided and the contractor and supplier should just share the deficit costs so that they can have the work done without any feeling cheated.
What causes it?
He says sometimes that happens because of lack of strict supervision and control of the funds outflow.
“When that happens, it will be hard to account for the money especially if the transactions have been carried out by different people in the company,” says Logiro.
He advises those planning to make the budget and estimate the costs not to assume but go to the markets to do survey and also consult from those who have gone through the same process before having the contract signed.
He says budgeting takes a lot of initiative especially at the initial stages which requires expertise. You can get this from inside the company or get experts from elsewhere just to make sure that everything is in place
What to do when that happens
Faith Amidiong, a procurement officer says this sometimes may have you involve the legal department because it is not any one’s fault and having it adjusted will leave one of the parties suffering to cover up the loses.
She says leaving the problem as it is for a long time causes more loopholes so addressing it as soon as possible saves a lot.
“But for one to avoid being in such situations, a fixed budget should not be an idea to buy. Opt for one that you will regularly update so that market price changes do not affect your expenditure,” says Amidiong.
She further says this sometimes happens at the point when it cannot be fixed but rather the company is left with no choice other than covering the deficit costs in order to have the project completed.