projects with similar actual costs adjusted for the current ones, overheard, projectreserves, and profit figures have to be contributed for bottom-up approach.
Some of the advantages of bottom-up budgeting is its perceived accuracy sincethe elements are more detailed. There is also the benefits pitched in with participativemanagement, and the difference in opinions can be resolved since the people outside theofficials are involved.
But it also has its own perceived disadvantages. First, it is time consuming andthe initial requests are not realistic. Second, the process has an inherent bias forincreasing expenditures as all new programmes, or expansion of existing programmes,are financed by new requests. There is no system for reallocation and there are no pre-set spending limits. Finally, it is difficult to reflect political priorities as it is a bottom-upexercise with the budget “emerging” at the end of this process.
Bottom-up approach in the Philippines
In the past, local government units, through their local development councils were required to formulate Public Investment Programs (PIPs) as required by Title Six,Section 109 of the Local Government Code of 1991 (RA 7160). These plans are thensubmitted to regional development councils for consideration for the nationalgovernment agencies' budgets. However, in such a system, the PIPs often arrive too lateto be integrated in the national budget, most often arriving in July when the Presidentalready submitted the General Appropriations Act to Congress by June.
In his visit to Tacloban City, Secretary Florencio Abad of the Department of Budget and Management announced the adoption a bottom-up budgeting approach forthe budget preparation process, as opposed to the conventional top-down process.
Thisapplication is in line with the goal of the current adminisatration to reduce poverty rateincidence in accordance to some of the United Nation’s Millennium Development Goals(MDGs) by 2015.
Organization for Economic Cooperation and Development (2008).
Performance Budgeting: A Users’ Guide.
Retrieved at: http://www.oecd.org/governance/budgeting/40357919.pdf 3 Blondal, Jon. (2003).
Budget Reform in OECD Member Countries:Common Trends.
Retrieved at: http://www.oecd.org/gov/budgeting/43505551.pdf 4 Official Gazette (2012).
Bottom-up approach defines 2013 process.
Retrieved at:http://www.gov.ph/2012/01/19/bottom-up-approach-defines-2013-budget-process/5 Philippine Information Agency (2012).
Feature: The ‘Bottom-Up’ approach for 2013 budget preparation process.
Retrieved at: http://r08.pia.gov.ph/index.php?article=1141329193496