MATRICIAL BUDGET IS THE BEST OPTION FOR YOUR PROJECT? WHAT IT IS, BENEFITS AND HOW TO USE

MATRICIAL BUDGET IS THE BEST OPTION FOR YOUR PROJECT? WHAT IT IS, BENEFITS AND HOW TO USE

WHAT IS?

The matrix budget or matrix analysis is an instrument of strategic business planning, which aims to guarantee the goals set by management at the operational level.

This methodology is used in the preparation, monitoring and control of the budget based on the PDCA. It is applied in the steps of planning, acquiring activities and monitoring the budget matrix.

Its goal is to reduce costs by means of a detailed analysis of the current situation, identification and implementation of best practices.

This type of budget has been gaining more and more adepts, mainly due to the ease in the elaboration and the crossed and objective vision provided by the analysis.

HOW TO USE?

The method has this name exactly because it is derived from an array, where we have the axes:

Packages: In this axis we will have the groups of revenues, expenses, costs or investments of the company;

Entities: Entities already represent the subdivisions of the company (physical or virtual) such as business units, cost centers or departments.

                                                         Figure 1: Unit Matrix x Expense Packets

Source: Treasy - Planning and Controlling

The most common is to use matrix analysis for budget and expense control, but its concepts fit perfectly the other areas of planning and budget, such as revenues, costs, investments, for example.

BENEFITS

Detailed examination of expenses: expenses are grouped (packages), detailing the data, homogeneous groups.
Specific reduction goals for each management: each department has reduction goals according to its need. It offers challenges that are compatible with the earning potential of each area.
Focus on specific points: some expenses by their own nature and dimension of value already have a specific control within the companies.

It presents effective systemic vision of monitoring and control of expenses.

Can be used in organization of any size or profile.

Improved data quality.

Implementation of changes and improvements in the resource management process, through cross-control of expenses and revenues.