To motivate the employees about commitments to produce positive results
Cost & Benefit of each activity is analysed regarding allocation of funds.
Involves work measures, benchmarking & unit cost.
Identify the targets and methods of evaluating performance of each unit of an Organization.
Taking into account of Inputs - Resources and Outputs - Services
To be completed within a particular Time frame
Allocation of Funds based on specific goals
Improves Performance in continuous manner
Makes clear Program Goals/Objectives/Fixing targets for performance
Justifies - Reallocation of Resources on the basis of Performance.
Higher transparency & accountability to Taxpayers
Better Cost estimation enables to allocate Funds to various projects by their importance.
Focus more on Targets, not on means of achievement
Focus more on Quantity, not on Quality.
Data may be manipulated to reach targets to get Funds
Becomes ineffective without a Proper system of Accounting & Reporting
In Govt Organizations like Indian Railways with multiple agencies, disagreement may arise on Spending priorities.