---
title: "Short note: Budgetary control"
subject: "Project Engineering"
chapter: 6
key: "semester_7/project_engineering:budgetary-control-note"
source: https://www.bctengineer.com/q/semester_7/project_engineering/budgetary-control-note
site: BCT Engineering
---

# Short note: Budgetary control

Project Engineering · Chapter 6: Introduction to Project Financing

- Asked in: 2067 Asar (old course), 4 marks
- Video: [What is Budgeting? | Budgetary control | Advantages & Limitations of Budgeting](https://www.youtube.com/watch?v=INnPo0QPXf4) — Educationleaves
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/project_engineering/budgetary-control-note
- Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-6

## Question

Write a short note on budgetary control.

## Short answer

Budgetary control is a managerial technique where budgets are prepared, actual performance compared, variances analyzed, and corrective action taken. Steps: set objectives, prepare budgets (sales, production, cost, cash, master), record actuals, compare, act. It aids planning, coordination, cost control, and performance measurement, but requires reliable estimates, time, and trained staff; can be inflexible if rigidly applied.

## Answer

**Budgetary control** is a technique of managerial control in which budgets are prepared for the future period, actual performance is recorded and compared with the budgets, variances are analysed, and corrective action is taken.

#### Steps

1. Set the objectives and the budget period.
2. Prepare the budgets for sales, production, cost and cash, and combine them into a master budget.
3. Record actual results.
4. Compare and find the variances.
5. Take corrective action and revise the budgets if needed.

#### Objectives and advantages

- Planning, coordination and control of activities.
- Fixing responsibility and measuring performance.
- Controlling cost, increasing efficiency and profit.

#### Limitations

- Estimates may be wrong, so the budget may not be realistic.
- Needs time, cost and trained staff.
- Can make managers inflexible if used rigidly.
- Does not replace management judgement.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Budgetary control is:
   A. A tax method
   B. A sales method
   C. Technique of managerial control comparing actual performance with budget
   D. A cost cutting only
   Answer: C. Budgets are prepared, actuals compared, variances analysed, action taken. (Key point: Definition)

2. Which step comes right after recording actual results?
   A. Set objectives
   B. Combine into master budget
   C. Revise budgets
   D. Compare and find variances
   Answer: D. Compare actuals with budget to find variances, then take action. (Key point: Steps)

3. A limitation of budgetary control is:
   A. Estimates may be wrong so the budget may be unrealistic
   B. It always replaces judgement
   C. It needs no staff
   D. It is flexible always
   Answer: A. It does not replace management judgement and needs time, cost and trained staff. (Key point: Limitation)

## Related in Project Engineering

- [Budgetary control; objectives, advantages, conditions](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Abudgetary-control-objectives-conditions) — Project Engineering, chapter 6