DEVELOPING OF DECISION SUPPORT SYSTEM FOR BUDGET ALLOCATION OF AN R&D ORGANIZATION

Abstract

The problem of optimizing fund allocation in the public sector through performance based budgeting is a complex process. This paper considered only a very small part of this process, namely the final allocation of public funds through goal programming technique. While analyzing the last nine years of budget data in an R&D organization, it is inferred that there is wide gap between fund utilization and its allocation. The paper proposes a performance based model to assist decision makers in assessing the R&D programmes of an organization and accordingly make budget allocation in a more realistic and accurate manner than before. The model has been finally implemented using Excel spreadsheet and the same can be used as a DSS (Decision Support System) for the performance-based allocation of public funds. This study has made an approach to assess the influence of priority and risks associated with R&D programmes using Fuzzy Set Theory (FST). In the present scenario of economic context, optimum utilization of public funds requiring optimum public fund allocation is a dynamic and complex process. The problem of optimizing expenditure in the public sector was first discussed in early 1990s especially in the U.S.A. Various models of performance based budgeting were developed and implemented from then. Given the complexity of the operational context, public funds allocation is difficult to optimize(1).This paper addresses the problem of public fund allocation in an R&D organization using a performance based goal programming model with fuzzy logic . Performance based budgeting has been emerged as a tool for optimizing the public funds allocation. It has been widely employed in several OECD countries. Performance budgeting focuses on results rather than inputs compared to traditional budgeting. It helps managers to have more confidence in their policy making decisions. Here we develop a decision support system to implement performance based budgeting to improve the existing fund allocation in the concerned R&D organization. The organization of this paper is as follows: First section provides an introduction to Performance based budgeting and the problem addressed in this paper. The second section gives a short review of the literature referred. The third section describes the problem identified. The methodology is described in detail in the fourth section. A case study is included in the fifth section.Section six summarizes the study in a brief manner. 2. LITERATURE REVIEW This section deals with a brief review of researches conducted in the area of decision making in order to identify the approach and tool to be adopted in the work. The literature shows several applications of goal programming (GP) and fuzzy logic techniques. It is seen from the literature that GP has been the most widely used multi- objective technique in management science. Among the different risk analysis techniques, the application of Fuzzy Set Theory (FST) to risk analysis seems appropriate from the review of literature conducted.