Stuart Comments:
Budgeting is normally based on the previous years’ operating costs with either a slight increase or decrease based on the replacement cycle for equipment. If your company has accurate records of costs in previous years, then expenses have a track record that indicates what the next year’s expenses should be, within a reasonable amount. Year-to- year figures provide a trend to follow. If you have a budget and are reasonably close to it, then you could be operating efficiently, but should never stop the aggressive drive to lower costs.
In reality, there is a place for budgeting, benchmarking and predicting maintenance for lowering operating costs. The question is how management handles it is when actual expenses vary from predictions. The issue is really how we can work together to be the low-cost provider and maintain a safe and productive fleet. There needs to be an understanding that benchmark or budget figures may not be achievable. Those numbers should be seen only as a guide, a prediction and a plan.
Perhaps a better word for benchmarking is defined as, “to have charge of, direct, administer; the act, art, or manner of managing, or handling, controlling, directing; skillful managing; careful, tactful treatment; skill in managing; executive ability.” In short, don’t spend time trying to benchmark when a sound budgeting process is more informative and instructive. Manage the budget, not to the budget or benchmark.
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