Financial Management as Tool for Management Development of Engineers

Abstract

One of the most effective means of developing engineers as managers is to encourage their active involvement in key decision‐making areas linked to the financial implications of engineering operations. Performance budgeting is one technique that can help to achieve this objective through holding engineers, as line managers, responsible for preparing and managing the operations budget. This paper describes how increasing awareness of financial issues is aiding overall management development in the national water‐supply authority in Sri Lanka. By compiling budgets in operational terms, the cost implications of such management options as reducing unaccounted‐for water, increasing water production, and increasing new connections can be quantified. Results to date show that the authority is being managed much more cost‐effectively, with actual expenditures, for example, being less than 2% above budget compared to 12% prior to the introduction of performance budgeting. The various training approaches being used are summarized, and the importance of management upgrading in the context of the overall development of the institution is emphasized.