Step 8: Establish a Budget

Reaching that financial number requires the BCP project team to define resources and financial requirements, verify the validity of each, and discuss each with the Executive Management.

In Europe and North America, one factor operating in favour of implementing a BCP program is that insurance companies now provide rebates for organizations that maintain effective premium BCM programs.

They eventually may mandate the testing of BC procedures before they issue loss of business insurance due to a business or computer outage. Insert into your budget estimate the savings or potential savings in insurance. If the corporate insurance is not applicable in your country, when you are determining the budget for a BC plan, you should take into account the allocation of funds for training, the resources needed to write and test the BC plan. Heighten Executive Management awareness of the critical business function or IT application systems already in place and assess the backup capabilities required to recover within the allotted time.

Define Resource Requirement

 In order to accurately define your BCP requirement as part of the budgeting process, you will need to:

• Define and verify the validity of resource requirements
• Obtain and validate the estimates of financial requirement
• Negotiate resource and financial requirements with the Executive Management

The budget amount is first estimated during the Project Management phase. It should include the initial project operating costs such as attendance of training, engagement of consultants, or purchase of specialized BCP software. The actual budget is then fine-tuned in the Business Impact Analysis and recovery Strategy phases when details of resource requirements are usually generated.

Provide Realistic Budget

 The points to look out for in budgeting are much the same as those for estimating the timeframe. Any increase in the time taken for the BCP project inevitably results in more money being spent. Be careful not to fall into the trap of increasing the number of people working on the BCP project in order to bring it back on schedule.

Putting more people on the job brings with it higher overheads, for example, space, computers, and other equipment, and less productivity per head at least initially as the newcomers have to be given training and need to acquaint themselves with the BCP project.

 Your budget should reflect all the resources required from the start of the BCP project right through to the end. The budget includes the following:

• BCP Training (In-house or public courses)
• Specialized BCP software
• External consultant
• Recovery facility and alternative locations
• Renovation and retrofitting of facilities Upgrading of telephone systems
• Furniture and equipment
• Stationery
• Testing
• External services rendered to support BCP
• Travel and education expenses

The budget from the business units includes:

• Man-hours needed for planning, testing, and maintenance
• Testing expenses
• Resource and material costs

Work Within the Budget Cycle

 Projects are often stopped due to budgetary constraints. No matter how convincing the business case, the required expenditure may not be approved if there is no allocation of funds for the BCP project in the relevant business units‟ budget.

It is of paramount importance, therefore, that the Organization BCM Coordinator lobbies the various business units, during the annual budgeting process, to include appropriate funding for BCP in the upcoming budget.

If the budget was inaccurately developed, you may not get adequate funding or resources to achieve your objectives. Be aware of the corporate budgetary cycle for approval and disbursement of funds. In some organizations, the budget may be carried forward to the next financial year but in others, it would be removed if it is not spent in that financial year.