A budget process is meant to create cost transparency. In many organizations it destroys exactly the transparency it is meant to create.
The buffer I knew in a budget was usually five to ten percent, in a politically charged environment sometimes fifteen. That is not arbitrary. Whoever plans well needs no huge buffer. But when an organization grabs greedily because of a toxic budget process, you do need one. In both cases there comes a point where you have to say stop.
The bazaar over years
You see the sham exchange in the fact that the negotiation round is anticipated. And not only for the first approval; in multi-year programs also midway through. Once the program is planned and approved, and someone then comes at me with demands for savings, I should at least still have something to give. That small concession shows goodwill. And the stop, when nothing really works anymore, shows professionalism.
The problem with this game: in the end no one knows the true number anymore. One side negotiates down, the other buffers against it, and what began as a transparent cost calculation has become a swap of sham figures. The process has destroyed the very basis on which a board actually wanted to decide.
What an honest budget looks like
For projects and programs, honest means: external and internal are calculated, and not only the setup: also the annual costs and the total cost over five years. In scenarios that connect time, scope and budget. You buffer for the unforeseeable parts of the program, so you do not have to reapply for every stumbling block. The purpose of the buffer is expressly not to appease future rounds of cuts.
That is how transparency about the real costs arises, and only with it do sound decisions between investment alternatives become possible. That is exactly what the process is for.
The test question for your next budget process: does it calculate external and internal, over five years, in scenarios? Or does it merely negotiate down a number that long ago consisted of nothing but buffers?
Negotiating down produces buffering produces false precision. In the end the budget process has destroyed the very cost transparency it was meant to create.