Budgeting Basics and Beyond

11.6. Analysis and Evaluation

R&D analysis involves looking at past, current, and future projects. Each R&D project should be thoroughly analyzed in terms of marketing, production, and distribution. There should be a priority ranking so that the best R &D projects are undertaken, given the limitations of manpower, facilities, and financial resources.

R&D may be related to sales, profits, production, number of employees, labor hours, number of segments, entering new markets, expansion of product lines or services, and diversification attempts. The manager must determine whether the research staff has the technical ability and resources to undertake the project successfully.

The manager should evaluate where R &D funds are being used, how successful the R&D undertakings are by category and type, where additional funding should be placed because of potential opportunities, and where less funding should be made because of unsuccessful and problem programs.

He or she should evaluate R &D on a recurring, periodic basis, such as quarterly or semiannually. Projects having greater uncertainty or risk may be evaluated more frequently, such as monthly. The manager should prepare a project screening report evaluating proposed R &D in terms of marketing, production, technical, safety, and legal and financial aspects. There should be progress points to appraise and track R&D efforts.

Performance standards for research should be used and compared to actual performance. These standards include ...