A quick note on budgeting ...

Posted on November 9, 2018 by Noon van der Silk

In “The Oregon Experiment”, the authors consider the following budgeting scenario.

Suppose you’re in the following situation: You have ~$2,500,000 that you’d like to allocate to construction projects in your community.

There are many ways you can allocate this money to projects of varying sizes. Consider the following options:

Option 1 - All projects considered equally

category
number of projects
rough total cost based on averages
A < $1000
1
$500
B $1000-$10,000
1
$5,000
C $10,000-$100,000
1
$50,000
D $100,000-$1,000,000
1
$500,000
E > $1,000,000
1
$2,000,000
totals
5
~$2,600,000

Option 2 - Projects considered unequally

category
number of projects
rough total cost based on averages
A < $1000
1000
$500,000
B $1000-$10,000
100
$500,000
C $10,000-$100,000
10
$500,000
D $100,000-$1,000,000
1
$500,000
E > $1,000,000
⅒ th of a project
$500,000
totals
~1100
$2,500,000

Option 3 - A middle ground

category
number of projects
rough total cost based on averages
A < $1000
500
$250,000
B $1000-$10,000
50
$250,000
C $10,000-$100,000
10
$500,000
D $100,000-$1,000,000
1
$500,000
E > $1,000,000
1
$1,000,000
totals
~550
$2,500,000

The main conclusion is that, for the same amount of money, we can chose to either support lots of small projects, or few total projects.

One of the main premises of the book, is that good change is made locally, by locals. In this way, schemes 2 and 3 are a significant improvement over Option 1.

One of the best initiatives that Victoria is doing along these lines is the “Pick My Project” program.

However, I think it’s also interesting to think about this in relation to other areas: