In the PMI process groups, the Initiating process groups comes before the Planning process group and this is generally considered to be a best practise. However in some organisations, it seems like the Planning is done before Initiating especially when it comes to the budgeting period. Not sure if this is a phenomenon also experienced in other organisations outside of Singapore (do feel free to express yourself in the comments)
What this means is that a lot of high level guesstimates are done in order to decide the amount the amount that should be budgeted for a project — if it really does kickstarted in the first place! Inevitably there will be qute a substantial project buffer due to the lack of preparedness and the need to be have conservative estimates in case the project ends up with insufficient budget. While this may be one way to ensure that the project has sufficient budget and can be executed should it be initiated, it also means that the funds may be inaccessible to other projects that have a much higher chance of being initiated.
This inevitably kicks off a vicious cycle of “budget reservation” where the various stakeholders and potential project sponsors will maintain larger and larger buffers in their proposed projects just to have something in the kitty in the event there is another project that pops up which requires the budget. It does not need to be said that this is not in the best interest of the organisation, but this still happens in many places.
I suppose one way to fix this will be to turn the budgeting process around for these afflicted organisation. Instead of letting the various departments give wild estimates in order to secure a budget, perhaps the head office should assign a budget to the various departments to let them use as necessary. The amount to be budgeted can be based on the cost estimates of previous years. A pool of money should also be kept aside by the head office in the event that some departments really need to utilise funds beyond their alloted budgets. This reserved pool can only be used after the departments present their business case to the head office. I suppose the reserve pool will need to be larger for the first 3 years since this paradigm shift in budgeting may results in some initial cost estimations being off.