Other Budgeting Terms:

Direct costs are expenses that can be traced directly to a specific construction activity, task or
project. These costs are the building blocks of any construction project, forming the foundation
upon which the entire financial structure is erected. Direct costs are often referred to as project
costs.

Indirect costs are not directly attributable to a single construction task or project. Instead, they
support the overall project environment, playing a critical role in its successful execution.
Indirect costs are often referred to as overhead costs or operating expenses.

Controllable costs are considered when the decision of taking on the cost is made by one individual.
Common examples of controllable costs are office supplies, advertising expenses, employee bonuses,
and charitable donations. Controllable costs are categorized as short-term costs as they can be adjusted
quickly.

Non-controllable cost is an expense that is not within the sphere of control of a manager. The cost may
be controllable at a higher level of the organization, but it is not controllable from the perspective of the
person in question. For example, a manager cannot alter his own salary.

Fixed cost is referred to as the cost that does not register a change with an increase or decrease in the
quantity of goods produced by a firm. Fixed cost is referred to as the cost that does not register a
change with an increase or decrease in the quantity of goods produced by a firm.

Variable costs are costs that change as the quantity of the good or service that a business produces
changes. Variable costs are the sum of marginal costs over all units produced. They can also be
considered normal costs. Fixed costs and variable costs make up the two components of total cost.

Performance Appriasal:

What are the purpose of a performance appraisal? Performance appraisals are used to review the job
performance of an employee over some period of time. These reviews are used to highlight both
strengths and weaknesses to improve future performance.

1. The primary purpose of performance appraisals is to provide feedback to employees about their
work performance,
2. identify strengths and weaknesses
3. set goals for improvement
4. and provide a basis for making decisions about promotions, raises, and other job-related
matters.

Types of performance appraisal tools

Pitfalls in Performance Appraisal

1. Halo Effect- Appraisng based on simgle characteristics

2. Horn Effect- the raters bias is in other direction, where one negative quality of employee is
being treated harshly
3. Leniency Effect- Based on raters own mental make up at the time of appraisal, raters may be
treated leniently
4. Stringency Effect- Based on raters own mental make up at the time of appraisal, raters may
be treated very strict.
5. Recency Effect- the rater gives geater weighstage to recent occurences than earlier
performance.
6. Primary Effect ( first impressions)- the appraiser’s first impression to the candidate may colour
his evaluation of all subdequent behavior.
7. Central tendency Effect- an alternative to the leniency effect. Which occurs when the
appraisers rate all employers at average performance.
8. Stereotyping- is a mental picture that individual holds about the persons because of that
persons age, sex, religion and etc.

Effective Performance Appraisal- An effective performance appraisal system provides consistent,

reliable, and valid data to help the management make strategic decisions. It furnishes data according to
the goal that serves the purpose of performance appraisal and succession planning.

Coaching as Part of the Performance Appraisal Process- Performance coaching, also known as high-
performance coaching, is an ongoing process that aims to improve an employee's performance in the
workplace. It's not about giving advice or being an expert though – it's about providing support as a
performance coach, sharing feedback, and encouraging continuous improvement.

Performance coaching can help identify an employee's growth, as well as help plan and develop new
skills. Using their coaching skills, supervisors evaluate and address the developmental needs of their
employees and help them select diverse experiences to gain necessary skills.
Performance Management- What is Performance Management? An ongoing, continuous process of
communicating and clarifying job responsibilities, priorities, performance expectations, and
development planning that optimize an individual's performance and aligns with organizational strategic
goals.

'Performance management' describes the attempt to maximise the value that employees create. It aims
to maintain and improve employees' performance in line with an organisation's objectives. It's a not a
single activity, but rather a group of practices that should be approached holistically.

All five component processes (i.e., planning, monitoring, developing, rating, rewarding) work together
and support each other, resulting in natural, effective performance management. Effective employee
performance management encompasses the five key components presented above.