The Stimson Company

1. What are the management control problems that The Stimson Company (TSC) is attempting to address with its use of project budgets?

2. The 3 purposes of budgeting: planning, coordination, and motivation. Evaluate how well the project budgets at TSC are achieving these purposes. Provide an overall conclusion regarding TSC's approach to developing and using project budgets.

3. "Not all of the budgets set by sales engineering are tight. They should be a target to shoot for; an incentive for superior performance, so we are motivated to search for creative solutions to our problems." Discuss this comment in the context of financial performance targets and the different purposes of budgets. Do you agree or disagree with Steve's position? Would your opinion change if project leaders were given input into the initial estimating process?