Incremental budgeting (Option B) relies on historical budget data and makes adjustments based on prior financial performance.

Why Option B is Correct?

Incremental budgeting takes previous years’ budgets and applies incremental increases or decreases based on inflation, cost changes, and expected needs.

It is one of the most commonly used methods in facility management, as FM professionals often base budgets on past expenditures and adjust for expected operational costs.

IFMA’s Finance & Business Core Competency highlights historical budget analysis as a key practice in incremental budgeting.

Why Other Options Are Incorrect?

Option A (Activity-based budgeting): This method allocates budget based on specific activities and cost drivers, rather than historical data.

Option C (Revenue-based budgeting): Revenue-based budgeting ties expenses to projected revenue rather than historical spending trends.