Budgetary slack

Budgetary slack is the deliberate inclusion of an easier performance margin, such as understating achievable revenue or overstating necessary cost. It can protect managers against uncertainty or increase the chance of earning a bonus, but may distort resource allocation and conceal capacity. Distinguish deliberate bias from an evidence-based allowance for risk or normal loss. Review incentives, information asymmetry and negotiation practices rather than assuming every conservative forecast is dishonest.