Hager, J.Yadavalli, Venkata S. SarmaWebber-Youngman, Ronald C.W.2015-08-282015-08-282015-06Hager, J, Yadavalli, VSS & Webber-Young, R 2015, 'Stochastic simulation for budget prediction for large surface mines in the South African mining industry', Journal of The Southern African Institute of Mining and Metallurgy, vol. 115, pp. 531-539.0038-223X (print)2225-6253 (online)http://hdl.handle.net/2263/49628This article investigates the complex problem of a budgeting process for a large mining operation. Strict adherence to budget infers that financial results align with goals. In reality, the budget is not a predetermined entity but emerges as the sum of the enterprise’s operational plans. These are highly interdependent, being influenced by unforeseeable events and operational decision-making. Limitations of stochastic simulations, normally applied in the project environment but not in budgeting, are examined and a model enabling their application is proposed. A better understanding of budget failure in large mines emerges, showing that the budget should be viewed as a probability distribution rather than a single deterministic value. The strength of the model application lies with the combining of stochastic simulation, probability theory, financial budgeting, and practical scheduling to predict budget achievement, reflected as a probability distribution. The principal finding is the interpretation of the risk associated with, and constraints pertaining to, the budget. The model utilizes a four-dimensional (space and time) schedule, linking key drivers through activity-based costing to the budget. It offers a highly expressive account of deduction regarding fund application for budget achievement, emphasizing that ’it is better to be approximately right than precisely wrong’.en© The Southern African Institute of Mining and Metallurgy, 2015BudgetingStochastic simulationProbability theoryFinancial budgetingPractical schedulingSouth African mining industryBudget predictionEngineering, built environment and information technology articles SDG-04SDG-04: Quality educationEngineering, built environment and information technology articles SDG-08SDG-08: Decent work and economic growthEngineering, built environment and information technology articles SDG-09SDG-09: Industry, innovation and infrastructureEngineering, built environment and information technology articles SDG-12SDG-12: Responsible consumption and productionEngineering, built environment and information technology articles SDG-17SDG-17: Partnerships for the goalsArticle