It makes zero sense to me either, yet it is an omnipresent influence in who gets tasked to what in my work. At my level, I do not know anyone who endorses it, they merely react to it.
Think of it the other way: If you have been given a $1 million budget, as a manager, your job is to purchase $1 million of Useful Stuff.
The rank above you has decided "we need $1 million of software, go buy that." They don't know exactly how much stuff costs, so they use a dollar value as a rough proxy.
If, as manager, you cut corners to save money, you're doing the wrong thing. They want the software! They don't to keep want the money, that's why it was allocated in the budget. Go buy us more Useful Stuff!
That's the paradox that causes the problem, perhaps paradox is not the correct term, conflicting view points?.
From above(the manager of the program) the job is to budget the funds thriftily and fairly, each project getting the amount it needs.
From below(the team working on the project) this feels like you are punished if you are able to save money and rewarded when you waste money.
I suspect this is probably the major problem with having a more command orientated economy. While it should be fairer(free market economies are notoriously unfair). The inversion in incentive hurts performance.