Hi Rajiv,
Your requirements can still be met utilizing the configuration of the EhP5 Enterprise Compensation Management functionality. If you set up the budget structure as I recommended above and set your guidelines to 5%, then you can utilize PECM_GENERATE_BUDGET to generate the budget based on the org structure and each manager will have a budget amount based on the exact pay of each employee in his/her organizational unit.
Several advantages in utilizing the new "bottom-up budgeting" that is available in EhP5 - one is that the BAdI HRECM00_BDG_EE_G already exists to generate the budget. Second, the budget can be updated to reflect changes due to transfers, terminations, new hires, etc. via PECM_PROCESS_SUPPORT. The budget amount may be changed for a individual as you indicate the General Manager may do via PECM_DISPLAY_BUDGETS.
Thus, all the functionality you are seeking is available in the standard ECM processes. It does take a bit of configuration effort, but once done, the overall budget amounts will be available to top management and each individual manager will have ability to see the budget amount and the exact affect of any amounts awarded during the pay review process.
Paul