ZERO BASE BUDGET
Description - A budget that requires management to start at zero and estimate all expenses as a new operation.
Strength - Forces a comprehensive analysis of business priorities and needs for resources.
Weakness - Difficult and time consuming to prepare.
Typical usage - Organizations focusing on cost reduction and evaluating efficiency.
ZBB is especially encouraged for Government budgets because expenditures can easily run out of control if it is automatically assumed what was spent last year must be spent this year.
features:-
Zero-Base Budgeting (ZBB)
Activities are re-evaluated each time a budget is formulated.
“De nova budgeting” - Budgeting without any reference to any base-past budgets and actual happening.
“How much” BUT “Why’ it needs to spend.
Participation of all level in decision-making.
Individual unit object are linked to corporate targets.
Quick budget adjustment can be made if, during the operating year cost are required to maintain expenditure level.
Purpose:-
- ZBB based upon premise that service and overhead levels can be changed without reducing over all service mission
To provide through evaluation of every function as to priority and mode of service delivery
Establish “decision packages” which permit budget decisions based upon value of the service rather than cross the board reductions
ZBB produces performances standards against which functions are measured throughout the year.
Description - A budget that requires management to start at zero and estimate all expenses as a new operation.
Strength - Forces a comprehensive analysis of business priorities and needs for resources.
Weakness - Difficult and time consuming to prepare.
Typical usage - Organizations focusing on cost reduction and evaluating efficiency.
ZBB is especially encouraged for Government budgets because expenditures can easily run out of control if it is automatically assumed what was spent last year must be spent this year.
features:-
Zero-Base Budgeting (ZBB)
Activities are re-evaluated each time a budget is formulated.
“De nova budgeting” - Budgeting without any reference to any base-past budgets and actual happening.
“How much” BUT “Why’ it needs to spend.
Participation of all level in decision-making.
Individual unit object are linked to corporate targets.
Quick budget adjustment can be made if, during the operating year cost are required to maintain expenditure level.
Purpose:-
- ZBB based upon premise that service and overhead levels can be changed without reducing over all service mission
To provide through evaluation of every function as to priority and mode of service delivery
Establish “decision packages” which permit budget decisions based upon value of the service rather than cross the board reductions
ZBB produces performances standards against which functions are measured throughout the year.