Zero Based Budgeting


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Zero Based Budgeting

A system of budgeting where each department or division of a company must justify all expenditures and allocations rather than simply increases over the previous fiscal year. That is, the budget is made with every department starting at zero dollars to spend, and each department must demonstrate need for what it wants to receive. Zero-based budgeting is advantageous because it is more detail-oriented than other forms of budgeting; among other things, it makes it easier to detect and eliminate over-inflated budgets. On the other hand, zero-based budgeting is more difficult and time consuming to put together and often has a bias toward departments that directly produce revenue instead of departments like R&D.
References in periodicals archive ?
The GFOA has some excellent resources and consulting assistance on alternative approaches such as budgeting for outcomes and zero based budgeting.
Gajrawala attributes this to higher contributions from ABI's much-vaunted Zero Based Budgeting and procurement savings.
We believe there is upside to cost savings guidance from Zero Based Budgeting (ZBB) on top of G&A savings within Blue Ocean, as well as procurement savings.
State policymakers regularly consider budget reform measures such as performance based budgeting and zero based budgeting.
Concepts such as Zero Based Budgeting and Management By Objectives were once put forward as models, but their popularity faded slowly.