Zero-base budgeting

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Zero-base budgeting (ZBB)

Budgeting method that disregards the previous year's budget in setting a new budget, since circumstances may have changed. Each and every expense must be justified in this system.

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 ?
But Beckett also pointed to Texas' early adoption of zero-base budgeting, which, unlike traditional budgeting, has departments start at zero and then justify their spending requests.
In the '70s, Garland embraced zero-base budgeting as a way forward, and jurisdictions today can do the same.
Because finances vary each year, zero-base budgeting helps to achieve the optimum value from available funds from year to year.
Still, because costs can be hard to contain, many campus managers are zero-base budgeting their food operations by focusing on student needs.
Back in the 1970s, Zero-base budgeting (ZBB) was very much in the news.
The zero-base budgeting process maximizes the fact-to-guess ratio.
Zero-base budgeting in budgeting management: A manual for librarians.
When using zero-base budgeting (ZBB), a government builds a budget from the ground up, starting from zero.
Prudent financial policies include a capital set-aside of the income tax, the accumulation of sinking funds for bond repayment, the use of zero-base budgeting, and a five-year expenditure forecast.
There have been many efforts in the private sector to mitigate the limitations of budgeting, such as zero-base budgeting and activity-based budgeting.
Other methods to sustain improvements include providing incentives to meet objectives (43%) and strict zero-base budgeting (27%).
Phoenix' Comprehensive Program Budget Review builds on the existing budget process, which since 1977 has been a modified zero-base budgeting process.