Zero Based Budgeting

(redirected from Budgeting, Zero-Based)

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 ?
We displayed satisfactory or good performance in all areas under this pillar, which reflects the many efforts such as performance- informed budgeting, zero-based budgeting, and the budget priorities framework, we made in the recent years to improve the budget formulation process.
They must also have a basic understanding of incremental budgeting, zero-based budgeting, and responsibility-centered budgeting.
Let's look at the fictional case study of Great Wall Cellars to compare and contrast conventional budgeting, zero-based budgeting (ZBB) and activity-based budgeting (ABB).
The variations on performance management have included organization development, management by objectives, total quality management, reinventing government, quality circles, performance budgeting, investment budgeting, zero-based budgeting, integrated product teams, business process reengineering, statistical process control, cutback management, public-private competitions, and strategic planning.