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.
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References in periodicals archive ?
"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.
Gajrawala noted that Zero Based Budgeting for the old A-B business is in place from January 1st.
A big negative can also be losing your zero based on a change of ammo.
Summary: Guntur (Andhra Pradesh) [India], June 2 (ANI): The Andhra Pradesh government on Saturday launched a Zero Based Natural Farming (ZBNF) scale-out scheme, aimed at benefitting around six million farmers by 2024.
SINCE the council service cuts started in 2008, Middlesbrough Mayor Ray Mallon, with the support of the Labour Group, has steadfastly refused calls to carry out a top-down zero based annual budget.
Where I fundamentally disagree with Ray Mallon and the Labour Group on Middlesbrough Council is that they will still not apply a zero based budget approach to every departmental expenditure using a top down policy to protect priority public services.
Cllr Walker said the council had missed an opportunity in not doing a zero based budget review of all the council's services and activities.
The reason I objected to this latest increase is because I believe that if all major spending departments had carried out a zero based budget for 2009/2010 the need to inflict this crippling 4.6% increase on the residents of Middlesbrough would have been greatly reduced.