What Is Zero-Base Budgeting?

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Offline Sultan Mahmud Sujon

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What Is Zero-Base Budgeting?
« on: April 12, 2017, 09:29:55 PM »
Imagine that you're planning a household budget. You probably begin by compiling a list of all your expenses and estimating how much you spend on each one. You prioritize the necessities, such as monthly mortgage payments, groceries, fuel, clothes, and utilities, but you also want to plan for other costs, like dining out, gifts and holidays.

You can use the same principle when you prepare a budget for your team, department or organization, and this is called "zero-base budgeting." It is the process of compiling all your expenditure from scratch, rather than looking at what you can cut from or add to your previous year's budget.

In this article, we'll look at what zero-base budgeting is, we'll identify its advantages and disadvantages, and we'll explore the role that managers play in implementing it.