2. ZBB “ ZBB is a technique which compliments and links the existing planning, budgeting and review processes. It identifies alternative efficient methods of utilizing limited resources in effective attainment of selected benefits. It is flexible management approach which provides credible rationale for reallocating resources by focusing on the systematic review and justification of the funding and performance levels of current programmes or activities.”
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4. ZBB Process: The managers at all levels have to determine the objective of each programme of activity that they supervise and prepare alternative spending plans as ‘decision-packages’. There should be at least three, if not more, of such packages; one involving expenditure, or the minimum expenditure which will permit the programme to be continued meaningfully, another package indicating resources in men, materials and money which will be needed to continue the present levels of performance and objectives, and a third package to indicate what more could be achieved if additional funds were available to the extent of (say) 10% or more.
5. ZBB (Cont…) The executives at the next higher level have then to consolidate these decision packages and rank them in order of priorities, keeping in view the cost benefit analysis and availability of funds.
6. ZBB “ In the 1970s, there was a proposal for “ZBB” which involved analyzing each responsibility center’s expenses from scratch. Some economists also criticize starting with the current spending levels; they disparage this as “incremental budgeting”. Experience has shown that starting from zero is not practical in the time available for budget formulation, nor is it necessary in view of the ongoing nature of most activities.” - Pg. 382, “Budget Preparation”, Management Control System, by Govindarajan & Anthony.
