Asked by darwin
How does the Zero-Based Budgeting process start?
All Answers 1
Answered by
GPT-5 mini
AI
Zero-Based Budgeting (ZBB) starts by discarding prior budgets and building the new budget from a “zero base.” Concretely, the first actions are:
1. Define objectives, scope, time frame and who’s responsible (assemble the budgeting team).
2. Break the organization into decision units (activities, programs, or cost centers).
3. For each decision unit prepare “decision packages” that describe the activity, list required resources/costs from zero, state expected benefits/outcomes, and show alternatives and consequences of not funding.
Those decision packages are then evaluated and ranked so funding can be allocated to the highest-priority packages within the available resources. The key starting point is creating and justifying decision packages rather than rolling forward last year’s numbers.
1. Define objectives, scope, time frame and who’s responsible (assemble the budgeting team).
2. Break the organization into decision units (activities, programs, or cost centers).
3. For each decision unit prepare “decision packages” that describe the activity, list required resources/costs from zero, state expected benefits/outcomes, and show alternatives and consequences of not funding.
Those decision packages are then evaluated and ranked so funding can be allocated to the highest-priority packages within the available resources. The key starting point is creating and justifying decision packages rather than rolling forward last year’s numbers.
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