Zero Based Budgeting

Knowledge Center

12manage is looking for students / contributors...


Description of Zero Based Budgeting. Explanation.


  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print

Definition Zero Based Budgeting. Description.

Zero Based Budgeting is a technique that sets all budgets to nil at the beginning of the year or period and requires from the departments that they justify all of their expenditures, not just those exceeding the budget. Money is allocated to the departments based on merit and not based on the previous year budget plus or minus some percentage such as in many traditional budgeting systems.

Its aim is to achieve is an optimal allocation of resources that incremental and other budgeting systems cannot achieve. Managers are asked to identify and justify their areas of work in terms of decision packages prior to starting the work.

Zero-Base-Budgeting was pioneered in the early 60s at Texas Instruments by Peter Phyrr.

Advantages of Zero Based Budgeting

  • The budget process focuses on a comprehensive analysis of objectives and needs.

  • Planning and budgeting are combined into a single process.

  • Managers must evaluate the cost effectiveness of their operations in detail.

  • Cost awareness and management participation in planning and budgeting is expanded at all levels of the organization.

Criticisms and drawbacks of Zero Based Budgeting

  • The huge amount of work involved.

  • May lead to micro management, offering less time and energy for the things that really matter.

  • Does it really lead to a material shift in the use of resources?

Zero Based Budgeting Forum
  Zero Based Budgeting Website
Would setting up a Zero Base Budgeting website tha...
  The Idea of Zero Based Budgeting (ZBB)
All the above points are true, but lose sight of t...
  Zero Based Budgeting and Day to Day Running Costs
With zero based budget how do you budget for your ...
  Zero Based or Activity Based Budgeting?
If I use an incremental budget at current. Which a...
  Objectives of Zero Based Budgeting (ZBB)?
What are the objectives of Zero Based Budgeting?...
  Involve Middle Management in Budgeting Process
In what ways can middle management in a firm becom...

Zero Based Budgeting Special Interest Group

Special Interest Group


Best Practices - Zero Based Budgeting Premium

Expert Tips - Zero Based Budgeting Premium

Resources - Zero Based Budgeting Premium

Zero Based Budgeting In-depth: Benefits, Limitations, Implementation Issues, Best Practices, ResultsSign up

Brief presentation that introduces Zero-based budg...
Usage (application): Financial Management, Zero Based Budgeting

News about Zero Based BudgetingSign up


Videos about Zero Based BudgetingSign up


Presentations about Zero Based BudgetingSign up


Books about Zero Based BudgetingSign up


More about Zero Based BudgetingSign up


Compare with: Beyond Budgeting  |  Balanced Scorecard  |  Activity Based Costing

Special Interest Group Leader

You here


Return to Management Hub: Decision-making & Valuation  |  Finance & Investing

More on Management  |  Return to Management Dictionary  | 


This ends our Zero Based Budgeting summary and forum.

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2018 12manage - The Executive Fast Track. V14.1 - Last updated: 17-8-2018. All names of their owners.