An Assessment of Zero-Based Budgeting to Protect the Leakage of Finance in Government and an Organizational Development.

A zero-base budget requires managers to justify all of their budgeted expenditures, rather than the more common approach of only requiring justification for incremental changes to the budget or the actual results from the preceding year. Thus, a manager is theoretically assumed to have an expenditure base line of zero (hence the name of the budgeting method). In reality, a manager is assumed to have a minimum amount of funding for basic departmental operations, above which additional funding must be justified. The intent of the process is to continually refocus funding on key business objectives, and terminate or scale back any activities no longer related to those objectives. Zero-Based Budgeting is a broad-reaching cost transformation effort that takes a "blank sheet of paper" approach to resource planning. It differs from traditional budgeting processes by examining all expenses for each new period, not just incremental expenditures in obvious areas. Zero-Based Budgeting forces managers to scrutinize all spending and requires justifying every expense item that should be kept. It allows companies to radically redesign their cost structures and boost competitiveness. Zero-Based Budgeting analyzes which activities should be performed at what levels and frequency and examines how they could be better performed-potentially through streamlining, standardization, Outsourcing, off shoring or automation. The process is helpful for aligning resource allocations with strategic goals, although it can be time-consuming and difficult to quantify the returns on some expenditure, such as basic research. [ABSTRACT FROM AUTHOR]