Zerobased budgeting or zbb, is an emerging budgeting technique, which is introduced with the aim of coping with the demerits of the traditional budgeting system. Key start for every planning process is to define where we are and where. A zero based budget simply means that every dollar of your income is assigned to an expense item. Zerobased budgeting zbb is a method of budgeting in which all expenses must be justified for each new period. Zerobased definition is having each item justified on the basis of cost or need. Zerobase budgeting zbb is a budgeting process that asks managers to build a budget from the ground up, starting from zero. Zerobase budgeting concepts and examples city of san diego. The goal of this paper is to define what zbb means in current practice.
It can precisely define the university management and promote budget reforms with the. Hence, the purpose of this study was to investigate the application of zero based budgeting zbb as a management tool for effective university budget implementation in. With a new lease on life powered in part by digitization, zero based budgeting zbb is getting a hard look from companies that see its extremely detailed approach to budgeting as an opportunity to capture operational efficiencies, stimulate growth, and boost performance. Zerobase budgeting is a term which has caught the imagination of many politicians and. Zerobased budgeting zbb1 first rose to prominence in government. Pdf the attempt to mitigate budget implementation problem in university of calabar. Budgeting for your nonprofit united way december 16, 2015. All expenses are judged and must be justified in order to remain in the budget. Rather than the previous years budget being the starting point for the next budget, a zerobased budget assumes no activities. Zerobased definition of zerobased by merriamwebster. Incremental budgeting or traditional budgeting or annual budgeting is a way of making the budget on the basis of the previous budget with adjusting it adds or subtracts based on. Zerobased budgeting is a method that has you allocate all of your money to expenses, savings and debt payments. Zerobased budgeting, or zbb, is a rigorous budgeting process that requires every dollar of every expense to be justified even if the expense has been occurring for many years.
Zerobased budgeting the purpose of the zerobased budget analysis is to assess individual programs against their statutory responsibilities, purpose, cost to provide services, and outcomes achieved in order to determine the efficiency and effectiveness of the program and its activities. Zero based budgeting meaning, steps, advantage, disadvantage. Zerobase budgeting zbb is a budgeting process that asks managers to build a. Kaduna state to adopt the zbb system, meaning that every. Zerobased budgeting zbb is an open and transparent way of creating a budget, resulting in important insights into consumption. Sarants definition of the zerobase based on the federal training experience is. Except, instead of panicking that theres no money left, there is nothing left over because you planned it that way. Zbb is a budgeting process that allocates funding based. Zerobase budgeting zbb is a term currently used to describe a couple of. Savings can be earmarked and assigned to activities that ultimately boost growth. Zerobased budgeting technique tends to drive administrators to identify mission, relate to. Budgeting from zero each year helps to remove unnecessary cost and create a detailed forecast. The goal is that your income minus your expenditures equals zero by the end of the. Zerobased budgeting zbb is a method of budgeting in which all expenses must be justified.