The Zero-Based Budget (ZBB) approach allows top-level strategic goals to be implemented into budgeting process by tying them to specific functional areas of the organization, where costs can be first grouped, then measured against previous results and current expectations.
Should be developed upon a thorough analysis of projected workload and costs, activity based and not developed exclusively from historical expenditure or to meet any imposed financial requirements and should be prepared at the level of each cost center.
Following the budget, the organization have to follow-up the maintenance costs:
- To ensure costs are within original plan
- To identify where costs can be reduced
- Provide value for money
- To remain competitive - Optimum cost per unit of throughput
See Also
Zero-based Budgeting: What it Is, Steps to create It & ExamplesWhat are the benefits and challenges of using a zero-based budgeting approach for your operating budget?Grant Cardone Swears by the 40/40/20 Rule: ‘I Guarantee You’ll Create Wealth for Yourself’Zero-Based Budgeting (ZBB) | Key Elements, Pros and Cons