![]() It is possible for managers to present pet projects as "necessary" expenses. However, the development of the budget can take time, effort, and additional staff. ZBB may be undertaken as a "rolling process" spread over several years so that only a limited number of departments or business functions are affected each year. Communication between departments can improve by involving employees in decision-making and budget prioritization. Zero-based budgeting encourages companies to evaluate every department's funding, and their current needs rather than the momentum of the previous year's budget or previous expenditure. Pyhrr was appointed by then- Georgia governor Jimmy Carter to manage the state's budgetary process. This enables management to allocate funds by current needs instead of historical expenditures. Under his system, costs are grouped and measured against the previous results and current expectations. Although used at least partially in both government and the private sector, there is some doubt whether ZBB has ever been utilized to its fullest extent in any organization.Īs an accounting manager for Texas Instruments, Peter Pyhrr created zero-based budgeting to help incorporate strategic objectives into the budgeting process by tying them to functional areas. However, the saving comes at the expense of a complete restructuring every budget cycle. The intended outcome is to access the efficient use of resources by determining if services can be provided at a lower cost. This budgeting method analyzes an organization's needs and costs by starting from a "zero base" (meaning no funding allocation) at the beginning of every period. It was developed by Peter Pyhrr in the 1970s. ![]() Zero-based budgeting (ZBB) is a budgeting method that requires all expenses to be justified and approved in each new budget period, typically each year. JSTOR ( December 2020) ( Learn how and when to remove this template message).Unsourced material may be challenged and removed.įind sources: "Zero-based budgeting" – news Please help improve this article by adding citations to reliable sources. This article needs additional citations for verification.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |