Zero Bases Budgeting (ZBB)
Most of the budgets are prepared on the basis of budget of previous time periods. The budget tend to lean on continuity, so that, the individual preparing the budget makes decisions on the basis of the previous year’s budget and must justify any added expenditures that are to be made in the current budget. Such a process usually builds a bias towards continuing the same activities year after year, assuming that the past expenditure must have been justified. This process is especially harmful when there have been changes either in the environment factors or in the organisational objectives. Zero-level budgeting seeks to remedy this deficiency. The budget is constructed from a zero base, as if it was the very first budget of the organisation. With each new budget, there should be a justification for every amount spent, starting from scratch. The organisational plan is broken down into departmental, functional and local plans and programme and these various programmes are given relative priority on the basis of evaluation of purpose, costs, benefits and any other consequences.