ZBB--a new skill for the financial manager.

: Zero-based budgeting (ZBB) is a management decision-making tool currently gaining wide acceptance. ZBB is a budgeting approach which is useful for planning, controlling and coordinating financial and human resources. It involves the re-evaluation of all budgeted activities in terms of priorities established by the management. The traditional process of incremental budgeting differs from ZBB in that only the planned changes are evaluated in the former. In incremental budgeting, the base budget is considered authorized and required little attention. The ZBB process focuses on the whol budget. This is accomplished by: (1) identifying decision units; (2) evaluating each decision unit in terms of performance, costs, benefits, and alternate means of accomplishiing the objectives; (3) ranking the decision packages; and (4) preparing a budget for the highest priority decision packages. The effect of the ZBB approach is that new high priority programs may be funded by eliminating or reducing existing lower-priority programs. ZBB is viewed as a logical process which can combine many of the elements of good management.