![]() ![]() ◊ All activities are justified on cost benefit considerations ![]() ◊ It weeds out wastage and inefficient units resulting in reduced costs and better productivity ◊ It ensures optimum use of financial resources The resources should be adequate enough to meet the requirements of the selected alternatives. (iv) Funding – The availability of resources of the organization is kept in mind and allocation of resources to various decision units is made. Ranking can be done by the following approaches or combinations of them – Judgmental approach, Comparison approach, Delphi method, voting approach. (iii) Ranking of priority – Decision packages are ranked by operational, departmental or executive managers on the basis organizational needs, availability of funds and other related factors. (ii) Preparation and development of decision packages – Formulation of decision package is a set of documents which identify and describe activities of the unit in such a way that management can evaluate and rank them against others competing for limited resources and decide to approve or disapprove it. ![]() They should have a meaningful identification and evaluation.The amount of expenditure, scope, direction and quality of task are bases to justify a meaningful decision unit. (i) Identification of decision unit – Decision units are identified in terms of responsibility centres. Zero Based Budgeting involves the following steps – → It sets priorities in respect of different activities and re-deploys the resources accordingly. → It reviews critically both existing and newly proposed activities. Managers have to justify that a project is essential and of high priority. → It deals with all aspects of budget requests of managers. → It reviews a project from `scratch’ on an assumption that noting is to be allowed. He defined Zero Based Budgeting as “an operating, planning and budgeting process which require each manager to justify his entire budget request in detail from scratch and shifts the burden of proof to each manager to justify why he should spend any money at all.” Features of Zero Based Budgeting Zero Based Budgeting was originally developed by Peter A Pyhrr at Texas instruments. ![]()
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