The zero-based budgeting system is a budgeting system that requires every item of expenditure to be justified as if a particular activity or program is taking off the first time.
The following are stages involved in zero-based budgeting systems
- Identification of decision unit/tasks and formulating operational plans
- evaluating the whole budget into decision packages based on decision units/tasks to which cost are assigned
- Ranking in priority the decision packages covering the activities, both new and existing in a competitive manner
- Determination of cut off point, to choose the packages which can be included and those to be rejected, and
- Prioritization/selection of the packages, to highlight the ones which fit in with the available resources