Zero-based budget

Theoriginoftheconcept

Theideaof​​zero-basedbudgetingoriginatedin1952.AmericanWayneLewisproposedabudgetinginhisarticle"NewExplanationofBudgetingTheory"Newargumentsin

Whenpreparingpublicexpenditurebudgets,whatcriteriaormethodsareusedtodeterminetheallocationofacertainamountoffundstodepartmentAinsteadoftodepartmentB,andtodepartmentAbutnottodepartmentB.MaybeWhatarethedifferentresults.Hebelievesthatonlythrough"non-traditionalmethods"canthisproblembesolved.Andthis"non-traditionalcompilationmethod"isthezero-basedbudgetingmethodthatwasformedlater.

Historyofdevelopment

Inthe1960s,theDepartmentofAgricultureoftheUnitedStatesFederalGovernmenttriedtoimplementzero-basedbudgetinginthisdepartment,butultimatelyfailed.

In1970,thepersonnelresearchdepartmentofTexasInstrumentsintheUnitedStatessuccessfullyusedthezero-basedbudgetingmethodindepartmentalbudgeting.Sincethen,alldepartmentsofthecompanyhavesuccessfullyadoptedzero-basedbudgetingwhenpreparingbudgets.Subsequently,zero-basedbudgetingwasfirstwidelypromotedintheprivatesectorintheUnitedStates.SoontheUSfederalgovernmentdecidedtousezero-basedbudgetinginthepublicsector,andGeorgiabecamethefirststategovernmentintheUnitedStatestoadoptazero-basedbudgetingmethod.

In1979,CarterwaselectedPresidentoftheUnitedStates,andthefederalgovernmentfullyimplementedthezero-basedbudgetingmethodtopreparepublicsectorbudgets.Manystategovernmentshavefollowedsuit.Thezero-basedbudgetingmethodhasemergedandspreadrapidlyintheUnitedStates.Afterthat,thegovernmentsofsomeothercountriesintheworldalsoadopteditoneafteranother.

Zero-basedbudgetingshowedadownwardtrendinthelate1980s.In1993,theUSCongresspromulgatedthe"GovernmentPerformanceandResultsAct"andbegantoadoptanewperformancebudgetingmethod.

Traditionalbudgeting

Methodsteps

1.Theextrapolationmethodextendsthepastexpendituretrend(ortheexpenditureamountofthepreviousyear)tothenextyear.

2.Increasetheamountasappropriatetoadapttotheincreaseinlaborcostsandrawmaterialcostscausedbyrisingwagesandrisingprices.

3.Increasetheamountagaintomeettheadditionalbudgetexpendituresrequiredtomodifytheoriginalplanandmodifytheoriginaldesignplan,usuallyreaching30%ormoreoftheoriginalbudgetinthisregard.

Substantialassumptions

1.Eachexpenditureitemofthepreviousyearisnecessaryandnecessarytoachieveorganizationalgoalsandtasks.

2.Eachexpenditureitemofthepreviousyearstillneedstobecontinuedinthenextyear,anditismorenecessarythanothernewplansornewprograms.

3.Eachexpenditureitemofthepreviousyearwasimplementedinthemostcost-effectivemanner.

4.Eachexpenditureitemofthepreviousyearwillstillbeneededinthenextyear.Atbest,someadjustmentsareneededtothelaborcostandrawmaterialcost.

Resultsandimpact

Accordingtosuchstepsandsuchassumptions,thebudgetpreparedwillinevitablyhavetheaforementioneddangeroustendencyandthefollowingresults:

1,Atthebeginningofeachbudgetyear,eachunitwilladdanadditionalamountbasedontheactualexpendituresofthepreviousyear.Aftercleverdecoration,itwillbesubmittedtothetopleadershipforapprovalasanewplan;

2,theleaderinchargeofbudgetapproval,Knowingthe"moisture"inthebudget,butbecauseIcan'tfullyunderstandthesituation,Ihavetocutdown30%(ormore)regardlessofthegoodandthebad,andthenstartaquarrelprocess;

3.AfterawhileAftertime,thebudgetpreparationiscompleted.Almostalltheapplicantshavealotofopinions,andeveryonefeelsthatthismethodmustbereformed,butyearafteryear,thereisstillnotmuchimprovement;

4.ThisindiscriminateslashingmethodmakesExperiencedfinancialpersonneldeliberatelycreatebudgetsthatgreatlyexceedactualneeds,sothattheycanmeettheirneedsaftera“cut”,butthosewhomakebudgetshonestlyarecomplaining.Fortunately,Ihaveeatenabit,gainmywisdom,andIwilllearntobehavewhenIre-engineermybudget.Asaresult,itisnothingmorethanencouragingsubordinatestodeceivesuperiors.Inresponsetotheproblemsoftraditionalcompilationmethods,BeterA.PyhrrofTexasInstrumentsintheUnitedStatesproposedtheconceptof"Zero-BaseBudgeting"(ZBB)in1970.U.S.governmentdepartments,especiallytheGeorgiastategovernment,firstadoptedZBBandachievedresults.Subsequently,businessorganizationsalsoadopteditaccordingly.

Zero-basedbudgeting

Themodernbudgetingworkisgraduallyformedafterthevictoryofthebourgeoisrevolutionandwiththeestablishmentofthemodernbudgetsystem.

Inthe17thcentury,Britaincompiledtheworld'sfirstnationalbudget.Bythe20thcentury,mostcountrieshadestablishedanationalbudgetingsystem.Inthemeantime,thebudgetingmethodhasalsoundergonemanychanges.Sincethecontentoftheearlygovernmentbudgetwasrelativelysimple,thebudgetpreparationadoptedaverysimple"functionalbudgetingmethod."

Withthetremendousdevelopmentofsocialproductivity,thecontentofgovernmentbudgetshasgraduallyincreased.Inordertomeetthisneed,arelativelycompletebudgetprocesshasbeengraduallyformed,includingmodernbudgetingmethods,suchas"Planningandperformancebudgetingmethod"(performancebudgeting),"projectbudgetingmethod"(projectbudgeting),etc.Quiteafewcountriesaroundtheworlduse"Zero-basedbudgetingmethod"(zero-basedbudgeting).

Algorithmsteps

Zero-basedbudgetinghasthefollowingfivesteps:

1.Divideanddeterminethegrass-rootsbudgetunits.Itisagrassrootsunitthatcanindependentlyprepareabudget.

Theso-called"budgetunit"isnotequivalenttoaunitinthesenseofdailylife.Toputitbluntly,itreferstoplaces,departments,projects,activities,etc.thatneedmoney.Howtodeterminethebudgetunit?Thedesignerofthezero-basedbudgethasnotmadehardandfastrules.Thekeyistoseeatwhichlevelthebudgetisprepared.Afterthebudgetunitisdetermined,thenextstepistomakeapackageofdecisions.

2.Compilethecostbudgetplanoftheunit

Theenterpriseproposestheoverallgoal,andtheneachgrassrootsbudgetunitstartsfromtheoverallgoaloftheenterpriseanditsownresponsibilitygoal,andpreparestheunitasThecostbudgetplantoachievetheabovegoalsmustspecifythepurpose,nature,functionoftheproposedproject,andtheamountofexpensestobespentintheplan.

3.Performcost-benefitanalysis

Afterthebasicbudgetunitclicksonthe"BudgetAnnualBusinessActivityPlan",afterconfirmingthebusinessitemsthatneedtobecarriedoutduringthebudgetperiodandtheirexpenses,Themanagementcomparesandanalyzestherequiredcostsandbenefitsofeachproject,weighstheseverity,distinguishesthelevels,drawsoutthelevels,andselectsthepriority.Thebusinessprojectsofgrassrootsbudgetunitsaregenerallydividedintothreelevels:thefirstlevelisnecessaryitems,thatis,itemsthatmustbecarriedout;thesecondlevelisneededitems,thatis,itemsthathelpimprovequalityandefficiency;thethirdlevelisimprovementItemsofworkingconditions.Thepurposeofcost-benefitanalysisistodeterminethereasonabledegree,sequenceandimpactofthebudgetaryunit’sexpendituresonthebusinessactivitiesoftheunit.

4.Reviewtheallocationoffunds

Accordingtothelevel,levelandorderofthebudgetproject,accordingtothefundsavailableduringthebudgetperiodandtheirsources,accordingtothepriorityorderoftheprojects,allocatefundsandimplementthembudget.

5.Prepareandexecutethebudget

Afterthefundallocationplanisdetermined,theofficialdraftofthezero-basedbudgetwillbeformulated,whichwillbeissuedforimplementationafterapproval.Intheimplementation,thedeviationfromthebudgetshouldbecorrectedintime,inspecialcircumstances,itshouldbecorrectedintime,andthereasonshouldbefoundoutwhenthereisaproblemwiththebudgetitself,andtheexperienceshouldbesummarizedtoimproveit.

Advantages

1.Conducivetoimprovingemployees'awarenessof"input-output".

Zero-basedbudgetingobservesandanalyzesallbusinessactivitiesstartingfrom"zero",anddoesnotconsiderpastexpenditurelevels.Therefore,itisnecessarytomobilizeallemployeesofthecompanytoparticipateinbudgeting,whichmakesunreasonablefactorsCannotcontinuetokeep,reducewastefromthebeginningoftheinput,throughcost-benefitanalysis,improvetheoutputlevel,sothattheawarenessofinputandoutputcanbeenhanced.

2.Itisconducivetothereasonableallocationoffunds.

Eachbusinessundergoesacost-benefitanalysis.Whethereachbusinessitemshouldexistandtheamountofexpendituremustbeanalyzedandcalculated,calculatedcarefully,andactwithinthelimitsofability,sothatthelimitedfundscanflowtoproductiveProject,theallocatedfundscanbemorereasonable.

3.Itisconducivetogiveplaytothecreativityofgrassrootsunitsparticipatinginbudgeting.

Inthepreparationprocessofzero-basebudget,theinternalsituationoftheenterpriseiseasytocommunicateandcoordinate,theoverallgoaloftheenterpriseismoreclear,andthepriorityofmulti-businessprojectsiseasytoreachaconsensus,whichhelpstomobilizetheinitiativeofgrassrootsunitstoparticipateinbudgetpreparation,Enthusiasmandcreativity.

4.Conducivetoimprovingthelevelofbudgetmanagement.

Zero-basedbudgetinggreatlyincreasesthetransparencyofthebudget.Theheadcountandspecialfundsinbudgetexpendituresareclearataglance.Thephenomenonofquarrelsbetweenalllevelsmaybealleviated,andthebudgetwillbemorerealisticandaffordableIntermsofcontrol,thepreparationandexecutionoftheentirebudgetcanbegraduallystandardized,andthelevelofbudgetmanagementwillbeimproved.

Disadvantages

Althoughzero-basedbudgetinghasmanygoodinnovationscomparedwithtraditionalbudgetingmethods,therearestillsome"bottlenecks"inpracticalapplications.

1.Sinceeverythingstartsfrom"zero",thezero-basedbudgetingmethodisusedtopreparealargeworkloadandrelativelyhighcost;

2,stratification,rankingandfundingWhenassigning,theremaybesubjectiveinfluences,whichmayeasilycauseconflictsbetweendepartments;

3.The"priority"ofanyunit'sworkitemsisrelative.Overemphasizingtheprojectmaybethatthepersonnelconcernedonlyfocusonshort-termbenefits,Ignoringthelong-terminterestsoftheunitasawhole.