WHERE DOES ZERO-BASE BUDGETING WORK?

ZERO-BASE BUDGETING REQUIRES A MANAGER TO JUSTIFY EACH ACTIVITY'S PROJECTED LEVEL OF EXPENDITURES IN TOTO, AND NO LEVEL IS TO BE TAKEN FOR GRANTED. MANY PROPONENTS OF ZERO-BASE BUDGETING ARE VERY VOCAL IN STRESSING THE ADVANTAGES IN USING THE TECHNIQUE, BUT THE TECHNIQUE DOES HAVE SOME BAD POINTS. IT WOULD SEEM WISEST TO EVALUATE BOTH GOOD AND BAD POINTS IN DECIDING WHETHER THIS TECHNIQUE SHOULD BE USED BY AN ORGANIZATION AND, IF SO, HOW, WHEN, AND WHERE. THE EXPERIENCE OF THE STATE OF GEORGIA ISOLATED CERTAIN GOOD POINTS OF ZERO-BASE BUDGETING - 1. THE ESTABLISHMENT OF A FINANCIAL PLANNING PHASE PRIOR TO BUDGET PREPARATION, 2. IMPROVEMENT IN THE QUALITY OF MANAGEMENT INFORMATION, AND 3. AN INCREASE IN THE BUDGET INVOLVEMENT OF PERSONNEL AT THE ACTIVITY LEVEL. BAD POINTS INCLUDED - 1. AN INCREASE IN TIME AND EFFORT FOR BUDGET PREPARATION, 2. A CONTENTION THAT THE NEW SYSTEM HAD NOT SIGNIFICANTLY AFFECTED FUNDS' ALLOCATION, AND 3. AN INEFFECTIVENESS OF THE DECISION-PACKAGE RANKING APPROACH TO MEET CHANGES IN FUNDING.