The Use of Zero-Base Budgeting in Industry: Some Observations

This paper presents an overview and analysis of the utility and effectiveness of Zero-Base Budgeting (ZBB) in industry. We provide a description of Zero-Base Budgeting and some insights into why companies use ZBB. An evaluation of ZBB is provided as well as an identification of the problems facing industrial users. Specific examples of failures and successes in user firms are presented along with an overall assessment of the technique. Finally, we derive conclusions about the effectiveness of ZBB based on an examination of industrial users.