Zero-Base Instead of Last Year Plus
Explain when zero-based budgeting is more useful than incremental budgeting for resetting cost structure.
A rolled-forward budget protects the past. A zero-based budget tests whether the past still deserves funding. Why incremental budgets drift Incremental budgeting is fast because it assumes the prior structure is mostly right. That convenience becomes a risk when the business has changed but the cost base has not. The old spend becomes the starting point, so the debate narrows to whether the category gets three percent more or five percent less. What ZBB forces Zero-based budgeting makes each manager justify the activity and the level of spend from the ground up. The strongest justification is not "we had it…
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