Advantage and Disadvantages of Zero Based Budgeting

Advantages

1. Resources allocation is more efficient.

2. Focus attention on values for money and makes clear relationship between output and input.

3. Develops a questioning altitude and makes it easier to identify obsolete as well as inefficient and less cost effective operations.

4. Leads to greater management and staff knowledge of operations.

Disadvantages

1. Time consuming.

2. High skills essential.

3. May encourage wrong impression that every decisions must be made via budgets.

4. Short- term benefits may be emphasized to the detriment of long-term benefits.