Advantages of zero base budgeting

1) it provides a basis for evaluating decision packages on the basis of benefit considerations

2) it reduces inefficiency and achieves high level of effectiveness

3) it is a logical extension of programmer budgeting. Hence the importance is ranking in the order of priorities

4) it has application in private and government organization as well as profit making and non profit making organizations.

5) In government sector it is helpful in identifying and improving the services

6) It can be applied to cost reduction programmers

7) It ensures thorough examination of every function or activity

8) Scarce resources can be utilized effectively

9) The performance of line managers can be judged against their commitments and performance thereof.

10) Long rang goals and plans can be linked with annual budgets through the ZBB. Similarly five year plans are linked with annual budget by government of India.

11) ZBB integrates planning budgeting and control into a single process. It facilitates rational analysis decision making and discarding low priority activities because the decision packages are ranked in the order of importance arrived at on the basis cost benefit analysis. It sharpens the planning and control functions.

12) On the above basis it allocates scares reface resources rationally

13) Inefficient and redundant activities are eliminated and duplicate activities are easily identified

14) ZBB had given thrust to MBO approach.

15) It improves MIS system significantly

16)  It examines all activates whether new or old and justifies the expenditure for the purpose of funding

17)  It is a top to bottom to top approach

18) ZBB uses the concept of participative management by involving the lower level and middle level managers also in the budgetary process.

19) It provides a good training to lower and middle managers in regard to the goals objectives operation and function of the organization and develops a talented and skilled management team

20) It helps to develop human skills and inter personal relationship