• 5 Marks

MI – May 2016 – L1 – SB – Q2a – Budgeting

Discuss the need to justify each decision package in zero-based budgeting.

“Under Zero-Based Budgeting, a budget decision must be made before including any decision package in the budget”. State what factors you would consider in including a decision-package in a zero-based budget.

Factors to consider:

  1. Cost-Benefit Analysis: Evaluate the expected benefits of the decision package relative to its cost.
  2. Alignment with Organizational Goals: Ensure that the decision package aligns with the strategic goals and objectives of the organization.
  3. Necessity and Priority: Assess the necessity of the expenditure and prioritize based on its urgency and impact on operations.
  4. Performance Metrics: Use performance indicators to measure the potential effectiveness and success of the decision package.
  5. Risk Assessment: Consider any potential risks associated with implementing the decision package, including financial, operational, and compliance risks.
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