Vanity: Is Musk Doing a "ZBB" Accounting of the Fed Gov?

VANITY ^

[TigerClaws]

"Zero-Based Budgeting."

Sure seems like what's going on. Justify every dollar spent. Use most often when a new owner takes over a failing company.

A bit to see Carter mentioned as he certainly expanded the federal bloat (added Department of Education, for example.)

Here's what ZBB is:

Zero-Based Budgeting: Definition

In the zero-based budgeting (ZBB) approach, all organizational activities are initially set to zero. ZBB is the newest approach to budgetary planning and control.

The approach was successfully developed and implemented in the 1970s by Peter A. Phyrr.

It was further popularized in 1979 when President Jimmy Carter of the United States required its use for the federal government. Zero-Based Budgeting: Explanation

The premise that underpins zero-based budgeting (ZBB) is twofold.

First, ZBB attempts to break away from the past in terms of the activities mandated, their budget allocations, and their expected increments.

It suggests that service departments should justify their annual budget allocations from the ground upward.

Any previous allocations in the past are not considered, and the focus becomes one of emphasizing future objectives and goals.

Secondly, while many organizations may not find it difficult to correlate specific activities with expenses like salaries, telephone calls, and machine maintenance, there is no fundamental questioning of the activity itself.

ZBB goes as far as to prompt the question: Do we need the activity or service in the first place?

While ZBB has received mixed results in many firms, it has one powerful advantage in addressing these drawbacks: namely, it implies a constant review of activities and priorities by those directly involved.

In turn, the costs involved can be assessed in a structured fashion. They can also be ranked in order of importance with other equally pressing needs for resources.

The traditional budgeting method, in contrast to ZBB, takes the current level of operations as the starting point for developing the future year's budget.

In the traditional approach, it is assumed that all previous activities are essential for achieving the ongoing objectives.

However, important limitations of the traditional approach include:

Budgets tend to get larger and larger over the years as inefficiencies of earlier years are carried forward

New projects receive a raw deal, being more susceptible to being dropped if budget cuts are necessary

Alternative ways of achieving the same objectives are not identified, meaning that things are taken for granted

Key problems and decision areas are not highlighted

With these limitations in mind, the traditional approach of using the existing budget as the starting point for developing the next budget needs reappraisal.

The second approach to budgeting is ZBB. Peter A. Phyrr, the creator of the approach, defined ZBB as follows:

An operating, planning, and budgeting process that requires each manager to justify their entire budget request in detail from scratch (hence zero-based) and shift the burden of proof to each manager to justify why they should spend any money at all.

ZBB starts from scratch each year and places less emphasis on what was budgeted in the past.

The approach involves evaluating and reviewing all activities and programs based on a cost-benefit analysis. Key Elements of Zero-Based Budgeting

Identifying objectives and developing an operating plan and budget for the coming year. Identifying alternative and efficient ways to achieve the current activity. Evaluating budget reductions and expansions systematically to allow for a re-allocation of resources as per the organization's priorities. Diagnosing unnecessary activities that budgeting may perpetuate.

[ProtectOurFreedom]

“An operating, planning, and budgeting process that requires each manager to justify their entire budget request in detail from scratch (hence zero-based) and shift the burden of proof to each manager to justify why they should spend any money at all.”

1. “But that’s the way we’ve always done! We have to keep doing it!”
2. “But we’ve sunk so much money in XYZ. We can’t walk away now and leave all that money behind.” (the “Sunk Cost Fallacy”)

[Bernard]

One of the problems with ZBB is that most people involved in developing budgets have no idea how “that expense got there”. Explaining the concept of “cost driver” to midlevel managers is much like teaching a dog to type an original thought.

[RainMan]

You had to go there ... der Fuhrer

[RainMan]

Helped companies like Microsoft do sales budgeting for years. They do “Top down/bottom up” where leadership creates top down revenue expectations. Staff creates bottom up of what they would be comfortable committing to. Final budget is after negotiating differences.

[Salamander]

Blue Oyster Cult fan.

Forget the cowbell.

I need more pointless ümläüts.

😀