Explain how ZBB is different from PPBS.

Zero-Based Budgeting (ZBB) and Program Planning and Budgeting System (PPBS) are two distinct budgeting approaches employed by organizations. ZBB starts from a zero base, scrutinizing all expenses to eliminate waste and enhance efficiency. It requires justifications for each individual item and aims to promote accountability and cost consciousness. PPBS, on the other hand, takes a broader view, evaluating programs as a whole to align budget decisions with organizational goals. It emphasizes systematic program evaluation and the use of performance measures.

ZBB and PPBS differ in their fundamental principles and starting points. ZBB challenges existing budget allocations, treating each expense independently. It strives to optimize resource allocation and identify unnecessary expenditures. PPBS, on the other hand, begins with program evaluation and goal-setting, focusing on the alignment of budgets with strategic objectives. It enables decision-makers to assess alternative scenarios and allocate resources to the most effective programs.

While ZBB emphasizes detailed evaluation and cost-effectiveness at the individual expense level, PPBS offers a comprehensive perspective on program effectiveness and goal achievement. Both approaches aim to enhance budgeting effectiveness but cater to different organizational needs. The choice between ZBB and PPBS depends on the organization’s priorities, circumstances, and desired outcomes.

In summary, ZBB and PPBS are distinct budgeting approaches with different starting points and areas of focus. ZBB scrutinizes individual expenses from a zero base, promoting efficiency and accountability. PPBS evaluates programs as a whole to align budgets with strategic objectives. Organizations must consider their specific needs when selecting the appropriate approach, as both methods offer unique benefits in improving budgeting efficiency and decision-making.