What is a modified zero-based budget?
A modified zero-based budget is an extension of a typical zero-based budget that includes “What-If” contingency planning scenarios. For example, three versions can be submitted that include one budget scenario if allocations were reduced by 10%, a status quo departmental request and an allocation scenario depicting how resources would be used if a 10% increase were granted. In summation, this methodology ask unit managers what would they do if faced with a budget reduction or increase of varying percentages. The prudent financial manager should always be prepared to answer this type of question as well as scanning the horizon for eminent changes. Since the environment is dynamic (ever changing), the answers to these type of questions should be re-evaluated on a regular basis.
