Disadvantages of Zero Based Budgets

Disadvantages of Zero Based Budgets

1.    Time Consuming

First disadvantage of zero based is that, it require a detail research by the relevant manager, therefore it require a lot of time of manager to prepare the budget.

2.    Too much Technical

Second advantages of zero based budgets are its data collection and analyses requirement. Data may noe be readily available to the manager, moreover, data analyses and drawing conclusion is very technical job.

3.    Pressure for accuracy

Third disadvantage of zero based budget is its un due pressure on manager for accuracy. Budget put extra pressure on manager for accuracy of estimates and then achievement of target set by themselves.

4.    Attempt of actual figures

Fourth disadvantage of zero based budgets is more focused on accuracy. Budget tries to prepare the budget with accuracy. The basic definition that budget is an estimate is ignored.

5.    Re inventing Wheel

Some people consider it to re invent the wheel every time. In many business the basic structure of the organization does not change for years, therefore zero based budgeting is not effective is such organization.