Budgeting Basics and Beyond

21.4. Decision Packages

The first major step in ZBB is the development of decision packages for existing and new programs. The decision package contains a description of the project, specific measures, and employee responsibilities. The package includes the manager's recommended way of producing a product or rendering a service in terms of cost and time. Alternative ways of performing the activity are also specified. For example, improving the quality will increase the cost. Further, reducing the time also may increase the cost because of overtime pay.

A decision package contains this information:

• Description of the activity and reasons to carry it out

• Statement of objectives and benefits to be derived

• The plan to achieve the program

• The priorities established

• Cost and time estimates along with evaluation

• Alternative methods of achieving the activity stated in cost and time

• Measures of output

• Resources needed, including physical and personnel support from other responsibility centers

• Legal, technical, and operational aspects

• Risk considerations

Decision packages must be reviewed carefully for possible deficiencies. Managers should assure themselves that the packages are complete and independent. Further, decision packages should not cross functional and organizational lines. If information is missing or packages are lumped together, misleading conclusions may be drawn.

A decision package can be either mutually exclusive or incremental. The former are alternative options, meaning that the ...