IT Project Management, 2nd Edition

4.6. Zero-Based Budgeting

Another concept you'll likely encounter is zero-based budgeting. Zero-based budgeting means that the budget for a department or program to be created must always start at zero, rather than a dollar amount from a similar project, and then the new expenses factored in. This long-winded approach generally is required each fiscal year. As Figure 4-3 depicts, zero-based budgeting requires a zero balance at the genesis. In other words, you can't take last year's budget for all projects in the IT department, add 20 percent to it, and claim that this new number is this year's upgrade budget. Zero-based budgeting forces a project manager to reflect the true costs of each project.

While this approach may seem similar to a bottom-up ...