Zero-Based Budgeting in Practice (AF-052) Training Course

Zero-Based Budgeting in Practice

Traditional incremental budgeting starts from last year's figures and adds a percentage. Over time this locks in inefficient spending, hides activities that no longer…

5 daysClassroom

49Upcoming dates

12Cities

£2,250Fees from

Course overview

Introduction

Traditional incremental budgeting starts from last year's figures and adds a percentage. Over time this locks in inefficient spending, hides activities that no longer create value and makes it hard to redirect resources towards strategic priorities.

This Zero-Based Budgeting in Practice training course shows participants how to build budgets from a zero base, where every cost must be justified by the value it delivers. Participants learn how to define decision units, analyse activities and cost drivers, build decision packages at different service levels and rank them against organisational objectives.

The course takes a realistic, practical view of zero-based budgeting. It explains where the full approach adds most value, where lighter variants are more appropriate, how to manage the workload and resistance that often accompany it, and how to turn one-off savings into a lasting culture of cost ownership.

Course Objectives

By the end of this training course, participants will be able to:

Explain the principles of zero-based budgeting and how it differs from incremental and activity-based budgeting
Define decision units, cost categories and cost owners for a zero-based exercise
Analyse activities, cost drivers and service levels to challenge existing spending
Prepare decision packages with clear options, costs, benefits and risks
Rank and select decision packages using objective prioritisation criteria
Integrate zero-based budgeting with strategic planning, forecasting and performance reporting
Manage stakeholder engagement, workload and resistance during a zero-based programme
Sustain savings through governance, cost ownership and periodic zero-based reviews

Target Audience

This training course is suitable for a wide range of professionals, including:

Finance managers, budget controllers and FP&A professionals
Chief financial officers and finance directors
Cost centre and departmental budget holders
Strategy and transformation managers
Public sector budget and planning officers
Internal auditors reviewing budgeting processes
Business partners supporting operational managers

Training Methodology

Participants learn through short briefings, worked examples and a running case study in which they build a zero-based budget for a support function. Group exercises cover activity analysis, decision package design and prioritisation workshops, while discussions draw on participants' own budgeting challenges to identify practical improvements they can apply immediately.

Target Competencies

Zero-based budget design
Cost driver and activity analysis
Decision package preparation
Resource prioritisation
Budget governance
Finance business partnering

Course outline

1Day One: Rethinking the Budget

Limitations of Incremental Budgeting: How historical baselines hide waste and block strategic change
Zero-Based Budgeting Principles: Justifying every cost against the value it creates
Variants of the Approach: Full zero-based, priority-based and targeted zero-based reviews
When Zero-Based Budgeting Fits: Organisational readiness, cost structures and timing
Roles and Governance: Sponsors, budget owners, finance teams and review panels
Lessons from Practice: Typical results, risks and failure points
Case Study: Diagnosing the budget of a growing shared-services function

2Day Two: Activity and Cost Driver Analysis

Defining Decision Units: Selecting the right level of analysis for each function
Activity Mapping: Identifying what each unit does and for whom
Cost Drivers: Linking spending to volumes, policies, service levels and choices
Benchmarking Costs: Internal and external comparisons to challenge assumptions
Separating Mandatory and Discretionary Spending: Legal, contractual and strategic commitments
Data Collection Templates: Gathering consistent information from budget owners
Practical Exercise: Building an activity and cost driver map for a support department

3Day Three: Building Decision Packages

Purpose of Decision Packages: Presenting choices rather than requests
Service Level Options: Minimum, current and enhanced levels of activity
Costing Each Option: Staff, operating costs, investments and one-off transition costs
Describing Benefits and Risks: Consequences of funding or not funding an activity
Alternative Delivery Models: Automation, outsourcing, sharing and simplification
Quality Review of Packages: Consistency, evidence and realism checks
Workshop: Preparing decision packages at three service levels

4Day Four: Ranking, Selection and Approval

Prioritisation Criteria: Strategic alignment, legal necessity, customer impact and return
Ranking Methods: Scoring models, paired comparison and facilitated ranking panels
Setting the Funding Line: Matching ranked packages to available resources
Challenging Assumptions Constructively: Running effective budget review meetings
Communicating Decisions: Explaining outcomes to budget owners and teams
Linking to the Forecast: Updating financial plans, headcount and targets
Simulation: Running a prioritisation panel and agreeing a funded budget

5Day Five: Implementation and Sustaining Cost Discipline