ZERO BASE BUDGETING SUMMARY STATEMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80M00165A000500200007-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 15, 2016
• Document Release Date: January 5, 2004
• Sequence Number: 7
• Publication Date: April 13, 1977
• Content Type: SUMMARY

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1 3 APR 1977
THE WHITE HOUSE
WASHINGTON
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ZERO BASE BUDGETING
SUMYUL RY STATEMENT
Zero Base Budgeting is a management technique that permits
agency Managers to develop a better understanding of their
organization and provides them detailed information for
making budget decisions. While the technique must be
adapted to the unique aspects of each agency, in general
the steps outlined below should be followed in its
implementation.
1. Analyze existing activities and objectives
The first step is to identify the activities per-
formed by the agency or area of responsibility,
the person responsible for performing each
activity, and the major objectives of that
activity. At this point, consideration might
be given to redistributing some of the activities
to insure that activity or program managers have
a relatively even workload.
2. Development of decision units
The next step is for each higher echelon manager
to sit down with each individual activity or oro-
gram manager reporting to him and define the
"decision units" he wishes to utilize and identify
the major objectives toward which the activity will
be directed for the period under review. A decision
unit may be defined as a group of activities that
have a common objective. It is suggested that an
individual activity or program manager identify no
more than 5 -`1.0 units for purposes of reporting
to his supervisor.
3. Compilation of information
The third step is the collection and summarization of
the following information about the decision unit:
a.
Activities
to be performed
b
Objectives
.
c.
d.
Performance
Actual and
measures
Projected
Costs
e.
Actual and
Projected
Personnel Levels
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4. Analysis of the information
Once the information is compiled, it becomes possible
to perform an initial analysis of the unit The
following questions should be asked:
a. Is it necessary for the government to continue
to perform these activities?
b. Can the private sector do a better job of per-
forming the activities?
c. Can the activities be performed more efficiently?
d. What changes would have to be made if funding for
the activities were cut or eliminated?
e. Is a similar activity being performed by another
unit? Should these activities be combined?
f. Would legislation be required to make the changes?
5. Development of decision packages
The next step is to develop a series of decision packages.
The process would begin with the development of a
package showing a minimum level of funding and per-
formance. Additional packages would then be developed
showing the incremental cost and performance for each
of the following levels:
14. If appropriate, levels between the minimum and
current
c. If appropriate, levels above the current level
6. Ranking of decision packages
Once decision packages are prepared for all the
decision units, the next step is for each manager
to rank the packages for the unit in order of
priority. For example, if a decision unit's budget
were cut by 20%, that manager might decide to retain
all activities at the minimum level or might decide
to eliminate two or three activities and operate
the others at the current levels. Needless to say,
the process requires making decisions as to what
is essential to each unit's operation.
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7. Higher level rankings
Once the rankings have been completed, the next step
is for them to be reviewed by the next higher echelon
of management. This review is basically a three-step
process in which the higher echelon of management.:
a. Reviews and analyzes the ranking to determine
whether changes should be made.
b. Develops a single ranking for all of the activities
performed in the decision units being reviewed.
C. Reviews rankings with the next higher level of
management.
This process will result in an agency-wide ranking of all
decision packages. That is the basic process from a managerial
point of view. In deciding on how to use this tool, the
following points should be kept in mind:
1. The basic purpose of the process is to help the
manager understand the relation between cost and
performance and to higher performance per unit o:E
cost. The amount of detail required will depend
on the activity or program and on the programmatic
and managerial experience of the manager.
2. Begin zero-base budgeting by performing a general
analysis of the total. organization and its activities
and then concentrate on initial detailed analysis on
the areas that are most likely to produce the best
results.
3. While in some cases immediate results will not be
realized, long-range benefits can be achieved by
reallocating existing resources to solve new
problems instead of requesting additional funds
and personnel.
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l_ i l UNCLASSIFIED COf'rIDENiAL SECRET
EXECUTIVE SECIIETARIA1
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DDCI
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D/DCI
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DDS&T
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DDI
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DDA
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DDO
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D/DCI/NI
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GC
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Compt
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D/Pers
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D/S
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DTR
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AO/DCI
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C/IPS
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DCI/SS
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D/EEO
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SUSPENSE
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