【正确答案】Main steps 1.Activities are identified by managers. Managers are then forced to consider different ways of performing the activities.These activities are then described in what is called a ‘decision package’, which: –analyses the cost of the activity; –states its purpose; –identifies alternative methods of achieving the same purpose; –establishes performance measures for the activity; – assesses the consequence of not performing the activity at all or of performing it at different levels. As regards this last point, the decision package may be prepared at the base level, representing the minimum level ofservice or support needed to achieve the organisation’s objectives. Further incremental packages may then be preparedto reflect a higher level of service or support. 2.Management will then rank all the packages in the order of decreasing benefits to the organisation. This will helpmanagement decide what to spend and where to spend it. This ranking of the decision packages happens at numerouslevels of the organisation. 3.The resources are then allocated based on order of priority up to the spending level available.

【正确答案】Potential problems At present, the LRA finds itself facing particularly difficult circumstances. The fires and the floods have meant that urgentexpenditure is now needed on schools, roads and hospitals which would not have been required if these environmentalproblems had not occurred. Lesting is facing a crisis situation and the main question is therefore whether this is a good timeto introduce anything new at the LRA when it already faces so many challenges. The introduction of ZBB in any organisation is difficult at any time because of the fact that the process requires far more skillsthan, for example, incremental budgeting. Managers would definitely need some specialist training as they simply will nothave the skills which they would need in order to construct decision packages. This then would have further implications interms of time and cost, and, at the moment, both of these are more limited than ever for the LRA. When so many costs arebeing faced by the LRA, can it really consider spending money on training staff to prepare and evaluate decision packages? Given that the budget needs preparing imminently as the new financial year is approaching, it is really too late to start trainingstaff. With ZBB, the whole budgeting process becomes a lot more cumbersome as it has to be started from scratch. There isa lot of paperwork involved and the whole process of identifying decision packages and determining their costs and benefitsis extremely time-consuming. There are often too many decision packages to evaluate and there is frequently insufficientinformation for them to be ranked. The LRA provides a wide range of services and it is therefore obvious that this would bea really lengthy and costly process to introduce. At the moment, some residents are homeless and several schools have beendamaged by fire. How can one rank one as more important than the other when both are equally important for thecommunity? Sometimes, the information needed in order to rank them simply will not be available, or managers will not feelable to assimilate it properly. Another problem with ZBB is that it can cause conflict to arise as departments compete for the resources available. Sinceexpenditure is urgently required for schools, roads and hospitals, it is likely that these would be ranked above expenditure onthe recycling scheme. In fact, the final phase of the scheme may well be postponed. This is likely to cause conflict betweendepartments as those staff and managers involved in the recycling scheme will be disappointed if the final phase has to bepostponed.

【正确答案】The potential benefits – ZBB will respond to changes in the economic environment since the budget starts from scratch each year and takes intoaccount the environment at that time. This is particularly relevant this year after the fires and the floods. Without ZBB,adequate consideration may not be given to whether the waste management scheme should continue but, if ZBB isused, the scheme will probably be postponed as it is unlikely to rank as high as expenditure needed for schools, housingand hospitals. –If any of the activities or operations at LRA are wasteful, ZBB should be able to identify these and remove them. This isparticularly important now when the LRA faces so many demands on its resources. –Managers may become more motivated as they have had a key role in putting the budget together. –It encourages a more questioning attitude rather than just accepting the status quo. –Overall, it leads to a more efficient allocation of resources. –All of the organisations activities and operations are reviewed in depth. – ZBB focuses attention on outputs in relation to value for money. This is particularly important in the public sector wherethe 3 Es (economy, efficiency and effectiveness) are often used to measure performance. Note: Only three were required.