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Zero based budget and Cost Control

Do you have effective maintenance cost management processes?

The Zero-Based Budget (ZBB) approach allows top-level strategic goals to be implemented into budgeting process by tying them to specific functional areas of the organization, where costs can be first grouped, then measured against previous results and current expectations.

Should be developed upon a thorough analysis of projected workload and costs, activity based and not developed exclusively from historical expenditure or to meet any imposed financial requirements and should be prepared at the level of each cost center.

Following the budget, the organization have to follow-up the maintenance costs:

  • To ensure costs are within original plan
  • To identify where costs can be reduced
  • Provide value for money
  • To remain competitive - Optimum cost per unit of throughput

What is Maintenance Cost Management?  

Following the budget, the organization have to follow-up the maintenance costs: 

  • To ensure costs are within original plan 
  • To identify where costs can be reduced 
  • Provide value for money 
  • To remain competitive - Optimum cost per unit of throughput 

 

Zero Based Budgeting Benefits 

  • Accuracy: Every department have to compute their operation costs as forecasted according to the activity defined. This gives a clear picture of costs against the desired performance, that will help in cost reduction. 
  • Efficiency: Improve the accurate allocation of resources department-wise, using the actual numbers, as per planning information. 
  • Reduction in redundant activities: It leads to the identification of opportunities and more cost-effective ways of doing things by removing all the unproductive or redundant activities. 
  • Budget inflation: Since every line item is to be justified, zero-based budget overcomes the weakness of incremental budgeting of budget inflation. 
  • Coordination and Communication: Improves coordination and communication within departments and motivates employees by involving them in decision-making. 
  • Safety and Sustained Success: Facility-wide safety is prioritized, which positively impacts sustained success of the TPM program. 

Learn more about

Reliability Maintenance Management

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