What is a drawback of the zero-based budgeting approach?

The zero-based budgeting approach requires that all expenses must be justified for each new period, rather than basing budgets on previous years’ figures. This means that every department must start from a "zero base" and determine what resources are needed for the upcoming period, necessitating detailed analysis and justification for every line item.

This method can be very labor-intensive and time-consuming, as it involves extensive planning, documentation, and justification of budgetary needs. The detailed process may demand significant time from management and staff to ensure that every expense is properly evaluated and aligned with the organization's strategic goals. Due to the complexity involved, organizations often find that this approach can drain resources and take longer to complete compared to more straightforward budgeting systems.

While it produces rigorously justified budgets, the necessity for comprehensive reviews for all expenditures makes it a demanding process, which is the primary drawback associated with zero-based budgeting.