Planning Programming Budgeting System (PPBS)
The Planning Programming Budgeting System (PPBS) is a budgeting method first proposed by the United States Department of Defence (USDOD) in 1961. It is an extension of programme budgeting that incorporates systems analysis, Operations Research (OR), and cost-effectiveness processes to systematically compare the costs and benefits of different approaches to achieving a policy goal or programme objective. This method combines the best features of both programme budgeting and performance budgeting.
Core Concepts and Process
The primary focus of PPBS is on planning. The process begins with establishing the library's goals and objectives and concludes with the formulation of specific programmes or services to meet those goals. A key feature of PPBS is that it establishes a rational basis for decision-makers to choose between alternative programmes.
The main elements of PPBS are:
- Budgeting and Systems Analysis: These are the two key components of the system.
- Planning and Programming: It combines the functions of planning activities and programmes, translating them into tangible projects, and finally presenting the requirements in budgetary terms.
- Measurement and Control: The controlling aspect of measurement, which is central to performance budgeting, is also an important part of PPBS.
Implementation Problems and Limitations
Despite its systematic approach, PPBS has several implementation challenges and critical gaps that have limited its adoption:
- Lack of Practical Guidance: The system tends to focus on what will be done rather than how to do it, and it often fails to provide a practical operating tool.
- Difficulty in Measurement: There are great disparities in practice and a lack of standards for measuring the effectiveness or performance of library programmes.
- Inadequate Evaluation Mechanisms: PPBS lacks a mechanism to evaluate the impact of different funding levels on services. It also tends to focus on new programmes or major increases for ongoing ones, rather than forcing a continued evaluation of existing programmes.
- Cost Calculation Issues: Cost calculations are based on decisions made in the early planning and programming stages, which may not reflect the actual operational costs.
Zero-Based Budgeting (ZBB)
Developed by Peter Phyrr in the early 1970s, Zero-Based Budgeting (ZBB) is a planning and budgeting process that is fundamentally different from traditional, historical budgeting.
Core Concepts and Process
The core principle of ZBB is the requirement for each manager to justify their entire budget request in detail from scratch (hence, "zero-base") every year. It does not take into account what happened in the past but places emphasis on current activities and the necessity to justify every part of the programme annually. No activity is continued simply because it was undertaken in the previous year; the burden of proof is on the manager to justify why they should spend money at all.
The steps involved in preparing a ZBB are:
- Identify "Decision Packages": All organizational activities are identified and developed as "decision packages". This involves a statement of purpose for each programme.
- Evaluate Alternatives: Alternative methods of performing each activity are identified and evaluated.
- Systematic Ranking: The decision packages are systematically evaluated and ranked, often with the help of a computer.
- Set a Cut-off Point: The final ranking is used to establish a cut-off point that corresponds to the total available budget allocation.
Advantages and Limitations
ZBB can improve the plans and budgets of libraries and help develop good management teams, with benefits accruing over the years.
However, ZBB faces significant barriers to adoption in libraries due to several problems:
- Complexity and Effort: It requires a thorough knowledge of the organization and demands an enormous amount of time, effort, and training to implement.
- Administrative Challenges: There are administrative problems and significant difficulties in developing and ranking the "decision packages".
Due to these challenges, the adoption of ZBB in libraries has been limited. While some attention has been given to these newer methods in recent years, the vast majority of libraries in India continue to follow the conventional line-item or historical method of budgeting.
🎯 IMPORTANT MCQs: PPBS & ZERO-BASED BUDGETING (ZBB)
Q1. What does PPBS stand for?
A) Public Programming Budgeting System
B) Planning Programming Budgeting System
C) Performance Planning Budgeting Structure
D) Programmed Personnel Budgeting Scheme
✅ Answer: B) Planning Programming Budgeting System
Explanation: PPBS = Planning Programming Budgeting System, introduced by US DoD in 1961.
Q2. The core focus of PPBS is on:
A) Historical spending patterns
B) Line-item control
C) Planning and comparing cost-effectiveness of programmes
D) Reducing staff salaries
✅ Answer: C) Planning and comparing cost-effectiveness of programmes
Explanation: PPBS uses systems analysis and OR to evaluate alternatives and choose the most cost-effective way to meet goals.
Q3. Which of the following is NOT a key element of PPBS?
A) Systems Analysis
B) Performance Measurement
C) Astrological Forecasting
D) Programme Planning
✅ Answer: C) Astrological Forecasting
Explanation: PPBS relies on rational, analytical tools — not astrology! Key elements include planning, programming, budgeting, and measurement.
Q4. A major limitation of PPBS in libraries is:
A) It is too simple to implement
B) Lack of standards to measure programme effectiveness
C) It encourages overspending
D) It ignores technology
✅ Answer: B) Lack of standards to measure programme effectiveness
Explanation: PPBS struggles in libraries due to difficulty in quantifying service impact and lack of uniform performance metrics.
Q5. Who developed Zero-Based Budgeting (ZBB)?
A) Henri Fayol
B) Peter Drucker
C) Peter Phyrr
D) W. Edwards Deming
✅ Answer: C) Peter Phyrr
Explanation: ZBB was developed by Peter Phyrr in the early 1970s as a radical alternative to historical budgeting.
Q6. In ZBB, every budget request must be justified:
A) Only if there’s a 10% increase
B) Based on last year’s allocation
C) From a “zero base” every year
D) Only for new programmes
✅ Answer: C) From a “zero base” every year
Explanation: ZBB requires managers to justify all expenses annually — no automatic carryover from past budgets.
Q7. What is a “Decision Package” in ZBB?
A) A financial audit report
B) A statement of purpose for each activity/programme
C) A staff performance review
D) A vendor contract
✅ Answer: B) A statement of purpose for each activity/programme
Explanation: Decision packages describe each activity, its purpose, alternatives, and costs — forming the basis for ranking and funding decisions.
Q8. Which step comes LAST in the ZBB process?
A) Identify decision packages
B) Rank decision packages
C) Set a cut-off point based on available funds
D) Evaluate alternatives
✅ Answer: C) Set a cut-off point based on available funds
Explanation: After ranking, the cut-off is set to align with the total budget — only packages above the cut-off get funded.
Q9. A major barrier to implementing ZBB in libraries is:
A) Too little paperwork
B) Simplicity and ease of use
C) High complexity, time, and training requirements
D) Lack of interest from users
✅ Answer: C) High complexity, time, and training requirements
Explanation: ZBB demands deep organizational knowledge, extensive effort, and training — making it hard for most libraries to adopt.
Q10. Which budgeting method do MOST Indian libraries still use?
A) PPBS
B) ZBB
C) Activity-Based Budgeting
D) Conventional Line-Item Budgeting
✅ Answer: D) Conventional Line-Item Budgeting
Explanation: Despite newer models, the majority of Indian libraries continue with traditional historical/line-item budgeting due to simplicity and familiarity.
Q11. Unlike traditional budgeting, ZBB forces managers to:
A) Increase budgets by 5% annually
B) Justify every expense regardless of past spending
C) Copy last year’s budget
D) Focus only on capital expenditures
✅ Answer: B) Justify every expense regardless of past spending
Explanation: ZBB’s “zero base” approach requires fresh justification — no activity is funded just because it existed before.
Q12. PPBS is considered an extension of:
A) Zero-Based Budgeting
B) Line-Item Budgeting
C) Programme and Performance Budgeting
D) Cash Flow Budgeting
✅ Answer: C) Programme and Performance Budgeting
Explanation: PPBS combines the best features of programme budgeting (planning by objectives) and performance budgeting (measurement and control).