What are the key benefits and challenges of implementing a zero-based budgeting approach, and how would you ensure a successful implementation?
A core FP&A interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
The key benefits of zero-based budgeting include increased cost transparency and accountability, as well as improved resource allocation. However, the approach can be time-consuming and resource-intensive to implement. To ensure a successful implementation, I would establish clear goals and objectives, engage stakeholders, and provide training and support.
WHAT INTERVIEWERS LISTEN FOR
- ✓Increased cost transparency and accountability
- ✓Improved resource allocation
- ✓Establish clear goals and objectives
COMMON MISTAKES
- ✗Failing to consider the time and resources required for implementation
- ✗Not engaging stakeholders
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