ZBB IS A PROCESS REQUIRING REVIEW OF ALL COMPANY PROGRAMS WITHOUT ANY REFERENCE TO PREVIOUS BUDGETS OR ACTIVITY; IT IS A FUNDAMENTAL REAPPRAISAL OF PROGRAM PURPOSES, METHODS, AND NECESSARY RESOURCES. IT BEGINS WITH IDENTIFICATION OF AN AGENCY'S ORGANIZATIONAL STRUCTURE AND GOALS, MANAGEMENT, AND DECISION UNITS (ENTITIES IN THE ORGANIZATION STRUCTURE WHOSE MANAGERS PREPARE THE INITIAL DECISION PACKAGES), AND SUBSEQUENT MEASURING OF COMPANY OBJECTIVES. STEP TWO INCLUDES DEVELOPMENT OF DECISION PACKAGES BY EXAMINING ALTERNATIVE WAYS OF ACCOMPLISHING AN OBJECTIVE AND IDENTIFYING DIFFERENT LEVELS OF FUNDING, ACTIVITY, OR PERFORMANCE FOR THAT ALTERNATIVE. AGENCIES THEN REVIEW THE DECISION PACKAGES AND RANK THEM IN ORDER OF PRIORITY (THIS INCLUDES A RANKING BOTH BY HIGH-LEVEL AND LOW-LEVEL MANAGERS AND FINAL CONSOLIDATION OF THE PACKAGES). PREPARING AND SUBMITTING THE BUDGET COMPLETES THE PROCESS. ISSUES OF ZBB IMPLEMENTATION ARE ADDRESSED IN THE TEXT. AN AGENCY INTERESTED IN ZBB WILL NEED TO SELECT AN ADVISORY IMPLEMENTATION TEAM AND AN ADVISORY STAFF, TRAIN MANAGERS IN ZBB CONCEPTS, PREPARE A CALENDAR OF EVENTS FOR ZBB, AND DEVELOP A ZBB MANUAL. A FINAL NOTE ADDRESSES THE ISSUE OF AUTOMATING THE ZBB CONCEPT. TABLES, CHARTS, AND BIBLIOGRAPHICAL REFERENCES ARE PROVIDED. (DAG)