Budget Integration, Program Budgeting andReengineering of Business Processes in Line Ministries Jean-Marc LEPAIN Budget Adviser Public Finance Specialist Ministry of Finance, Kabul firstname.lastname@example.org
Budget IntegrationBudget Integration has two aspects: Integration of two documents: Ordinary and Development Budget; The creation of a fully integrated organization through the integration of two processes.
New Budgeting Concepts Program based budgeting Performance based budgeting (through performance based indicators and output and outcome tracking) Provincial budgeting
A complex consultative ProcessBudgeting becomes multi-organizational: ANDS CGs MoF Line Ministries MoEco Provincial Development Committees Provincial council Parliament
Organizational Issues Consultation and cooperation with many organizations, stakeholders and decision makers becomes essential. All line-ministries must have a common organization. It means that the integration process must be controlled by MoF and validated by the Steering Committee. Culture change is a major challenge.
Organizational ChangesOrganizational Changes have two aspects: Organizational changes resulting from budget integration; Organizational changes resulting from the introduction of program budgeting.
Strategy toward Program Budgeting Each Ministry will have to develop a three year strategy toward program budgeting. Implementation will be gradual. Modification of the new budget classification will come first Merging of administrative department into a support program covering finance, human resources, IT, procurement, etc., will be gradual.
Program Structure Programs must cover the Ministry’s mission statement; Programs must be limited in number (5 to 7); Programs must have a relative managerial autonomy; Programs must have independent resources (finance, human resources, assets); Programs must be integrated in the overall ministry strategy; Programs must not overlap.
Process Mapping Programs are made of sub-programs, activities and projects. A seminar on program designing will be organized within a month; Program designing might beneficiate from modern Business Process Reengineering such as process maping and wotkflow analysis. MoF will provide assistance in such areas.
Line-Ministries Management Structure An Administration Program will provide support to all other programs and will cover, planning (mostly consolidation of program planning activities), Finance (including budgeting, payment processing, accounting and reporting), Procurement, Human Resources, IT, etc. The integration of asset management (mostly buildings and vehicules) is still under discussion; The Planning Department can integrated into a Policy and Coordination Department under the Administration Program, but must planning activities will be decentralized and the responsibility of programs; A Finance Department supervising and controlling all financial affairs must be created, including budgeting, grant management, budget execution, accounting and reporting Provincial budgeting will require a dedicate unit Other issues: HR and payroll
Policy and Coordination Updating of sector strategy Definition of program and sub-program Project structure Definition of targets and performance indicators Coordination with other ministries Technical assistance to provinces Monitoring of provincial implementation plan Tashkil
Finance Department Aid Coordination Budget Unit Budget Execution Unit Procurement (To be discussed) Accounting Reporting
Program Structure Decentralized model (MRRD / Project Implementation Units) versus centralized model Level of integration with the Policy and Coordination Department Level of integration with the Finance Department Level of integration with the HR Department
Human Resources Recruitment Career path Training Payroll management
Administration Logistic Legal Affairs Public relations Small procurement IT
Change Management Change Management requires a Change Strategy. Change is not just about organization, it is about people and mind set. Change Management requires unity of vision. Change Management requires a strong leadership.
Key Strategic Issue Gradual approach Big Bang approach
Change StrategyA written change strategy must be prepared. The Change Strategy must cover: Implementation Team Communication Plan Capacity Building Plan Training Plan Consultation seminars Work Plan
Communication PolicyCommunication is an important element of Change Management. Communication must be: Planned in advance Controlled and authorized Timely Targeted
Work PlanThree phases:(1) Analysis(2) Design and Planning(3) Physical restructuring
Analysis Clear definition of the objectives (project mission statement) Process Mapping and workflows Identification of new requirements and of their organizational impact Identification of all unit affected Assessment of the existing capacity and of new capacity need Change Management structure Identification of HR issues (recruitment, pay scale, etc.)
Design and Planning New process map New organization chart ToR of business unit Job Descriptions Training plan Define outputs and design reports Revised Work Plan
Physical Integration Define time horizon Manage the project by phases Act quickly on HR issues Bring all people in one physical location Provide regular on the job training
Budget Circular Should make reference to the Public Finance Management Law Outline the implementation team mission Define the responsibility of the Finance Department Define expected results at the end of the Fiscal Year