2.30 3.00pm Understanding Vocab Of Perf Mgmt (Jim Brumby)

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Vocabulary of government performance management and performance based budgeting

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2.30 3.00pm Understanding Vocab Of Perf Mgmt (Jim Brumby)

  1. 1. “The Vocabulary of Performance”<br />Jim Brumby<br />Sector Manager, Public Sector & Governance<br />ICGFM<br />December 2-4, 2009<br />CONFIDENTIAL AND PROPRIETARY<br />Any use of this material without specific permission of The World Bank is strictly prohibited<br />
  2. 2. 1<br />Table of Contents<br /><ul><li>A Transition of Complexity
  3. 3. Defining Performance
  4. 4. Inputs, Outputs, Outcomes, Indicators
  5. 5. Output and Indicator Characteristics
  6. 6. Is our concern solely with outputs?
  7. 7. Results Chain
  8. 8. Basic Concepts: Performance Budgeting
  9. 9. Objectives of Performance Budgeting
  10. 10. OECD Practices in Performance Budgeting</li></li></ul><li>A Transition of Complexity<br />Performance & Accountability<br />Mission driven<br />Customer driven<br />Employee responsive<br />Flexible<br />Preventive<br />Positive team focus<br />Control & compliance<br />Rules governed<br />Limited flexibility<br />Non-preventive<br />Negative focus<br />Control of individuals<br />A significant cultural & institutional change<br />Gauging Interests<br />Performance is for the most part determined by where you sit<br /><ul><li>As a purchaser of a service, your interests are typically different from those of the supplier of the service
  11. 11. Buyer of car; versus manufacturer of car
  12. 12. As a regulator, your interests are typically different from those of the regulated
  13. 13. Compliant behavior versus lightness of burden
  14. 14. In some cases, parties may have interests as both purchasers and suppliers (e.g. co-operatives)</li></ul>Government performance is complex in part because of the variety of interests<br /><ul><li>Standard problems of government production </li></ul>With different degrees of clarity, performance budgeting systems attempt to address these various interests<br /><ul><li>Institutional fabric is important
  15. 15. Westminster; Presidential; other Parliamentary etc </li></ul>2<br />
  16. 16. Defining Performance <br />3<br />SOURCE: Produced in http://www.wordle.net/.<br />
  17. 17. Inputs, Outputs, Outcomes, Indicators<br />Inputs: the resources used by government to produce outputs. <br /><ul><li>Inputs include the labor (the range of skills, expertise and knowledge of employees), capital assets (including land and buildings, motor vehicles and computer networks), financial assets, and intangible assets (such as intellectual property) which are used in delivering outputs.</li></ul>Outputs: the goods or services (usually the latter) which government agencies provide for citizens. <br /><ul><li>The concept of outputs is not confined to tangible goods and social services delivered directly to citizens. The concept also include more intangible flows of influences on the surroundings from agencies, institutions and other entities delivering on public policies.
  18. 18. Outputs are potentially largely controllable by government agencies and measurable either quantitatively or qualitatively. Thus outputs can be used for performance management more easily than outcomes.</li></ul>4<br />Outcomes: the effects on society of outputs from governmental entities<br />Outcomes – whether intended or unintended – are not usually completely controllable by governments. The degree of control depends on the influence of extraneous factors on the goal in question, the effectiveness of implementation and the quality of the policies for reaching the goal.<br />Indicator: Quantitative or qualitative variable that provides a simple and reliable means to measure achievement, to reflect the changes connected to actions undertaken. <br />
  19. 19. Results Chain (Production Process) <br />Contextual Factors <br />Structural, institutional, and managerial arrangements<br />5<br />Inputs<br />Activities<br />Intermediate Outcomes<br />Outputs<br />Final Outcomes<br />Effectiveness:refers to the cause and consequence relation between output and outcome and the extent to which the intervention’s objectives were achieved.<br />Efficiency:indicates the relation between the deployed resources (input) and the delivered products or service (output) (I/O).<br />Glossary of Key Terms in Evaluation and Results Based Management. <br />Available from: http://www.aidharmonization.org/download/212150/glossary_of_aid_monitoring_terms.pdf<br />Source: Dries Verlet and Carl Davos, “Evaluation of performance in the public sector: end or mean?” EGPA Study Group on Evaluation, 2008. <br />
  20. 20. Output and indicator characteristics<br />6<br />
  21. 21. 7<br />Basic Concepts – Performance Budgeting<br />Performance Budgeting – performance impact of resource allocations and use in order to hold line ministries accountable and efficiently allocate resources. <br />Weakest form<br /><ul><li> Presentational performance budgeting
  22. 22. Instrument of transparency
  23. 23. Performance informed budgeting
  24. 24. Instrument of accountability
  25. 25. Assists with efficiency
  26. 26. Begins more earnest efforts to define, measure, improve</li></ul>Moderate form<br /><ul><li>Direct performance budgeting
  27. 27. An unambiguous contractual mechanism</li></ul>Strongest form<br />Key Point: One system may have all these, depending on the characteristics of the production process, the nature of the services being supplied, and the preferences and capabilities of the main players <br />
  28. 28. Objectives of Performance Budgeting <br /><ul><li>Create stronger links between allocated public resources and outputs/outcomes of the public sector
  29. 29. Impact on decisions in resource allocation by using performance information
  30. 30. Produce and report relevant performance information
  31. 31. Assist three objectives of public expenditure management </li></ul>Allocative efficiency by challenging the composition of public expenditure with respect to social needs and priorities <br />Operational efficiency by encouraging cost-effective service delivery and value for money <br />Aggregate fiscal discipline by affecting the level of public expenditure through allocative and operational efficiency <br />The logic is inexorable: <br />Many countries aspire to performance budgeting; implementation is a journey rather than a destination. <br />8<br />
  32. 32. OECD practices in performance budgeting:Spectrum of models<br />Contractual<br />Internal-hierarchical<br /><ul><li>Pressure on agencies to boost performance
  33. 33. Improve allocative decisions within agencies</li></ul>The agency model<br /><ul><li>Specified outcome/output targets linked to the budget</li></ul>PSAs (UK), decentralized results framework (Netherlands, Norway)<br />Purchaser-provider budgeting<br /><ul><li>Budget agencies are competitive suppliers of the public sector outputs (quasi-market)
  34. 34. Explicit performance contracts with specified quantity, quality and price of outputs</li></ul>Australia, New Zealand<br />Formula-based budgeting<br /><ul><li>Resources are allocated according to a specified formula
  35. 35. Usually used in sectors (e.g. health)</li></ul>Program budgeting<br /><ul><li>Establish program results along with funding requirements through the budget process
  36. 36. Disaggregate them to the front-line level
  37. 37. Program classification based on multiple objectives of individual government agencies ( generally corresponds to organizational boundaries)</li></ul>France, Korea, U.S.<br />Gauge<br /> nonfinancial <br />performance<br />Various interests<br /><ul><li>As funder/purchaser
  38. 38. As regulator
  39. 39. As owner</li></ul>Need intertemporal consistency<br /><ul><li>Performance measures
  40. 40. benchmarking
  41. 41. program evaluation
  42. 42. expenditure reviews
  43. 43. CBA</li></ul>Key message: Using performance information in budget decision-making <br />ex-ante (expected targets) and/or ex-post (actual results)<br />9<br />
  44. 44. End <br />Thank You. <br />10<br />

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