(c) 1999 Arunaselam Rasappan "RESULTS ORIENTED

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(c) 1999 Arunaselam Rasappan "RESULTS ORIENTED

  1. 1. “ RESULTS ORIENTED BUDGETING REFORMS: MALAYSIA & SINGAPORE” WORLD BANK Washington, DC 15 JULY, 1999 ARUNASELAM RASAPPAN , PhD. EXECUTIVE DIRECTOR ARTD (Malaysia) Management, Evaluation, & Research Associates Kuala Lumpur
  2. 2. THE SOCIO-ECONOMIC ENVIRONMENT in MALAYSIA/ SINGAPORE
  3. 3. BUDGET REFORMS & NATIONAL STRATEGIES / AGENDA _________________________________________ * DYNAMIC SOCIO-ECONOMIC ENVIRONMENT * SOCIO-ECONOMIC DEVELOPMENT * NATION-BUILDING * GLOBALIZATION * COMPETITIVENESS * ENABLING MECHANISMS
  4. 4. BUDGET REFORMS & OTHER CAUSAL FACTORS _________________________________________ * RISING EXPECTATIONS * TREND TOWARDS RIGHTSIZING * SCARCE RESOURCES * NEW PUBLIC MANAGEMENT INITIATIVES * INCREASING DEMAND FOR GREATER ACCOUNTABILITY
  5. 5. THE ACCOUNTABILITY AGENDA _________________________________________ “PROGRAM RESULTS” “SERVICE QUALITY” “MORE WITH LESS” “VALUE FOR MONEY” “RESOURCES OPTIMIZATION” “IMPROVED ACCOUNTABILITY”
  6. 6. FINANCIAL ACCOUNTABILITY <ul><li>ENSURING COMPLIANCE WITH FINANCIAL RULES AND REGULATIONS </li></ul>
  7. 7. MANAGEMENT ACCOUNTABILITY <ul><li>MANAGEMENT EFFICIENCY </li></ul><ul><li>ENSURING QUALITY </li></ul><ul><li>MINIMIZING WASTAGE </li></ul><ul><li>OPTIMIZING RESOURCES </li></ul>
  8. 8. PROGRAM ACCOUNTABILITY <ul><li>ENSURING PROGRAM </li></ul><ul><li>ACHIEVES OBJECTVES </li></ul><ul><li>PROGRAM PRODUCES </li></ul><ul><li>MANDATED RESULTS </li></ul><ul><li>PROGRAM RESULTS </li></ul><ul><li>FULFILL CLIENTS’ NEEDS </li></ul><ul><li>BEST OPTIONS ARE </li></ul><ul><li>CHOSEN </li></ul>
  9. 9. BUDGET REFORMS
  10. 10. BUDGET REFORMS * LINE-ITEM BUDGETING (Pre 60s) * CENTRALIZED * DETAILED CONTROL * INCREMENTAL * REACTIVE BUDGETS * PROGRAM PERFORMANCE BUDGETING SYSTEM (PPBS) (1960s TO 1990s) * PROGRAM/ACTIVITY BASED * PERFORMANCE FOCUS * DETAILED CONTROL * CENTRALIZED
  11. 11. BUDGET REFORMS PERFORMANCE-ORIENTED BUDGETING (1990s) * MODIFICATION TO PPBS * PROGRAM / ACTIVITY BASED * AGGREGATE CONTROL * GREATER FLEXIBILITY * PERFORMANCE BASED * RESULTS FOCUS * PERFORMANCE TOOLS
  12. 12. BUDGET REFORM SEQUENCING ISSUES <ul><li>STAGE OF SOCIO-ECON DEV’T </li></ul><ul><li>RESOURCE AVAILABILITY </li></ul><ul><li>RESOURCE CAPACITIES </li></ul><ul><li>CULTURAL & VALUE SYSTEMS </li></ul><ul><li>FOCUSSED & STRUCTURED </li></ul><ul><li>PRACTICAL EXAMPLES </li></ul><ul><li>TECHNICAL ASSISTANCE </li></ul><ul><li>LEADERSHIP & VISION </li></ul>
  13. 13. ASSOCIATED PUBLIC SECTOR REFORMS
  14. 14. DRIVERS OF OTHER PUBLIC SECTOR REFORMS & FOCUS <ul><li>CRITICAL DEVELOPMENT </li></ul><ul><li>MECHANISMS </li></ul><ul><li>* CHANGE AGENTS </li></ul><ul><li>* DEV’T FACILITATORS </li></ul><ul><li>GLOBAL COMPETITIVENESS </li></ul><ul><li>* MALAYSIA INC. </li></ul><ul><li>* CHANGE AGENTS </li></ul><ul><li>* GROWTH FACILITATORS </li></ul><ul><li>CAPACITY & CAPABILITY </li></ul><ul><li>BUILDING </li></ul><ul><li>PUBLIC SERVICE FOCUS </li></ul>
  15. 15. ASSOCIATED PUBLIC SECTOR REFORM INITIATIVES <ul><li>PRODUCTIVITY </li></ul><ul><li>IMPROVEMENTS </li></ul><ul><li>TQM </li></ul><ul><li>ISO 9000 </li></ul><ul><li>QUALITY IMPROVEMENTS </li></ul><ul><li>CONTINUOUS IMPROVEMENTS </li></ul><ul><li>PERFORMANCE REPORTING </li></ul><ul><li>INNOVATIONS IN </li></ul><ul><li>GOVERNMENT </li></ul>
  16. 16. ASSOCIATED PUBLIC SECTOR REFORM INITIATIVES <ul><li>ASSET MANAGEMENT </li></ul><ul><li>COSTING OUTPUTS/ACTIVITIES </li></ul><ul><li>CLIENT CHARTERS </li></ul><ul><li>SERVICE RECOVERY </li></ul><ul><li>COUNTER SERVICE </li></ul><ul><li>COMPLAINTS HANDLING </li></ul><ul><li>PERFORMANCE BUDGETING </li></ul>
  17. 17. LINKAGE BETWEEN BUDGET REFORMS & MANAGEMENT REFORMS <ul><li>CRITICAL ROLE OF </li></ul><ul><li>MANAGEMENT REFORMS </li></ul><ul><li>LINK WITH NATIONAL DEV’T </li></ul><ul><li>LINK WITH ECON. GROWTH </li></ul><ul><li>LINK WITH SERVICE QUALITY </li></ul><ul><li>MISSING LINKS WITH </li></ul><ul><li>BUDGET REFORMS </li></ul><ul><li>INTEGRATED PERFORMANCE </li></ul><ul><li>MANAGEMENT FRAMEWORK </li></ul>
  18. 18. DIFFICULTIES IN ADOPTING AN INTEGRATED PERFORMANCE MANAGEMENT FRAMEWORK <ul><li>LACK OF PROVEN AND </li></ul><ul><li>WORKABLE MODELS </li></ul><ul><li>INTRICACIES & DIFFICULTIES </li></ul><ul><li>INABILITY OF POLICY-MAKERS </li></ul><ul><li>AND PROGRAM MANAGERS </li></ul><ul><li>LACK OF RESOURCES </li></ul><ul><li>LACK OF EXPOSURE AND </li></ul><ul><li>GUIDANCE </li></ul>
  19. 19. Program Logic & Linkages Model (ProLL Model)  CLIENTS NEEDS / PROBLEMS POLICIES PROGRAM/ ACTIVITY INPUT (RESOURCES) PROCESS OUTPUT OUTCOME Objective Achievement (rate / level ) OBJECTIVE Needs Fulfillment / Problem alleviation (rate / level) Mission Goals  Arunaselam Rasappan (1992)
  20. 20. LINKAGE BETWEEN BUDGET REFORMS & RESOURCES MANAGEMENT
  21. 21. NATIONAL BUDGET APPORTIONMENT BETWEEN DEVELOPMENT & OPERATING BUDGET
  22. 22. DEVELOPMENT BUDGET = 30% OPERATING BUDGET = 70% COMPOSITION OF OPERATING BUDGET? EMOLUMENT = 60-70%
  23. 23. The Results-Oriented Budgeting System (MBS/PBS)
  24. 24. THE RBB SYSTEM <ul><li>IMPLEMENTED IN 1990 (1996) </li></ul><ul><li>BASED ON THE PPBS (1969) </li></ul><ul><li>NOW INTEGRATED WITH KEY ELEMENTS OF THE PPBS, ZBB, AND MBO </li></ul><ul><li>BASED ON THREE MAJOR </li></ul><ul><li>ACCOUNTABILITY TYPES </li></ul><ul><li>“ LET MANAGERS MANAGE & MAKE MANAGERS MANAGE” </li></ul>
  25. 25. THE RBB SYSTEM <ul><li>TRUST & EMPOWERMENT </li></ul><ul><li>ACCOUNTABILITY FOR </li></ul><ul><li>FLEXIBILITY </li></ul><ul><li>PERFORMANCE AGREEMENTS BETWEEN CEO & MINISTRY OF FINANCE </li></ul><ul><li>EXPENDITURE TARGETS BASED ON THREE YEAR BUDGET TRENDS & BUDGET FORMULA </li></ul>
  26. 26. THE RBB SYSTEM <ul><li>TREATMENT OF CURRENT </li></ul><ul><li>POLICIES, NEW POLICIES, & </li></ul><ul><li>ONE-OFFS </li></ul><ul><li>PERFORMANCE AGREEMENT & ANNUAL REPORTING </li></ul><ul><li>VARIANCE ANALYSIS & EXCEPTIONS REPORTING </li></ul><ul><li>EFFICIENCY DIVIDEND </li></ul><ul><li>“ THRESHOLD” OR EXCESS </li></ul><ul><li>CLAUSE </li></ul>
  27. 27. BUDGET FORMULA 3-YEAR AVERAGE TO ESTABLISH EXPENDITURE TARGET PLUS INCREMENTS PLUS INFLATION PLUS CURRENCY LOSS MINUS “ ONE-OFFS” MINUS EFFICIENCY DIVIDEND
  28. 28. THE PERFORMANCE MANAGEMENT FRAMEWORK
  29. 29.  THE MISSION & PiL  STRATEGIC PLAN  GOALS & OBJECTIVES  PERFORMANCE PLAN  PERFORMANCE MANAGEMENT ELEMENTS  PERFORMANCE REPORTING  PERFORMANCE EVALUATION  USE OF PROGRAM LOGIC
  30. 30. Program Logic & Linkages Model (ProLL Model)  CLIENTS NEEDS / PROBLEMS POLICIES PROGRAM/ ACTIVITY INPUT (RESOURCES) PROCESS OUTPUT OUTCOME Objective Achievement (rate / level ) OBJECTIVE Needs Fulfillment / Problem alleviation (rate / level) Mission Goals  Arunaselam Rasappan (1992)
  31. 31. STRATEGIC PERFORMANCE MANAGEMENT <ul><li>CONSCIOUS EFFORT AT </li></ul><ul><li>MEASUREMENT </li></ul><ul><li>“ VALUE FOR MONEY” </li></ul><ul><li>PROGRAM OUTPUTS & OUTCOMES </li></ul><ul><li>RESOURCES AND RESULTS </li></ul><ul><li>LINKAGES </li></ul><ul><li>IMPROVED EFFICIENCY & EFFECTIVENESS </li></ul><ul><li>REDUCED WASTAGE (ECONOMY) </li></ul><ul><li>APPROPRIATENESS / RELEVANCE </li></ul><ul><li>“ KEY RESULT AREAS” </li></ul><ul><li>GET YOUR BASICS RIGHT FIRST! </li></ul>GREATER FOCUS ON :
  32. 32. THE “PROGRAM LOGIC” APPROACH <ul><li>BASIC & FUNDAMENTAL </li></ul><ul><li>QUESTIONS FIRST! </li></ul><ul><li>PURPOSE-IN-LIFE (PiL) </li></ul><ul><li>TERMS OF REFERENCE (ToR) </li></ul><ul><li>DOING THE“RIGHT THINGS, </li></ul><ul><li>THE RIGHT WAY, FOR THE </li></ul><ul><li>RIGHT BENEFICIARIES!” </li></ul>
  33. 33. PROCESS MEASUREMENT <ul><li>EFFICIENCY </li></ul><ul><ul><li>TIME </li></ul></ul><ul><ul><li>LABOR </li></ul></ul><ul><ul><li>COST </li></ul></ul><ul><li>EFFECTIVENESS </li></ul><ul><li>QUALITY </li></ul><ul><li>RELEVANCE </li></ul><ul><li>APPROPRIATENESS </li></ul>
  34. 34. IMPACT MEASUREMENT <ul><li>POSITIVE </li></ul><ul><li>NEGATIVE </li></ul><ul><li>INTENDED </li></ul><ul><li>UNINTENDED </li></ul>
  35. 35. IMPACT MEASUREMENT <ul><li>DIRECT </li></ul><ul><li>INDIRECT </li></ul><ul><li>SHORT TERM </li></ul><ul><li>LONG TERM </li></ul>
  36. 36. OUTCOMES & LOGICAL LINKAGES OUTCOME CLIENTS’ NEEDS & PROBLEMS O B J E C T I V E S INTERNAL EXTERNAL POSITIVE NEGATIVE INTENDED UNINTENDED POSITIVE NEGATIVE INTERNAL EXTERNAL
  37. 37. Program Logic & Linkages Model (ProLL Model)  CLIENTS NEEDS / PROBLEMS POLICIES PROGRAM/ ACTIVITY INPUT (RESOURCES) PROCESS OUTPUT OUTCOME Objective Achievement (rate / level ) OBJECTIVE Needs Fulfillment / Problem alleviation (rate / level) Mission Goals  Arunaselam Rasappan (1992)
  38. 38. PERFORMANCE EVALUATION * SYSTEMATIC & DETAILED REVIEW OF THE ACTIVITY * TO ASSEESS TO WHAT EXTENT IT HAS MET WITH PREDETERMINED GOALS AND OBJECTIVES * EXAMINE ISSUES OF EFFICIENCY, ECONOMY, AND APPROPRIATENESS OF THE ACTIVITY.
  39. 39. PERFORMANCE EVALUATION * FORMATIVE EVALUATION * SUMMATIVE EVALUATION * META EVALUATION * EVALUATION OF “3E”s & “A”
  40. 40. PERFORMANCE EVALUATION <ul><li>FORMATIVE EVALUATION - </li></ul><ul><li>LINKED WITH KAIZEN & </li></ul><ul><li>CONTINUOUS IMPROVEMENT </li></ul><ul><li>ANNUAL EVALUATIONS </li></ul><ul><li>- LINKED WITH BUDGET </li></ul><ul><li>- EVALUATION ACTION PLAN </li></ul><ul><li>SUMMATIVE EVALUATIONS </li></ul><ul><li>- ONCE IN 5 YEARS </li></ul>
  41. 41. ProLL EVALUATION POINTS FE Clients Target Group/s Stakeholders SE FE Relevance Validity Applicability SE SE Relevance Appropriateness Scope Coverage Relevance Appropriateness Scope Coverage SE FE Efficiency Effectiveness Economy FE Clients’ Charter Performance Targets Micro Accounting TQM & Quality Productivity Measures Service Recovery Counter Service Zero Defect ISO 9000 SE FE Quantity /Quality Timeliness /Cost Appropriateness SE FE Summative Evaluation Points Formative Evaluation Points CLIENTS BASIC NEEDS/ PROBLEMS POLICY PROGRAM/ ACTIVITY INPUT (RESOURCES) PROCESS OUTPUT (SERVICES/ PRODUCTS Efficiency Effectiveness Economy OUTCOME/ IMPACT/ CHANGES Positive Negative Unintended Derivative SE FE Efficiency Effectiveness Economy Objective Achievement ( rate/level ) FE SE Funds Manpower Materials Equipment Mission Goals OBJECTIVES Needs Fulfillment/ Problem Alleviation (Degree/Level) FE SE
  42. 42. PERFORMANCE EVALUATION <ul><li>EVALUATION ISSUES: </li></ul><ul><li>EFFECTIVENESS ISSUES </li></ul><ul><li>EFFICIENCY ISSUES </li></ul><ul><li>ECONOMY ISSUES </li></ul><ul><li>APPROPRIATENESS </li></ul><ul><li>ISSUES </li></ul>
  43. 43. PERFORMANCE MEASUREMENT - DANGERS AND FALLACIES GOAL DISPLACEMENT QUANTITATIVE DRIVEN PROCESS OUTPUT DRIVEN FOCUS ON TANGIBLE OUTPUTS INDICATORS AS THE END OUTCOME OBSESSION COMPARTMENTATION
  44. 44. GUIDELINES FOR EFFECTIVE PERFORMANCE MANAGEMENT <ul><li>USE PROGRAM LOGIC APPROACH </li></ul><ul><li>CORRECT CLIENT IDENTIFICATION </li></ul><ul><li>CORRECT NEEDS/PROBLEMS I.D. </li></ul><ul><li>PiL & ToR ALIGNMENT </li></ul><ul><li>STRATEGIC PLAN, CLEAR GOALS </li></ul><ul><li>& OBJECTIVES </li></ul><ul><li>INPUT-OUTPUT-OUTCOME LINK </li></ul><ul><li>INTEGRATION WITH NPM EFFORT </li></ul>
  45. 45. GUIDELINES FOR EFFECTIVE PERFORMANCE MANAGEMENT * PRIORITZE ALL PERFORMANCE MEASURES * CLEAR PERFORMANCE STANDARDS & RESPONSIBILITY * QUANTITATIVE & QUALITATIVE * COMPARE PERFORMANCE * EVALUATION & CONTINUOUS IMPROVEMENT * INTEGRATE INPUTS & OUTPUTS WITH OUTCOMES
  46. 46. BUDGET REFORM IMPLEMENTATON STRATEGIES * STRATEGIC PLANNING * PREPARATORY WORK * INTER-AGENCY COORDINATION * ENABLING MECHANISMS * PILOT TESTING * STAGGERED IMPLEMENTATION * STAGGERED INTENSITY
  47. 47. BUDGET REFORM IMPLEMENTATON - MISSING LINKS * OWNERSHIP & COMMITMENT FROM ALL LEVELS * PERFORMANCE MEASUREMENT SYSTEM * PERFORMANCE INFORMATION SYSTEM * INTEGRATION WITH OTHER MANAGEMENT REFORMS * INTER-AGENCY COORDINATION
  48. 48. BUDGET REFORM & POLICY-MAKING * MAJOR MISSING LINK * INTRICACIES OF POLITICAL CONSIDERATIONS * POLITICAL V/S ADMINISTRATIVE DRIVEN * POLICY CONSIDERATIONS AS KEY COMPONENT OF BUDGETING * NEED FOR INTEGRATION BETWEEN PERF. MNGT, PERF. EVALUATION & POLICY-MAKING
  49. 49. BUDGETING, FISCAL DISCIPLINE, ALLOCATIVE EFFICIENCY & OPERATIONAL EFFICIENCY
  50. 50. BUDGETING, FISCAL DISCIPLINE, ALLOCATIVE EFFICIENCY & OPERATIONAL EFFICIENCY * IMPROVED FISCAL DISCIPLINE * Budget Discipline * Resource Predictability * Improved Planning * Reduced Supplementaries * IMPROVED OPERATIONAL DISCIPLINE * Improved financial mng’t * Less budget overruns * Focused Expenditures * Better value-for-money * Reduced Wastage
  51. 51. BUDGETING, FISCAL DISCIPLINE, ALLOCATIVE EFFICIENCY & OPERATIONAL EFFICIENCY * LIMITED ALLOCATIVE EFFICIENCY * Reasonable success at agency levels * Limited success at politiical levels * Room for improvement
  52. 52. BUDGETING EFFORTS TOWARDS IMPROVING EFFICIENCY GOVERNMENT COMMITED TOWARDS IMPROVING EFFICIENCY: * ENHANCED STRATEGIC PLANNING * PERFORMANCE PLANNING * MINIMIZING AD-HOC BUDGETS * LINKING RESOURCES & POLICY * MINIMIZE ONE-OFFS * EXPENDITURE CAPS * BALANCED BUDGET APPROACH * REDUCED ENTITLEMENTS & CHARGED EXPENDITURES * EXCEPTIONS REPORTING * COST CONSCIOUSNESS * FLEXIBILITY FOR ACCOUNTABILITY
  53. 53. ACCOUNTING REFORMS
  54. 54. ACCOUNTING REFORMS <ul><li>MINIMAL LINKS WITH BUDGET </li></ul><ul><li>REFORMS </li></ul><ul><li>ACCOUNTING REFORMS FROM 1960s </li></ul><ul><li>MAJOR REFORMS LINKED BUT </li></ul><ul><li>OTHERS WERE PIECEMEAL </li></ul><ul><li>MAJOR ACCOUNTING REFORMS </li></ul><ul><li>LINKED TO BUDGETS: </li></ul><ul><ul><li>MODIFIED CASH ACCOUNTING </li></ul></ul><ul><ul><li>COST INFORMATION </li></ul></ul><ul><ul><li>DECENTRALIZED ACCOUNTING </li></ul></ul><ul><ul><li>INTEGRATED INFORMATION </li></ul></ul>
  55. 55. ACCOUNTING REFORMS <ul><li>CASH ACCOUNTING </li></ul><ul><li>MODIFIED CASH ACCOUNTING </li></ul><ul><li>SELF-ACCOUNTING AGENCIES </li></ul><ul><li>DECENTRALIZATION TO </li></ul><ul><li>STATES AND AGENCIES </li></ul><ul><li>INTEGRATED REPORTING </li></ul><ul><li>MICRO-ACCOUNTING </li></ul><ul><li>ELECTRONIC GOVERNMENT </li></ul>
  56. 56. BUDGETING, FISCAL RISKS & CONTINGENT LIABILITIES <ul><li>SPECIAL CIRCUMSTANCES </li></ul><ul><li>OF DEVELOPING COUNTRIES </li></ul><ul><li>TRANSPARENCY ISSUES IN </li></ul><ul><li>BUDGETING </li></ul><ul><li>COMPLIANCE WITH </li></ul><ul><li>ACCOUNTING PRINCIPLES </li></ul><ul><li>LINKAGE WITH BUDGETING </li></ul><ul><li>PRACTICES </li></ul>
  57. 57. TIME FRAMEWORK FOR BUDGETING
  58. 58. TIME FRAMEWORK FOR BUDGETING <ul><li>ANNUAL BUDGETING </li></ul><ul><li>PERFORMANCE BUDGETS & </li></ul><ul><li>MULTI-YEAR FOCUS </li></ul><ul><li>ELEMENTS OF MULTI-YEAR </li></ul><ul><li>PLANNING & CEILINGS </li></ul><ul><li>MODIFIED MULTI-YEAR </li></ul><ul><li>BUDGETING WITH ESTIMATED </li></ul><ul><li>RESOURCE CERTAINTY </li></ul><ul><li>FORWARD ESTIMATES - DEVT </li></ul><ul><li>V/S OPERATING BUDGETS </li></ul>
  59. 59. IMPACT OF BUDGET REFORMS - MAJOR REFORM FEATURES & IMPACT <ul><li>ACCOUNTABILITY FOR FLEXIBILITY </li></ul><ul><li>ANNUAL BUDGET CEILINGS </li></ul><ul><li>PROGRAM AGREEMENTS & </li></ul><ul><li>PERFORMANCE FRAMEWORKS </li></ul><ul><li>FUNDS TRANSFER FLEXIBILITY </li></ul><ul><li>EFFICIENCY DIVIDENDS </li></ul><ul><li>PERFORMANCE MEASUREMENT </li></ul><ul><li>PROGRAM EVALUATION & </li></ul><ul><li>POLICY-MAKING PROCESSES </li></ul>
  60. 60. “ RESULTS ORIENTED BUDGETING REFORMS: MALAYSIA & SINGAPORE” WORLD BANK Washington, DC 15 JULY, 1999 ARUNASELAM RASAPPAN , PhD. EXECUTIVE DIRECTOR ARTD (Malaysia) Management, Evaluation, & Research Associates Kuala Lumpur

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