This document discusses performance budgeting and related concepts. It defines key terms like inputs, outputs, outcomes, and indicators. It also describes the results chain showing how inputs lead to activities, outputs, and intermediate and final outcomes. The document notes there are varying interests in performance like those of purchasers, suppliers, and regulators. It outlines objectives of performance budgeting like improving allocative and operational efficiency. Finally, it describes different OECD models of performance budgeting on a spectrum from contractual to program budgeting.

1. “The Vocabulary of Performance” Jim Brumby Sector Manager, Public Sector & Governance ICGFM December 2-4, 2009 CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of The World Bank is strictly prohibited

3. Defining Performance

4. Inputs, Outputs, Outcomes, Indicators

5. Output and Indicator Characteristics

6. Is our concern solely with outputs?

7. Results Chain

8. Basic Concepts: Performance Budgeting

9. Objectives of Performance Budgeting

11. Buyer of car; versus manufacturer of car

12. As a regulator, your interests are typically different from those of the regulated

13. Compliant behavior versus lightness of burden

15. Westminster; Presidential; other Parliamentary etc 2

16. Defining Performance 3 SOURCE: Produced in http://www.wordle.net/.

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.4 Outcomes: the effects on society of outputs from governmental entities 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. Indicator: Quantitative or qualitative variable that provides a simple and reliable means to measure achievement, to reflect the changes connected to actions undertaken.

19. Results Chain (Production Process) Contextual Factors Structural, institutional, and managerial arrangements 5 Inputs Activities Intermediate Outcomes Outputs Final Outcomes Effectiveness:refers to the cause and consequence relation between output and outcome and the extent to which the intervention’s objectives were achieved. Efficiency:indicates the relation between the deployed resources (input) and the delivered products or service (output) (I/O). Glossary of Key Terms in Evaluation and Results Based Management. Available from: http://www.aidharmonization.org/download/212150/glossary_of_aid_monitoring_terms.pdf Source: Dries Verlet and Carl Davos, “Evaluation of performance in the public sector: end or mean?” EGPA Study Group on Evaluation, 2008.

20. Output and indicator characteristics 6

22. Instrument of transparency

23. Performance informed budgeting

24. Instrument of accountability

25. Assists with efficiency

27. An unambiguous contractual mechanismStrongest form 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

29. Impact on decisions in resource allocation by using performance information

30. Produce and report relevant performance information

31. Assist three objectives of public expenditure management Allocative efficiency by challenging the composition of public expenditure with respect to social needs and priorities Operational efficiency by encouraging cost-effective service delivery and value for money Aggregate fiscal discipline by affecting the level of public expenditure through allocative and operational efficiency The logic is inexorable: Many countries aspire to performance budgeting; implementation is a journey rather than a destination. 8

36. Disaggregate them to the front-line level

38. As regulator

40. benchmarking

41. program evaluation

42. expenditure reviews

43. CBAKey message: Using performance information in budget decision-making ex-ante (expected targets) and/or ex-post (actual results) 9

44. End Thank You. 10