Integrating Planning, Performance, and Budgeting

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Integrating Planning, Performance, and Budgeting

• Bill Dorotinsky
• The World Bank

Istanbul June 7, 2005
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Planning to what end?
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How to make planning effective?

• even the best planning eventually degenerates
  into work
• and needs to do so to be relevant
• only the military have time and discipline to do
  extensive contingency planning
• Common requirement for effective planning
  resource constraints
• Why a separate planning process? Why not build it
  into the budget process?
• How?
• Help Government reflect plans in budget process
• Early engagement of policy officials in budget
  process
• At ministry level
• Provide annual budget ceilings (multi-year)
• Require ministry/sector plan
• Give agency flexibility to allocate resources
• Monitor whether plan is reflected in resource
  allocations

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Performance of what, for whom?

• Different systems have been developed to meet
  different intents, problems
• Government to society (Oregon accountability)
• Bureaucracy to Elected officials (UK Next Steps
  accountability Brazil PPA US High Impact Agency
  Initiative Mexico National Plan)
• Agencies to their managers (US GPRA
  performance)
• Ministries/programs to budget office (US PART
  efficiency, effectiveness, parsimony)
• Service providers to purchasers (balanced
  scorecard accountability)

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Many choices
How to integrate depends on the nature, intent of
performance measurement

• Time frame
• Shorter favors process, output measures
• Longer allows outcome measures
• Type of assessment, who does it, uses it
• Annual, general for budget allocation (budget
  office)
• Continuous, indicator-based, for program managers
  (program manager)
• Annual performance contract assessment (agency,
  budget office for elected/senior official)
• Funding or termination (impact or program
  evaluation, professional evaluators)
• Performance auditing (for legislature, external
  auditor for CEO by internal auditor)
• Management improvement (citizens, client
  satisfaction surveys)

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And other determining factors

• Type of program, activity
• Research, service delivery
• If, when outcomes can be known
• Railroads
• Cost-avoidance accounting

Bureaucracy. James Q. Wilson. Basic Books.
1989. See especially Chapter 9, Compliance
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Implementing effective performance monitoring
requires

• Setting organizational incentives to support
  performance monitoring
• Getting performance monitoring consistent with
  organizational culture
• Need for central unit to play active and
  effective leadership role in defining criteria
  and implementing practical performance monitoring
• Linking ongoing performance measurement with more
  periodic program and policy evaluations
• Attention to client/customer/citizen in
  developing performance monitoring

Monitoring Performance in the Public Sector
Future Directions from International Experience.
Mayne, John and Eduardo Zapico-Goni, eds.
Transaction Publishers London, 1997. Pp.22-4.
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Integration of performance and financial
management is easier where

• strategic/target objective setting is linked to
  resource allocation
• global or output-based budgeting is in place
• full-cost activity accounting is in place
• programs consist of tangible and measurable
  products or services
• integration is attempted at the level of program
  management and operational management
• the impact of programs can be seen soon after
  delivery
• the results can be attributed to the program with
  high degree of confidence

Integrating Financial Management and
Performance Management. OECD PUMA, July 1999. P.
9.
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Bottom-line

• Integrating performance into budget and
  management process more challenging
• But careful thought and planning can lead to
  reasonable systems