Outcome Based Budgeting

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2013 Censof Global Conference 1 5 December 2013, Dubai Performance Management in Public Sector: Outcome Based ing Mohd Sakeri Abdul Kadir OBB Project Team Ministry of Finance Malaysia 1

Presentation outline 1 Malaysia s budgetary system in perspective 2 Outcome Based ing 3 Panning, ing and M&E under OBB 4 MyResults application 5 Challenges 2

Malaysia s budgetary reform initiatives Accountability, flexibility & delegation Integrated Approach 2012 -> Detailed Controls & Discipline 1957-1968 Programs & Performance Traditional Approach Incremental line item budgeting 1969-1990 1990-2012 Prog. Performance ing System (PPBS) Program Performance Program- Activities Performance Indicators Evaluation Modified ing System (MBS) Disaggregated Ceilings MBS Program Agreements Exceptions Reporting Evaluation Outcome Based ing (OBB) Integration Alignment ing for results Results Reporting Evaluation 3

Factors taken into consideration in implementing Outcome Based ing (OBB) Greater fiscal challenges that require effective & efficient expenditure management Greater demand for accountability, quality results, doing more with less & enhanced authority over resources Limited strategic alignments and integrations Existence of overlapping programs and increasing redundancy Rising expectation on excellent public service delivery based on outputs tends to skew more towards compliance than performance Lack of systematic monitoring and evaluation system 4

OBB plays a key role in linking the national transformation pillars from implementation to RESULTS TRANFORMATION PILLARS Government Transformation Programme OBB ENVIRONMENT Economic Transformation Results Reporting Programme Strategic Reform Initiatives National Key Economic Areas Planning for outcome M&E Strategic management tool for managers at all levels Structured mechanisme linking national planning to implementation at agencies Vertical alignments Horizontal linkages Malaysia s Medium-term Plan (10 th & 11 th Plan) ing for Outcome Integrated budgeting RESULTS VISION 2020 5

OBB will focus on Performance reporting and policy formulation Planning for Outcome Developing the strategic Results Framework for the Ministry Results Reporting ing for Outcome Managing information for monitoring, evaluation & decision support system Monitoring & Evaluation Preparing the resource requirements to drive the ministry results 6

Integrated approach to results-based management Planning for results is essential to enable: National level National Strategic Thrusts National Key Results Area National Outcome Key Performance Indicator National Programme National Results Framework better budget estimates effective programmes implementation & better results delivery systematic monitoring & performance reporting structured programme evaluation Performance Planning Ministry level Ministry s Outcome Key Performance Indicator Programme (of intervention) Ministry s Results Framework (MRF) Programme level Programme Outcome Key Performance Indicator Activity Activity level Activity Outcome Key Performance Indicator Activity Output Performance Indicator Ministry Executive Summary Programme Perf. Mgt. Framework Activity Perf. Mgt. Framework 7

Strategic planning using program logic Outcome Outcome Hierarchy Analysis Problems/Needs Problem Tree Analysis & Objective Tree Analysis Clients/Stakeholders Outcomes are the changes Management tool ProLL is used in identifying problems/needs and defining the hierarchy for the outcomes at Ministry, Programme & Activity levels we are bringing to a problem or need situation linked to our clients and stakeholders So, what are the Outcomes? 8

Programme logic and linkages (ProLL) model CLIENTS/ STAKEHOLDERS NEEDS/PROBLEMS POLICIES STRATEGIES Perfomance Indicators DEMAND ANALYSIS Needs Fulfillment / Problem alleviation (rate / level) Purpose in Life / Mission/Goals/ToR PRELIMINARY OUTCOMES PROGRAMME EFFECTS Outcome Achievement (rate/level ) PROGRAMME RESULTS IMPACT TERTIARY OUTCOMES INTERMEDIATE OUTCOMES PROGRAMME PROGRAMME DELIVERY PROGRAMME OUTPUTS PROCESS OUTPUTS PROCESS/ACTIVITIES INPUTS ProLL 2010 Rasappan, Arunaselam & Winston, Jerome, CeDRE International 9

Monitoring plan: identifying right indicators KPI: target variance tolerance limit baseline Indicators describe evidence which may be used to report on the achievement of certain aspects of a programme result Under OBB, KPIs are identified for preliminary outcomes at all levels How to measure performance? KPIs based on SMART principles Specific Measurable Attainable Realistic Time bound 10

Linking planning and budgeting under OBB Integrated national plans to achieve long term objectives National programs needed to achieve integrated national plans Ministerial Programs linked to complete national programs Activities required to complete the ministerial programs National Level Ministry/Agency Level MES PPMF APMF National National Program 1 National Program 2 Ministry 1 Ministry 2 Program 1 Program 2 Program N Activitiy1 Activity 2 Activity 3 Activity N OE & DE National Program N Ministry N Program 1 Program 2 Activity 1 Activity 1 Program N Activity N 11

Program logic and results framework IMPACT TERTIARY OUTCOME INTERMEDIATE OUTCOME PRELIMINARY OUTCOME CLIENTS / STAKEHOLDERS PROBLEMS/ NEEDS ROOT CAUSES INTERVENTIONS OUTPUT PROCESS INPUT PROGRAMME 12

MyResults application PLANNING FOR RESULTS National Strategic Thrust National Key Results Area National Outcome National Programme Data is for discussion purposes only, not to be cited National level Ministry Outcome Ministry level Profiles Source of authority Clients Stakeholders Needs Problems Outcome KPI 13

MyResults application BUDGETING Data is for discussion purposes only, not to be cited Operating Expenditure General Object (accounting codes) Policies: 1. Existing policy 2. New policy 3. One-off Development Expenditure Project list 14

MyResults application PERFORMANCE MONITORING Data is for discussion purposes only, not to be cited Minitry-level Outcome & KPI Target Actual achievement < 60% 60-79% 80-99% > 99% 15

Focuses on outcome in strategic planning and budgeting will 1 Align ministries to national priorities Establish vertical linkages between Ministry-level outcomes and national-level priorities 2 Enable prioritization Use outcomes as basis of prioritization and guiding point for resource constraints and optimization 3 4 5 Eliminate wastage Encourage innovation Foster value-formoney mindset Address cross-cutting issues through identification of overlapping programs/activities and shared outcomes Encourage innovative ideas through balancing cost efficiency and achievement of intended results Change budget reviewing process to focus on program performance and results delivery, not on input utilization 6 Promote effective fiscal management Consolidation of important information into MyResults application Provide multi-year view of performance and budgeting data to support decision-making process at all levels 16

Challenges in implementing OBB OUTCOMES OUTPUTS PROCESS INPUTS Understanding the concepts Role of management in strategy building Quality of information in the results framework Redefining the roles and functions of budget review officers Sustainable capacity building and frequent movement of OBB trainers Identifying the right IT solution and translating business requirements into an IT system 17

thank you terima kasih 18 myresults@treasury.gov.my