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Outcome Based Budgetingan integrated approach to public sector performance management in Malaysia
National Budget OfficeMinistry of Finance Malaysia
28 August 2014
Presentation outline
1 Performance management & budgetary reforms
2 Factors taken into consideration under OBB
3 Integrated approach to OBB using Logic Model
4 OBB implementation journey
5 Critical Success Factors & Challenges in implementing OBB
2
Outcome Based Budgetingan integrated approach to public sector
performance management
Macroeconomic Planning
MTF
ResultsBased Budget
Formulation
Program Implementation
Program Delivery
Evaluation
Revenue policy
Debt policy
Formative
OutcomeplanningSummative
Setting National Priorities &
Goals
Program Rectification
Expenditure Management
Delegation and accountability
Performance Budgeting
PerformanceMonitoring
& Reporting
Performance Management in Public Sector
3
Budgetary Reforms in Malaysia
4
Detailed Controls & Discipline• Incremental
line item budgeting
Programs & Performance
• Program Performance
• Program-Activities
• Performance Indicators
• Monitoring & Evaluation
Accountability, flexibility & delegation
• Disaggregated Budget
• Budget Ceilings• Program
Agreements• Exceptions
Reporting• Monitoring &
Evaluation
Integrated Approach
• Integration• Alignment• Budgeting for
results • Results
Reporting• Monitoring &
Evaluation
TraditionalPPBS
MBSOBB
1957 - 19691969 - 1990
1990 - 20132013 - date
Presentation outline
1 Introduction
2 Outcome Based Budgeting
3 Integrated approach to OBB using Logic Model
4 OBB implementation journey
5 Challenges in implementing OBB
5
SIX LEVERS
Vertical alignment of national priorities and
ministry activities
Managing cross cutting initiativesCoordination of
operating and development
budgets
Accountability in the public sector and
authority over resources
Systematic monitoring and evaluation system
Focus on outcomes
Why Change was required??
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Greater demand for quality results Need to rationalise government expenditure & improve public
sector services delivery Government has identified six transformation levers:
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Planning for Outcome
Budgeting for Outcome
Monitoring & Evaluation
Results Reporting
Developing the strategic Results
Framework for the Ministry
Preparing the resource
requirements to drive the ministry
results
Managing information for monitoring, evaluation and
decision support system
Performance reporting and
policy formulation
OBB Strategic Cycle
Economic Transformation
Programme• Strategic Reform
Initiatives• National Key
Economic Areas
Malaysia’s Medium-term Plan
(10th & 11th Plan)
Government Transformation
Programme
VISION 2020
• Strategic management tool for managers at all levels
• Structured mechanisme linking national planning to implementation at agencies
•Vertical alignments•Horizontal linkages•Integrated budgeting
TRANFORMATION PILLARS OBB ENVIRONMENT
OBB plays a key role in linking the national transformation pillars from implementation to RESULTS…
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RESULTSPlanning for
outcome
Budgeting for Outcome
M&E
Results Reporting
5 National Programmes
6 National Programmes
10 National Programmes
4 National Programmes
5 National Programmes
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Creating the Environment for Unleashing Economic
Growth
Moving towards Inclusive Socio-Economic Development
KRA3
Developing and Retaining a First-World Talent Base
KRA3KRA3
KRA4
KRA 1
KRA5
KRA2
KRA4
KRA1
KRA 1
KRA 2
KRA 3
KRA 4
KRA 6
KRA 2
KRA 4
KRA3
KRA 1
KRA 2 KRA 2
KRA 1
KRA 4
KRA 5
5 National Outcomes
4 National Outcomes
4 National Outcomes
5 National Outcomes
6 National Outcomes
TERAS STRATEGIK 4
TERAS STRATEGIK 5
KRA5
Source: EPU
Building an Environment that Enhances Quality of
Life
Transforming Government to Transform Malaysia
STR. THRUST 5STR. THRUST 1 STR. THRUST 2 STR. THRUST 3 STR. THRUST 4
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National Results Framework
Strategic Thrusts
10th Malaysian Plan KRAs
10th Malaysian Plan Outcomes
National Programmes
Mini. Prog. nMin. Prog. 3
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Activity 7 Activity n
Nati
onal
Res
ults
Fr
amew
ork
(NRF
)M
inis
try
leve
l Res
ults
Fra
mew
ork
Outcome 3 Outcome nOutcome 2
Min. Prog. 1 Min. Prog. 2
Outcome 1
Ministry
Activity 8
Programme-Activity Structure
S/Activity Project Sub-Activity Project Sub-Activity Project10
Activity levelActivity Outcome KPIActivity Output PI
Activity levelActivity Outcome KPIActivity Output PI
National levelNational Strategic ThrustsNational Outcome Key Performance Indicator National Programme
Ministry levelMinistry’s OutcomeKey Perf. Indicator Programme
Ministry levelMinistry’s OutcomeKey Perf. Indicator Programme
Programme levelProg. Outcome KPIActivity
Programme levelProg. Outcome KPIActivity
Programme levelProg. Outcome KPIActivity
Programme levelProg. Outcome KPIActivity
Activity levelActivity Outcome KPIActivity Output PI
Vertical alignmentsHorizontal linkages Integrated budgets
Activity levelActivity Outcome KPIActivity Output PI
Activity levelActivity Outcome KPIActivity Output PI
Activity levelActivity Outcome KPIActivity Output PI
Budgets are builtActivity level
Activity Outcome KPIActivity Output PI
Activity levelActivity Outcome KPIActivity Output PI
Activity levelActivity Outcome KPIActivity Output PI
Integrated approach under OBB
Budgets are built
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NRF
MES
PPMF
APMF
Presentation outline
1 Introduction
2 Outcome Based Budgeting
3 Integrated approach to OBB using Logic Model
4 OBB implementation journey
5 Challenges in implementing OBB
12
Implementation
When Planning
Linear Logic Model
INPUT PROCESS OUTPUT
…and outputs are assembled
based on inputs
We have a tendency to
focus on Inputs
OUTCOME
The focus should be on
Outcomes
Outcomes are the changes we bring to a problem or
need situation
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NEEDS & PROBLEMSANALYSIS
OUTCOMES
Addressing Needs and Problems
Outcome Needs/Problem Triangulation
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JANUARYCall Circularfor New Year Estimates
MarchReceive submissionsand BRO makesIndividual Study
APRIL Preliminary Analysis
Agencies Prepareand Submit NewYear Estimates
MAY-JULYBudget
examination
NOVEMBERDetermination of ET by Treasury
SEPTEMBERBudget DocumentPrinted and submitted to Parliament
FEDERAL TREASURY(NATIONAL BUDGET OFFICE)
BUDGET CYCLE
SEPTEMBER-DECEMBERParliament Debates andApproves New Year Budget
Budget Executionby Agencies
END OF DECEMBERMinister of Finance issuesWarrant of Expenditure
JULY - AUGUST Approval of New Year Estimates by the Minister of Finance and Cabinet
Disbursement/Reportingby Accountant General
Presentation outline
1 Performance management & budgetary reforms
2 Factors taken into consideration under OBB
3 Integrated approach to OBB using Logic Model
4 OBB implementation journey
5 Challenges in Implementing OBB
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Developed OBB Conceptual Framework
Awareness Programs
Capacity Building (Trainers and RLs)
Developed Initial Results Framework for all Ministries
Continuous data quality refinement
Focus on monitoring & performance reporting
Initiate COE & evaluation cycle to be operational
Budget prep. for 2016 to be fully OBB compliant
Integrated performance monitoring & reporting to be
Full implementation of OBB recommendations including full systems and institutions
2010 - 2011
2012-2013
2014 - 2015
2016 >
OBB Policy Circular Roll out of OBB to all
ministries (Parallel in 2012)
Data validation & refinement (selected Min initiative)
Strengthening the role of MOIC in Planning
PHASE 1
OBB Implementation Journey
PHASE 2
Presentation outline
1 Performance management & budgetary reforms
2 Factors taken into consideration under OBB
3 Integrated approach to OBB using Logic Model
4 OBB implementation journey
5 Critical Success Factors & Challenges in Implementing OBB
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Critical Success Factors
Performance information must be demand driven by stakeholders
Leaders must empower their team and execute strategy
BROs must focus on program performance and accountability
Sustainable capacity buildingReport on performance through effective
monitoring and evaluation
OUTPUTS
INPUTS
PROCESS
OUTCOMES
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Understanding the concepts
Role of management in strategy building
Quality of information in the results framework
Culturalising performance
Redefining the roles of budget review officers – focus on performance & accountability
Sustainable capacity building and frequent movement of OBB trainers
Identifying the right IT solution and translating business requirements into an IT system
Challenges in implementing OBB
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MyResults: Performance Management SystemMinistry/Agency
Planning
Budgeting
Monitoring
Evaluation
Reporting
Demand Analysis
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