1. (c) 1999 Arunaselam Rasappan “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. (c) 1999 Arunaselam Rasappan THE SOCIO-ECONOMIC ENVIRONMENT in MALAYSIA/ SINGAPORE

3. (c) 1999 Arunaselam Rasappan BUDGET REFORMS & NATIONAL STRATEGIES / AGENDA _________________________________________ * DYNAMIC SOCIO-ECONOMIC ENVIRONMENT * SOCIO-ECONOMIC DEVELOPMENT * NATION-BUILDING * GLOBALIZATION * COMPETITIVENESS * ENABLING MECHANISMS

4. (c) 1999 Arunaselam Rasappan BUDGET REFORMS & OTHER CAUSAL FACTORS _________________________________________ * RISING EXPECTATIONS * TREND TOWARDS RIGHTSIZING * SCARCE RESOURCES * NEW PUBLIC MANAGEMENT INITIATIVES * INCREASING DEMAND FOR GREATER ACCOUNTABILITY

5. (c) 1999 Arunaselam Rasappan THE ACCOUNTABILITY AGENDA _________________________________________ “PROGRAM RESULTS” “SERVICE QUALITY” “MORE WITH LESS” “VALUE FOR MONEY” “RESOURCES OPTIMIZATION” “IMPROVED ACCOUNTABILITY”

6. (c) 1999 Arunaselam Rasappan FINANCIAL ACCOUNTABILITY ENSURING COMPLIANCE WITH FINANCIAL RULES AND REGULATIONS $

7. (c) 1999 Arunaselam Rasappan MANAGEMENT ACCOUNTABILITY l MANAGEMENT EFFICIENCY l ENSURING QUALITY l MINIMIZING WASTAGE l OPTIMIZING RESOURCES

8. (c) 1999 Arunaselam Rasappan PROGRAM ACCOUNTABILITY l ENSURING PROGRAM ACHIEVES OBJECTVES l PROGRAM PRODUCES MANDATED RESULTS l PROGRAM RESULTS FULFILL CLIENTS’ NEEDS l BEST OPTIONS ARE CHOSEN

9. (c) 1999 Arunaselam Rasappan BUDGET REFORMS

10. (c) 1999 Arunaselam Rasappan 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. (c) 1999 Arunaselam Rasappan BUDGET REFORMS PERFORMANCE-ORIENTED BUDGETING (1990s) * MODIFICATION TO PPBS * PROGRAM / ACTIVITY BASED * AGGREGATE CONTROL * GREATER FLEXIBILITY * PERFORMANCE BASED * RESULTS FOCUS * PERFORMANCE TOOLS

12. (c) 1999 Arunaselam Rasappan BUDGET REFORM SEQUENCING ISSUES * STAGE OF SOCIO-ECON DEV’T * RESOURCE AVAILABILITY * RESOURCE CAPACITIES * CULTURAL & VALUE SYSTEMS * FOCUSSED & STRUCTURED * PRACTICAL EXAMPLES * TECHNICAL ASSISTANCE * LEADERSHIP & VISION

13. (c) 1999 Arunaselam Rasappan ASSOCIATED PUBLIC SECTOR REFORMS

14. (c) 1999 Arunaselam Rasappan DRIVERS OF OTHER PUBLIC SECTOR REFORMS & FOCUS p CRITICAL DEVELOPMENT MECHANISMS * CHANGE AGENTS * DEV’T FACILITATORS p GLOBAL COMPETITIVENESS * MALAYSIA INC. * CHANGE AGENTS * GROWTH FACILITATORS p CAPACITY & CAPABILITY BUILDING p PUBLIC SERVICE FOCUS

15. (c) 1999 Arunaselam Rasappan ASSOCIATED PUBLIC SECTOR REFORM INITIATIVES ò PRODUCTIVITY IMPROVEMENTS ò TQM ò ISO 9000 ò QUALITY IMPROVEMENTS ò CONTINUOUS IMPROVEMENTS ò PERFORMANCE REPORTING ò INNOVATIONS IN GOVERNMENT

16. (c) 1999 Arunaselam Rasappan í ASSET MANAGEMENT í COSTING OUTPUTS/ACTIVITIES í CLIENT CHARTERS í SERVICE RECOVERY í COUNTER SERVICE í COMPLAINTS HANDLING í PERFORMANCE BUDGETING ASSOCIATED PUBLIC SECTOR REFORM INITIATIVES

17. (c) 1999 Arunaselam Rasappan LINKAGE BETWEEN BUDGET REFORMS & MANAGEMENT REFORMS Z CRITICAL ROLE OF MANAGEMENT REFORMS Z LINK WITH NATIONAL DEV’T Z LINK WITH ECON. GROWTH Z LINK WITH SERVICE QUALITY Z MISSING LINKS WITH BUDGET REFORMS Z INTEGRATED PERFORMANCE MANAGEMENT FRAMEWORK

18. (c) 1999 Arunaselam Rasappan DIFFICULTIES IN ADOPTING AN INTEGRATED PERFORMANCE MANAGEMENT FRAMEWORK Z LACK OF PROVEN AND WORKABLE MODELS Z INTRICACIES & DIFFICULTIES Z INABILITY OF POLICY-MAKERS AND PROGRAM MANAGERS Z LACK OF RESOURCES Z LACK OF EXPOSURE AND GUIDANCE

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. (c) 1999 Arunaselam Rasappan LINKAGE BETWEEN BUDGET REFORMS & RESOURCES MANAGEMENT

21. (c) 1999 Arunaselam Rasappan NATIONAL BUDGET APPORTIONMENT BETWEEN DEVELOPMENT & OPERATING BUDGET

22. (c) 1999 Arunaselam Rasappan DEVELOPMENT BUDGET = 30% OPERATING BUDGET = 70% COMPOSITION OF OPERATING BUDGET? EMOLUMENT =60-70%

23. (c) 1999 Arunaselam Rasappan The Results-Oriented Budgeting System (MBS/PBS)

24. (c) 1999 Arunaselam Rasappan THE RBB SYSTEM l IMPLEMENTED IN 1990 (1996) l BASED ON THE PPBS (1969) l NOW INTEGRATED WITH KEY ELEMENTS OF THE PPBS, ZBB, AND MBO l BASED ON THREE MAJOR ACCOUNTABILITY TYPES l “LET MANAGERS MANAGE & MAKE MANAGERS MANAGE”

25. (c) 1999 Arunaselam Rasappan THE RBB SYSTEM l TRUST & EMPOWERMENT l ACCOUNTABILITY FOR FLEXIBILITY l PERFORMANCE AGREEMENTS BETWEEN CEO & MINISTRY OF FINANCE l EXPENDITURE TARGETS BASED ON THREE YEAR BUDGET TRENDS & BUDGET FORMULA

26. (c) 1999 Arunaselam Rasappan THE RBB SYSTEM l TREATMENT OF CURRENT POLICIES, NEW POLICIES, & ONE-OFFS l PERFORMANCE AGREEMENT & ANNUAL REPORTING l VARIANCE ANALYSIS & EXCEPTIONS REPORTING l EFFICIENCY DIVIDEND l “THRESHOLD” OR EXCESS CLAUSE

27. (c) 1999 Arunaselam Rasappan BUDGET FORMULA 3-YEAR AVERAGE TO ESTABLISH EXPENDITURE TARGETPLUS INCREMENTSPLUS INFLATIONPLUS CURRENCY LOSSMINUS “ONE-OFFS”MINUS EFFICIENCY DIVIDEND

28. (c) 1999 Arunaselam Rasappan THE PERFORMANCE MANAGEMENT FRAMEWORK

29. (c) 1999 Arunaselam Rasappan  THE MISSION & PiL  STRATEGIC PLAN  GOALS & OBJECTIVES  PERFORMANCE PLAN  PERFORMANCE MANAGEMENT ELEMENTS  PERFORMANCE REPORTING  PERFORMANCE EVALUATION  USE OF PROGRAM LOGIC

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. STRATEGIC PERFORMANCE MANAGEMENT » CONSCIOUS EFFORT AT MEASUREMENT » “VALUE FOR MONEY” » PROGRAM OUTPUTS & OUTCOMES » RESOURCES AND RESULTS LINKAGES » IMPROVED EFFICIENCY & EFFECTIVENESS » REDUCED WASTAGE (ECONOMY) » APPROPRIATENESS / RELEVANCE » “KEY RESULT AREAS” » GET YOUR BASICS RIGHT FIRST! GREATER FOCUS ON :

32. THE “PROGRAM LOGIC” APPROACH  BASIC & FUNDAMENTAL QUESTIONS FIRST!  PURPOSE-IN-LIFE (PiL)  TERMS OF REFERENCE (ToR)  DOING THE“RIGHT THINGS, THE RIGHT WAY, FOR THE RIGHT BENEFICIARIES!”

33. (c) 1999 Arunaselam Rasappan PROCESS MEASUREMENT * EFFICIENCY TIME LABOR COST * EFFECTIVENESS * QUALITY * RELEVANCE * APPROPRIATENESS

34. (c) 1999 Arunaselam Rasappan IMPACT MEASUREMENT * POSITIVE * NEGATIVE * INTENDED * UNINTENDED

35. (c) 1999 Arunaselam Rasappan IMPACT MEASUREMENT * DIRECT * INDIRECT * SHORT TERM * LONG TERM

36. OUTCOMES & LOGICAL LINKAGES OUTCOME CLIENTS’ NEEDS & PROBLEMS OBJECTIVESOBJECTIVES INTERNALEXTERNAL POSITIVENEGATIVE INTENDED UNINTENDED POSITIVENEGATIVE INTERNALEXTERNAL

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. 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. PERFORMANCE EVALUATION * FORMATIVE EVALUATION * SUMMATIVE EVALUATION * META EVALUATION * EVALUATION OF “3E”s & “A”

40. PERFORMANCE EVALUATION FORMATIVE EVALUATION - LINKED WITH KAIZEN & CONTINUOUS IMPROVEMENT ANNUAL EVALUATIONS - LINKED WITH BUDGET - EVALUATION ACTION PLAN SUMMATIVE EVALUATIONS - ONCE IN 5 YEARS

41. ProLL EVALUATION POINTS FE Clients Target Group/s Stakeholders SE FE Relevance Validity Applicability 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. PERFORMANCE EVALUATION EVALUATION ISSUES: EFFECTIVENESS ISSUES EFFICIENCY ISSUES ECONOMY ISSUES APPROPRIATENESS ISSUES

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. GUIDELINES FOR EFFECTIVE PERFORMANCE MANAGEMENT USE PROGRAM LOGIC APPROACH CORRECT CLIENT IDENTIFICATION CORRECT NEEDS/PROBLEMS I.D. PiL & ToR ALIGNMENT STRATEGIC PLAN, CLEAR GOALS & OBJECTIVES INPUT-OUTPUT-OUTCOME LINK INTEGRATION WITH NPM EFFORT

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. (c) 1999 Arunaselam Rasappan BUDGET REFORM IMPLEMENTATON STRATEGIES * STRATEGIC PLANNING * PREPARATORY WORK * INTER-AGENCY COORDINATION * ENABLING MECHANISMS * PILOT TESTING * STAGGERED IMPLEMENTATION * STAGGERED INTENSITY

47. (c) 1999 Arunaselam Rasappan 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. (c) 1999 Arunaselam Rasappan 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. (c) 1999 Arunaselam Rasappan BUDGETING, FISCAL DISCIPLINE, ALLOCATIVE EFFICIENCY & OPERATIONAL EFFICIENCY

50. (c) 1999 Arunaselam Rasappan 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. (c) 1999 Arunaselam Rasappan BUDGETING, FISCAL DISCIPLINE, ALLOCATIVE EFFICIENCY & OPERATIONAL EFFICIENCY * LIMITED ALLOCATIVE EFFICIENCY * Reasonable success at agency levels * Limited success at politiical levels * Room for improvement

52. (c) 1999 Arunaselam Rasappan 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. (c) 1999 Arunaselam Rasappan ACCOUNTING REFORMS

54. (c) 1999 Arunaselam Rasappan ACCOUNTING REFORMS ò MINIMAL LINKS WITH BUDGET REFORMS ò ACCOUNTING REFORMS FROM 1960s ò MAJOR REFORMS LINKED BUT OTHERS WERE PIECEMEAL ò MAJOR ACCOUNTING REFORMS LINKED TO BUDGETS: ò MODIFIED CASH ACCOUNTING ò COST INFORMATION ò DECENTRALIZED ACCOUNTING ò INTEGRATED INFORMATION

55. (c) 1999 Arunaselam Rasappan ACCOUNTING REFORMS ò CASH ACCOUNTING ò MODIFIED CASH ACCOUNTING ò SELF-ACCOUNTING AGENCIES ò DECENTRALIZATION TO STATES AND AGENCIES ò INTEGRATED REPORTING ò MICRO-ACCOUNTING ò ELECTRONIC GOVERNMENT

56. (c) 1999 Arunaselam Rasappan BUDGETING, FISCAL RISKS & CONTINGENT LIABILITIES ò SPECIAL CIRCUMSTANCES OF DEVELOPING COUNTRIES ò TRANSPARENCY ISSUES IN BUDGETING ò COMPLIANCE WITH ACCOUNTING PRINCIPLES ò LINKAGE WITH BUDGETING PRACTICES

57. (c) 1999 Arunaselam Rasappan TIME FRAMEWORK FOR BUDGETING

58. (c) 1999 Arunaselam Rasappan TIME FRAMEWORK FOR BUDGETING ò ANNUAL BUDGETING ò PERFORMANCE BUDGETS & MULTI-YEAR FOCUS ò ELEMENTS OF MULTI-YEAR PLANNING & CEILINGS ò MODIFIED MULTI-YEAR BUDGETING WITH ESTIMATED RESOURCE CERTAINTY ò FORWARD ESTIMATES - DEVT V/S OPERATING BUDGETS

59. (c) 1999 Arunaselam Rasappan IMPACT OF BUDGET REFORMS - MAJOR REFORM FEATURES & IMPACT  ACCOUNTABILITY FOR FLEXIBILITY  ANNUAL BUDGET CEILINGS  PROGRAM AGREEMENTS & PERFORMANCE FRAMEWORKS  FUNDS TRANSFER FLEXIBILITY  EFFICIENCY DIVIDENDS  PERFORMANCE MEASUREMENT  PROGRAM EVALUATION & POLICY-MAKING PROCESSES

60. (c) 1999 Arunaselam Rasappan “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