Presentation is loading. Please wait.

Presentation is loading. Please wait.

Types of Analysis Some experts divide Budget Analysis into these types, which deal with different questions:

Similar presentations


Presentation on theme: "Types of Analysis Some experts divide Budget Analysis into these types, which deal with different questions:"— Presentation transcript:

1 Types of Analysis Some experts divide Budget Analysis into these types, which deal with different questions:

2 Types of Analyses 1. Policy 2. Risk 3. Efficiency 4. Management 5. Costs 6. Evaluation

3 1. Policy: What is the best way to spend the available money in the budget? Who should benefit?

4 Policy: WHO should spend the money? Governments? Governments? Specific ministries? Specific ministries? Individuals? Individuals? Businesses? Businesses? NGOs? NGOs? WHEN should the money be spent?

5 What is the opportunity cost of a policy? What will not get done, what will we fail to accomplish, if money is spent for Service A instead of Benefit B or Activity C?

6 Example A ministry of economy spends 10% of its budget to subsidize the site of a new factory employing 2000 workers by cutting the same amount from aid to small business that would have supported 3000 jobs.

7 What Happened? The opportunity cost was 1000 jobs.

8 Policy: If activities are grouped by program classifications that focus on results: What program or spending design will produce the best results?

9 2. Risk: What problems could occur? What problems could occur? Could the spending be delayed? Could some special factor, such as a borrowing requirement or need for intergovernmental cooperation, block the expenditure?

10 Risk Analysis What costs might increase? Are the estimates reliable? What impact could inflation have? Could there be shortages of materials or labor? What costs might increase? Are the estimates reliable? What impact could inflation have? Could there be shortages of materials or labor?

11 Risk Analysis What are the negative political implications of this allocation? Would the Government be unable to get the votes to pass it? What interests would oppose it? What arguments would be used against it? What are the negative political implications of this allocation? Would the Government be unable to get the votes to pass it? What interests would oppose it? What arguments would be used against it?

12 Risks Could the money be wasted on a mismanaged or failed activity? Does history indicate that these types of allocations do not achieve desired results or benefits? Could the money be wasted on a mismanaged or failed activity? Does history indicate that these types of allocations do not achieve desired results or benefits?

13 3. Efficiency: Is this money being spent economically or wasted? What is the administrative cost of delivering this benefit or service? How much time does it take to accomplish the service or benefit and is that an appropriate amount of time for the task?

14 Efficiency: How does the cost of these activities compare among similar places within the country? How does it compare to similar activities in other countries?

15 4. Management: Are the organizations and people using this money well managed? Is there adequate communication and supervision?

16 Management: Are a reasonable number of people assigned to the task? What is the ratio of staff to managers or supervisors?

17 5. Costs and Benefits: What specific, measurable benefits will be obtained if we invest a certain amount of budget money in an activity or project? Does the benefit justify the cost?

18 Unit Cost: How can we calculate each output cost in total? How can we calculate each output cost in total? What is the salary cost of a unit of service? What is the salary cost of a unit of service?

19 Unit Cost Example: 1. A primary school teacher costs, on average, 10,000 Odh per year. 2. The teacher will instruct 35 children. 3. The salary cost per child is? 10, = ?

20 Unit Cost Example: How many people are needed to achieve each unit of service or benefit? Example: 5 people may be needed to keep one bus in service for 24 hours. Example: 5 people may be needed to keep one bus in service for 24 hours.

21 Revenue and Cost: Does the activity produce revenue? Does the activity produce revenue? Should it produce more or less revenue that the current scheme? Should it produce more or less revenue that the current scheme? How much of the cost of the service or benefit is paid for by this revenue? How much of the cost of the service or benefit is paid for by this revenue?

22 Expenditure forecasting: What amount of budget money should this activity need next year? What amount of budget money should this activity need next year? What is the base amount from which spending for this activity should be calculated? What is the base amount from which spending for this activity should be calculated? What are the medium term (3-5 year) costs associated with this budget item? What are the medium term (3-5 year) costs associated with this budget item?

23 Expenditure forecasting: What are the long term (more than 5 year) costs?

24 6. Evaluation: What are the long term effects of this spending?

25 Evaluation: What are the spending trends for this activity?

26 Evaluation: Should this activity continue to receive budget funds?

27 Summary Analysts and their bosses need to spend time deciding: which questions to answer and what types of analysis they want to do before they start an analysis process.


Download ppt "Types of Analysis Some experts divide Budget Analysis into these types, which deal with different questions:"

Similar presentations


Ads by Google