Performance Management May 2011

Purpose Align resources, activities and outputs with government objectives to achieve outcomes Encourage improvements in efficiency (outputs) and effectiveness (outcomes) Facilitate maintenance of aggregate fiscal discipline

The Quest for Performance Program budgets 50’s, 60’s Zero-base budgeting ‘70s New Public Management and Performance Budgeting from 80’s Development Effectiveness Agenda Paris 2007 & Accra 2009 P4R within WBG Data from OECD/WBG Budget Practices Survey 2007/2008. http://webnet.oecd.org/budgeting/Budgeting.aspx N= OECD 30; Non-OECD 61 of which Africa 21, Asia 9, Latin America 8, Middle East & North Africa 4, Europe and Central Asia 19

Making and Letting Managers Manage Political Set policy objectives Define and outcomes Financial Management System Flexibility in managing inputs Medium-term expenditure framework Agency Delegate authority over resources to managers Allow managers to chose delivery mechanisms Adequate information systems

Program Structure Responsibilities and competencies Definition Appropriations Resource allocation Management Definition Chart of accounts Activities, projects Integration Regulatory, policy, administrative and service delivery functions Span of control Canada Performance Framework (OECD, 2007)

Costing Identify efficiency gains Benchmarking unit costs Setting user fees Outsourcing Cost-benefit analysis Full Cost Analysis ? Within Government charges Capital charges Indirect costs and overheads

Measuring Performance Outputs (Standardization (DRGs), Weighting, Exogenous factors) Outcomes (Sufficiency, Responsibility, Exogenous factors, Time lags) Perverse Incentives Information Systems Consultation (practitioners, users, communities) Target setting (Top-down, bottom-up) Quality Control (Gaming) Oversight

Linking Results and Budgets ANAO in OECD (2007) 1. Presentational Performance Budgeting 2. Performance-Informed Budgeting 3. Direct Performance Budgeting

Performance Informed Budgeting Monitoring Problem Solving and Management Support Publication & League Tables Budget Incentives and Sanctions Management Interventions Personnel Incentives and Sanctions + Credibility ? Effectiveness ? –

Direct Performance Budgeting Country Sector Basis for Payment Honduras Primary Health Care Clinics Per capita in service areas (+Case Payments) El Salvador Rural Primary Education Number of Students Enrolled Norway Health Payment “Diagnostically Related Group” Case South Africa Primary & Secondary Education Funding norms per student incl. private schools up to 2.5 norms United Kingdom General Practitioners Per Capita Lump Sum based on Patient List + Case Payments Chile Vouchers for students Sweden Company Registration Registration Fees Capitation payments Case Payments Purchaser- Provider Fee for Service Market

Monitoring and Reporting Evaluation Audit ? Short-Term Against Targets Outputs Medium-Long Term Assess Impacts Outputs & Outcomes Across Results Chain Management System Information Quality

Implementation Leadership Coverage Pace Australia Canada Denmark Korea Top-Down Bottom-Up All Partial Big-Bang Gradual Australia Canada Denmark Korea Netherlands Sweden United Kingdom United States 1. Won’t get it right first time 2. Takes years to institutionalize 3. Requires long-term commitment