Conditional Grant Business Plan Training Process National Treasury August 2007 DAY - ONE Technical Assistance Unit

Objectives Understanding of broad policy framework governing Conditional Grants Understand alignment of Budget Cycle and Conditional Grant Cycle Understand the application and use of the RBM in the preparation of business plans Develop business plans (draft) as a learning process

Two Day Agenda DAY One DORA requirements Budget cycle, Conditional Grant Cycle and Alignment Model (where relevant) Introduction to RBM concepts and terminology DAY two Develop business plans as a learning process focusing on: Logic model – Grant Profile Performance Measurement Framework Risk Management Plan

Learning approach Lectures To share essential concepts. Group Exercises Learn by doing – test our ability to apply our knowledge to the development of actual business plans Discussions To link concepts to participants needs, build on participants experience and offer the opportunity to develop a support network. Readings Reference materials (documents and websites) will be made available to participants to pursue individual learning interests. Feedback This is your workshop. We would appreciate feedback so that we can better meet your interests and needs.

Rules of Engagement Be open to share experience, ideas, opinions Respect ideas, opinions Don’t be afraid to ask questions. We will either Answer it Park it Refer it to the group Research it and answer it later, in group or off-line

ALIGNMENT OF THE BUDGET CYCLE, CONDITIONAL GRANT CYCLE AND THE INFRASTRUCTURE DELIVERY CYCLE

MTEF Budget Preparation Cycle and Conditional Grant Planning Processes 31 Aug Mid Dec Mid Feb Draft Budget Update Budget Final Budget Budget Alloc Letter 10 x 10 MTEC MinComBud Cabinet MTBPS Budget Day The Budget Cycle The Budget Cycle is a 3 year cycle consisting of planning processes, implementation processes & closure processes being undertaken in each year. As mentioned earlier the budget should show how the targets and priorities set out in the 5 year Strategic Plan are going to be addressed. In many cases budgets are not informed by the strategic plan and actual projects. Conditional Grant Planning Processes APPROVAL 1st draft of Business Plan for next year Updated Business Plan for next year Finalising the Grant Framework for DoRA Requirements Legend: Input into Budget Process Linkages

Alignment of the MTEF Budget Cycle and the Conditional Grant Cycle Draft Budget Update Budget Final Budget Implement Budget AFS AR Draft Budget Update Budget Final Budget Implement Budget AFS Draft Budget Update Budget Final Budget Implement Budget Grant Initiation Grant Formulation & Approval Level 1 Approval: CG approved for coming yr Implementa-tion Planning Year 1: Implementation, Monitoring & Reporting Business Plan for Year 2 Year 2: Implementation, Monitoring & Reporting The Budget Cycle The Budget Cycle is a 3 year cycle consisting of planning processes, implementation processes & closure processes being undertaken in each year. As mentioned earlier the budget should show how the targets and priorities set out in the 5 year Strategic Plan are going to be addressed. In many cases budgets are not informed by the strategic plan and actual projects. Business Plan for Year 3 Legend: Input into Budget Process Linkages Budget Allocation

Infrastructure Planning Processes The Budget Cycle The Budget Cycle is a 3 year cycle consisting of planning processes, implementation processes & closure processes being undertaken in each year. As mentioned earlier the budget should show how the targets and priorities set out in the 5 year Strategic Plan are going to be addressed. In many cases budgets are not informed by the strategic plan and actual projects.

In the case where a Conditional Grant contains infrastructure the Infrastructure Delivery Cycle must be taken into consideration Draft Budget Update Budget Final Budget Implement Budget AFS AR Draft Budget Update Budget Final Budget Implement Budget AFS Draft Budget Update Budget Final Budget Implement Budget Grant Initiation Grant Formulation & Approval Level 1 Approval: CG approved for coming yr Implementa-tion Planning Year 1: Implementation, Monitoring & Reporting Business Plan for Year 2 Year 2: Implementation, Monitoring & Reporting The Budget Cycle The Budget Cycle is a 3 year cycle consisting of planning processes, implementation processes & closure processes being undertaken in each year. As mentioned earlier the budget should show how the targets and priorities set out in the 5 year Strategic Plan are going to be addressed. In many cases budgets are not informed by the strategic plan and actual projects. Business Plan for Year 3 Project Implementation Infrastructure Planning Programme Design Project Design Project Tender Legend: Input into Budget Process Linkages Budget Allocation

INTRODUCTION TO RESULTS BASED MANAGEMENT OR PERFORMANCE MANAGEMENT

Some Key Questions How does the cumulative impact of long term initiatives get measured and reported? What is the contribution of the work being done in terms of the strategic goal? How can progress be measured and reported? Who needs to get such reports? Is government getting value for its money? How can interdependencies be managed? Can a shared understanding of service delivery be generated?

What is Results-based Management Is a comprehensive approach to public management based on a client\taxpayer\citizen-centred view It focuses on external results (outcomes) rather than on internal processes to drive change It integrates strategy resources, performance, measurement, learning and adjusting to improve decision making Results information is used for learning and decisions making as well as reporting and accountability

Why results-based management (2) The expected benefits are better responses to client\taxpayer\citizen expectations, particularly with regard to value for money It puts considerable emphasis on defining and achieving results and development and improvement It facilitates an integrated and coherent approach to public management with improved accountability Management for results and not by results – is the key through arrangement of resources to achieve the outcomes

RBM Elements & Solutions Results Based Management assists in setting the stage to answer these and other questions Key elements include; The building in of a useful approach from the beginning of the strategic process; A focus on the results to be achieved; and Ongoing and continuous management over time and up and down the public sector hierarchy.

Importance in SA? Government Wide Monitoring and Evaluation System (GWM&E) Framework for Managing Programme Performance Information (PIF) Both initiatives are using RBM principles, emphasis is on: Accountability and achieving results Meeting stakeholder expectations Ensuring Value for money

RBM Cycle Programme Management Influence and Project Management NT TAU

RBM Management Framework Impact Manage/influence to achieve these Outcomes (change in behaviour) Outputs Project Manage & Budget for these Activities Inputs (deliverables)

RBM Performance Framework Impact Indicator There need to be indicators of performance at all levels Outcomes Indicator Outputs Indicator Activities Indicator Inputs Indicator

RMB Logical Framework Impact Outcomes Outputs Activities Inputs Assumptions Outcomes Assumptions Outputs Assumptions Assumptions hold true Activities THEN AND Inputs IF

Managing for Results - Principles Focus the dialogue on results at all phases of the (Programmes & Projects) development process Align programming, monitoring, and evaluation with results Keep results measurement and reporting as simple, cost-effective, and user friendly as possible Manage for, not by, results, by arranging resources to achieve outcomes Use results information for learning and decision making as well as reporting and accountability

Moving from a Focus on Outputs to a Focus on Outcomes Previous Focus How we know how well are we doing What we use to do the work What we do What we produce Who we impact REACH INPUT ACTIVITIES OUTPUTS OUTCOMES What we wish to achieve WHAT ? HOW ? WHO? WHY? New Focus Moving from a Focus on Outputs to a Focus on Outcomes

Results-Based Management: Linking Programmes to Strategic Objectives Emphasises strategic alignment of effort towards results objectives – linking programmes to strategic objectives Strategic Plan Operational Planning Process Reporting Process Planning Process UI suggest that we speak to this slide to make the point that the different planning levels need to be connected and are cascading downwards from the strategic plan, taking their direction form the strategic plan and roll up in terms of identified and clearly articulated and measurable accountabilities at each level. Operational Plan Unit Work Plan Employee Work Plan

How this is applied in SA

Focusing on Results helps… Departments to understand the difference made by their programmes to the communities they serve Departments have increased transparency and accountability Departments to better allocate resources and better design/adapt programmes and services to the needs of the people Using RBM as a management tool, Department will be in a position to learn and improve their programmes and service delivery

Some tools ‘assimilated’ by RBM Plans State of the Nation address, Budget speech Department's strategic plans and operational plans Performance measurement/monitoring systems GWM&E PIF Control system Performance audit HR engagement and accountability Performance agreements Published public service standards (Batho Pele) Programme/Project Design Logic model (results chain); Logical Analysis Framework (logframe); Results based management frameworks Risk based and audit framework

What you need to focus on!!! Change management Risk management Performance management and reporting

Change Management Necessary to minimise negative impact due to transition Benefits of good change management Performance Time New level of performance Old level of performance Initial impact of change is a decrease in productivity.

Why manage risk? Fundamental responsibility of (public service) management! Management decisions are generally made in a context of uncertainty. RBM emphasis on accountability in the pursuit of results requires a thorough identification and understanding of risk in order to have the appropriate control system in place. A proactive stance in risk management not only minimises probability and incidence of undesirable events, it also fosters innovation. ‘Risk is no longer something to be faced; risk has become a set of opportunities open to choice.’ Peter L. Bernstein, Against the Gods

RBM and Risk Risk is the uncertainty that surrounds future events & outcomes. It is a function of the probability and the impact of an event that has the potential to (negatively) influence the realisation of the organisation’s expected results. Risk increases over time, as, in a dynamic environment, numerous variables come into play, many not under any one individual or organisation’s control. Source: CIDA web site

Performance measurement Is all about… Why does the project, programme exist? What do we want to accomplish? How are going to deliver the programme? How will we know how well we are doing? What changes do we make to improve the delivery of the programme?

What outcomes & impact we wish to achieve. Project Framework Typical Focus RBM Focus Outcome Who is reached Input Output Activity What we use to do the work What we do What we produce What outcomes & impact we wish to achieve. Who Benefits Performance Measures Indicators, baselines and targets

The RBM cycle – Not a linear sequence! Commit feedback, adjust Implement Control feedback, adjust feedback, adjust Report Improve

Introduction to RBM concepts and terminology

Activities vs. Outputs vs. Outcomes “what we do” Describes a collection of functions (actions, jobs, tasks) that consume inputs/resources and whose outputs deliver benefits/impacts to a client. Outputs “what we produce” The direct products and services generated through processes or activities. Outcomes “why we do it” The effects, benefits or consequences (impacts) that occur (either in the short, intermediate, or long-term) due to the outputs of programs, processes or activities. In summary, every Program undertakes Activities that produce Outputs that contribute to the achievement of Outcomes.

Examples of Activities Activities “what we do” Describes a collection of functions (actions, jobs, tasks) that consume inputs/ resources and whose outputs deliver benefits/impacts to a client. Conduct research Publish documents Provide advice Contract for services Respond to enquiries Draft the business plan Organize Committee meetings Organize Committee travel Note that Activities contain verbs

Examples of Outputs Research papers Advice and direction Outputs “what we produce” The direct products and services generated through processes or activities without specific reference to their ultimate purpose. Research papers Advice and direction Service providers obtained and work initiated Business plan Committee reports Note that Outputs contain nouns

Examples of Outcomes A secure work environment Outcomes “why we do it” The effects, benefits or consequences (impacts) that occur (either in the short, intermediate, or long-term) due to the outputs of programs, processes or activities. A secure work environment Electronic accessibility and equality Sound management practices (accountability and reporting framework, people management, internal communications, technology support) Representative workforce Note that Outcomes refer to a changed state of being and are stated in the present tense.

Key Issues to consider when identifying outcomes Are there stated national /sectoral goals Have political promises been made that specify improved performance of the government Do citizens, polling data indicate specific concerns Is authorizing legislation present Other; Millennium Development Goals (MDGs), PoA Objectives

Indicators, Standards/Targets Indicators ( The “How”) A quantitative or qualitative attribute, statistic or parameter that, tracked over time, provides information on the condition of a phenomenon. (e.g. percentage of clients that are satisfied). Standards/Targets (The “How Much”) Specific quantitative or qualitative goals associated with specific performance indicators (e.g. 90% client satisfaction). Standards imply product and service levels to which an organization is prepared to commit. Targets imply a desired goal that may be more ambitious than a standard. In summary, Indicators, Standards and Targets are used to provide information on how efficiently and effectively the Program is being managed.

Examples of Indicators Indicators “the how” A quantitative or qualitative attribute, statistic or parameter that, tracked over time, provides information on the condition of a phenomenon Cost per unit published % of total workforce leaving the organization Time (hours) to respond to a request for service Level of satisfaction of service users/ providers

Examples of Standards/Targets Standards/Targets (the “How Much”) Specific quantitative or qualitative goals against which actual outputs or outcomes will be compared 60% of South Africans are aware of housing subsidies opportunities Training cost per new employee is $2,000 85% of workforce is satisfied with working conditions, quality of life 99% availability of IT networks

Exercise Number 1 RBM Language

Results Chain RESULTS High Control Low Influence STRATEGIC OUTCOMES INPUTS (RESOURCES) ACTIVITIES OUTPUTS OUTCOMES (IMMEDIATE) OUTCOMES (INTERMEDIATE) OUTCOMES (FINAL) A Results Chain can include multiple inputs, activities, outputs or outcomes. There are two types of Results: Outputs and Outcomes.

RBM Line of Sight

Exercise Number 2 Outcomes

Exercise Number 3 Identifying indicators related to the Logic Model

Brief Summary RBM goes beyond the work we do – it interrogates the impact this has. There is a hierarchical relationship between outputs and outcomes. Each level of this logic must and can be measured. Measurements used for management and reporting. Indicators are not the same up the hierarchy.