1. The World Bank Integrating Planning, Performance, and Budgeting Bill Dorotinsky The World Bank Istanbul June 7, 2005

2. Planning to what end? TypePurposeProConObservation National Development Planning (sometimes capital) DevelopmentOutside the box thinking Without resource constraints, can be unrealistic, abstract Fell out of favor Can task a Ministry with this, rather than whole of government Policy/GovernmentNational betterment Coherent framework for setting policy Hopefully sensible, realistic Netherlands coalition agreements Australia costing of political platforms Ministry/SectorBetter achieve sector objectives Can favor outside the box thinking, but frequently treated narrowly in terms of growing sector Without resource constraints, often unrealistic With resource constraints, can be effective tool for finding alternate means of achieving objectives Bureau/Department /Agency planning Better meet their mission and workload Tend to take resources as given, and focus on improving performance within limits By itself, may not think creatively Most analogous to corporate planning

3. How to make planning effective? “even the best planning eventually degenerates into work” –and needs to do so to be relevant –only the military have time and discipline to do extensive contingency planning Common requirement for effective planning: resource constraints Why a separate planning process? Why not build it into the budget process? How? –Help Government reflect plans in budget process Early engagement of policy officials in budget process –At ministry level Provide annual budget ceilings (multi-year) Require ministry/sector plan Give agency flexibility to allocate resources Monitor whether plan is reflected in resource allocations

4. Performance of what, for whom? Different systems have been developed to meet different intents, problems –Government to society (Oregon – accountability) –Bureaucracy to Elected officials (UK Next Steps – accountability; Brazil PPA; US High Impact Agency Initiative; Mexico National Plan) –Agencies to their managers (US GPRA – performance) –Ministries/programs to budget office (US PART – efficiency, effectiveness, parsimony) –Service providers to ‘purchasers’ (balanced scorecard – accountability)

5. Many choices Time frame –Shorter favors process, output measures –Longer allows outcome measures Type of assessment, who does it, uses it –Annual, general for budget allocation (budget office) –Continuous, indicator-based, for program managers (program manager) –Annual performance contract assessment (agency, budget office for elected/senior official) –Funding or termination (impact or program evaluation, professional evaluators) –Performance auditing (for legislature, external auditor; for CEO by internal auditor) –Management improvement (citizens, client satisfaction surveys) How to integrate depends on the nature, intent of performance measurement

6. And other determining factors Type of program, activity –Research, service delivery If, when outcomes can be known –Railroads Cost-avoidance accounting Wilson’s* four organization types Outcomes ObservableNot Observable OutputsObservableProduction Organization Procedural Organization Not Observable Craft Organization * Bureaucracy. James Q. Wilson. Basic Books. 1989. See especially Chapter 9, Compliance

7. Implementing effective performance monitoring * requires * Setting organizational incentives to support performance monitoring Getting performance monitoring consistent with organizational culture Need for central unit to play active and effective leadership role in defining criteria and implementing practical performance monitoring Linking ongoing performance measurement with more periodic program and policy evaluations Attention to client/customer/citizen in developing performance monitoring * Monitoring Performance in the Public Sector: Future Directions from International Experience. Mayne, John and Eduardo Zapico-Goni, eds. Transaction Publishers; London, 1997. Pp.22-4.

8. Integration of performance and financial management * is easier where strategic/target objective setting is linked to resource allocation global or output-based budgeting is in place full-cost activity accounting is in place programs consist of tangible and measurable products or services integration is attempted at the level of program management and operational management the impact of programs can be seen soon after delivery the results can be attributed to the program with high degree of confidence * “Integrating Financial Management and Performance Management.” OECD PUMA, July 1999. P. 9.

9. Bottom-line Integrating performance into budget and management process more challenging But careful thought and planning can lead to reasonable systems