1. Outcome Based Budgeting
an integrated approach to public sector performance management in Malaysia
National Budget Office
Ministry of Finance Malaysia
28 August 2014

2. Outcome Based Budgeting
an integrated approach to public sector performance management
Presentation outline 1
Performance management & budgetary reforms 2
Factors taken into consideration under OBB 3
Integrated approach to OBB using Logic Model 4
OBB implementation journey 5
Critical Success Factors & Challenges in implementing OBB

3. Performance Management in Public Sector
Setting National
Priorities &
Goals
Revenue
policy
Macroeconomic
Planning
MTF
Debt
policy
Summative
Outcome
planning
Evaluation
Results
Based
Budget
Formulation
Formative
Performance
Budgeting
Program
Rectification
Delegation and
accountability
Program
Delivery
Program
Implementation
Expenditure
Management
Performance
Monitoring
& Reporting

4. Budgetary Reforms in Malaysia
Traditional
PPBS
MBS
OBB
date
Integrated Approach
Integration
Alignment
Budgeting for results
Results Reporting
Monitoring & Evaluation
Accountability, flexibility & delegation
Disaggregated Budget
Budget Ceilings
Program Agreements
Exceptions Reporting
Monitoring & Evaluation
Programs & Performance
Program Performance
Program- Activities
Performance Indicators
Monitoring & Evaluation
Detailed Controls & Discipline
Incremental line item budgeting

5. Presentation outline 1 Introduction 2 Outcome Based Budgeting 3
Integrated approach to OBB using Logic Model 4
OBB implementation journey 5
Challenges in implementing OBB

6. Why Change was required??
Greater demand for quality results
Need to rationalise government expenditure & improve public sector services delivery
Government has identified six transformation levers:
Focus on outcomes
Systematic monitoring and evaluation system
SIX LEVERS
Vertical alignment of national priorities and ministry activities
Accountability in the public sector and authority over resources
Managing cross cutting initiatives
Coordination of operating and development budgets

7. Monitoring & Evaluation
OBB Strategic Cycle
Planning for Outcome
Budgeting for Outcome
Monitoring & Evaluation
Results Reporting
Developing the strategic Results Framework for the Ministry
Performance reporting and policy formulation
Managing information for monitoring, evaluation and decision support system
Preparing the resource requirements to drive the ministry results

8. OBB plays a key role in linking the national transformation pillars from implementation to RESULTS…
TRANFORMATION PILLARS
OBB ENVIRONMENT
RESULTS
Planning for outcome
Budgeting for Outcome
M&E
Results Reporting
Government Transformation Programme
Economic Transformation Programme
Strategic Reform Initiatives
National Key Economic Areas
VISION 2020
Strategic management tool for managers at all levels
Structured mechanisme linking national planning to implementation at agencies
Vertical alignments
Horizontal linkages
Integrated budgeting
Malaysia’s Medium-term Plan (10th & 11th Plan) 8

9. National Results Framework
Creating the Environment for Unleashing Economic Growth
Moving towards Inclusive Socio-Economic Development
Developing and Retaining a First-World Talent Base
Building an Environment that Enhances Quality of Life
TERAS STRATEGIK 4
Transforming Government to Transform Malaysia
TERAS STRATEGIK 5
STR. THRUST 1
STR. THRUST 2
STR. THRUST 3
STR. THRUST 4
STR. THRUST 5
KRA 1
KRA1
KRA 1
KRA 1
KRA 1
KRA 2
KRA2
KRA 2
KRA 2
KRA 2
KRA 3
KRA3
KRA3
KRA3
KRA3
KRA 4
KRA4
KRA4
KRA 4
KRA5
KRA 4
KRA5
KRA 5
KRA 6
5 National Outcomes
4 National Outcomes
5 National Outcomes
6 National Outcomes
4 National Outcomes
5 National Programmes
6 National Programmes
10 National Programmes
4 National Programmes 9
Source: EPU

10. Programme-Activity Structure
Strategic Thrusts
10th Malaysian Plan KRAs
National Results Framework (NRF)
10th Malaysian Plan Outcomes
National Programmes
Ministry
Outcome 1
Outcome 2
Outcome 3
Outcome n
Min. Prog. 1
Min. Prog. 2
Min. Prog. 3
Mini. Prog. n
Ministry level Results Framework
Activity 3
Activity 5
Activity 7
Activity n
Activity 1
Activity 6
Activity 2
Activity 4
Activity 8
S/Activity
Project
Sub-Activity
Project
Sub-Activity
Project

11. Integrated approach under OBB
National level
National Strategic Thrusts
National Outcome
Key Performance Indicator
National Programme
Vertical alignments
Horizontal linkages
Integrated budgets
NRF
Ministry level
Ministry’s Outcome
Key Perf. Indicator
Programme
Ministry level
Ministry’s Outcome
Key Perf. Indicator
Programme
MES
Programme level
Prog. Outcome
KPI
Activity
Programme level
Prog. Outcome
KPI
Activity
Programme level
Prog. Outcome
KPI
Activity
Programme level
Prog. Outcome
KPI
Activity
PPMF
Activity level
Activity Outcome
KPI
Activity Output PI
Activity level
Activity Outcome
KPI
Activity Output PI
Activity level
Activity Outcome
KPI
Activity Output PI
Activity level
Activity Outcome
KPI
Activity Output PI
Activity level
Activity Outcome
KPI
Activity Output PI
Activity level
Activity Outcome
KPI
Activity Output PI
Budgets are built
Budgets are built
Activity level
Activity Outcome
KPI
Activity Output PI
Activity level
Activity Outcome
KPI
Activity Output PI
Activity level
Activity Outcome
KPI
Activity Output PI
APMF

12. Presentation outline 1 Introduction 2 Outcome Based Budgeting 3
Integrated approach to OBB using Logic Model 4
OBB implementation journey 5
Challenges in implementing OBB

13. Linear Logic Model Implementation When Planning INPUT PROCESS OUTPUT
Outcomes are the changes we bring to a problem or need situation
INPUT
PROCESS
OUTPUT
OUTCOME
We have a tendency to focus on Inputs
…and outputs are assembled based on inputs
The focus should be on Outcomes
When Planning

14. Addressing Needs and Problems
Outcome Needs/Problem Triangulation
NEEDS & PROBLEMS
ANALYSIS
OUTCOMES
Addressing Needs and Problems

15. BUDGET CYCLE JANUARY March FEDERAL TREASURY (NATIONAL BUDGET OFFICE)
NOVEMBER
Determination of ET by Treasury
JANUARY
Call Circular
for New Year
Estimates
March
Receive submissions
and BRO makes
Individual Study
APRIL Preliminary
Analysis
MAY-JULY
Budget examination
JULY - AUGUST
Approval of New Year
Estimates by the Minister of
Finance and Cabinet
Agencies Prepare
and Submit New
Year Estimates
SEPTEMBER
Budget Document
Printed and submitted
to Parliament
SEPTEMBER-DECEMBER
Parliament Debates and
Approves New Year Budget
Disbursement/Reporting
by Accountant General
END OF DECEMBER
Minister of Finance issues
Warrant of Expenditure
Budget Execution
by Agencies

16. Presentation outline 1 Performance management & budgetary reforms 2
Factors taken into consideration under OBB 3
Integrated approach to OBB using Logic Model 4
OBB implementation journey 5
Challenges in Implementing OBB

17. OBB Implementation Journey
2016 >
Full implementation of OBB recommendations including full systems and institutions
Continuous data quality refinement
Focus on monitoring & performance reporting
Initiate COE & evaluation cycle to be operational
Budget prep. for to be fully OBB compliant
Integrated performance monitoring & reporting to be
OBB Policy Circular
Roll out of OBB to all ministries (Parallel in 2012)
Data validation & refinement (selected Min initiative)
Strengthening the role of MOIC in Planning
Developed OBB Conceptual Framework
Awareness Programs
Capacity Building (Trainers and RLs)
Developed Initial Results Framework for all Ministries
PHASE 2
PHASE 1

18. Presentation outline 1 Performance management & budgetary reforms 2
Factors taken into consideration under OBB 3
Integrated approach to OBB using Logic Model 4
OBB implementation journey 5
Critical Success Factors & Challenges in Implementing OBB

19. Critical Success Factors
OUTCOMES
Performance information must be demand driven by stakeholders
Leaders must empower their team and execute strategy
BROs must focus on program performance and accountability
Sustainable capacity building
Report on performance through effective monitoring and evaluation
OUTPUTS
PROCESS
INPUTS

20. Challenges in implementing OBB
Understanding the concepts
Role of management in strategy building
Quality of information in the results framework
Culturalising performance
Redefining the roles of budget review officers – focus on performance & accountability
Sustainable capacity building and frequent movement of OBB trainers
Identifying the right IT solution and translating business requirements into an IT system

21. MyResults: Performance Management System
Ministry/Agency
Planning
Budgeting
Monitoring
Evaluation
Reporting
Demand Analysis

22. thank you
terima kasih