Monitoring Performance: lessons from international experience

1. Monitoring Performance:lessons from international experience Bill Dorotinsky Budget Execution Course January 17, 2003

2. New Public Management? • Features • Formal contracting • Purchaser-provider split • Agencies - flexibility • Origins – advanced industrial countries • Applicable to developing countries?

3. Implementing effective performance monitoring requires: • Setting organizational incentives to support performance monitoring • Predictable funding • Flexible resource application at program level • Getting performance monitoring consistent with organizational culture • Individual versus group responsibility • Need for central unit to play active and effective leadership role in defining criteria and implementing practical performance monitoring • May not be MoF!!

4. Implementing effective performance monitoring requires (2): • Linking ongoing performance measurement with more periodic program and policy evaluations • Frequently, performance measures simply indicate the need for deeper evaluation • Attention to client/customer/citizen in developing performance monitoring • Citizen/beneficiary surveys not a substitute • Client satisfaction only one measure

5. 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

6. Other lessons • Measures should be ones program managers use regularly, find useful, and are part of normal management information systems • Clear model of program • Choosing the right goal and outcome measures – not easy! • Outcomes don’t supplant other measures • Performance monitoring creates “demand-pull” for better data; will change data systems • Performance monitoring as culture change, rather than merely a paper exercise: effects will vary. • stakeholder buy-in and partnering • decentralization

7. Other lessons • If central budget institutions lead performance budgeting efforts, which is natural, then a prerequisite of success is redefining the role of the central budget institution from command-and-control to collaboration. • Uncertainty breeds skepticism-- but also motivates • Great danger of misinterpretation and misuse • Underestimates of interdependence • Shorter the time horizon, more process oriented the measure • Performance budgeting is iterative, evolutionary • Need auditing of data systems and performance reports

8. Introducing performance orientation into budgets • Need not be complex • Piloting • Informal ’political’ contracts • Start with fundamentals • Mission statements • Defining programs within organizations • Defining outputs • Developing logic models of programs • Full costing of programs • Ex poste report of what was done • Benchmarking performance for similar activities

9. Other tools • Other tools for getting some handle on performance: • Public expenditure tracking surveys • Client-satisfaction surveys