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Outcome Based Budgeting

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

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Outcome Based Budgeting

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

  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 Outcome planning Summative 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 1957 - 1969 1969 - 1990 1990 - 2013 2013 - 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. OBB Strategic Cycle 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 • Economic Transformation Programme • Strategic Reform Initiatives • National Key Economic Areas Government Transformation Programme 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)

  9. National Results Framework TERAS STRATEGIK 4 TERAS STRATEGIK 5 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 Transforming Government to Transform Malaysia STR. THRUST 2 STR. THRUST 5 STR. THRUST 1 STR. THRUST 3 STR. THRUST 4 KRA 1 KRA 1 KRA1 KRA 1 KRA 1 KRA 2 KRA 2 KRA 2 KRA2 KRA 2 KRA 3 KRA3 KRA3 KRA3 KRA3 KRA 4 KRA 4 KRA4 KRA4 KRA 4 KRA5 KRA 5 KRA5 KRA 6 6 National Outcomes 5 National Outcomes 4 National Outcomes 5 National Outcomes 4 National Outcomes 5 National Programmes 6 National Programmes 5 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 n Activity 7 Activity 1 Activity 6 Activity 2 Activity 4 Activity 8 S/Activity Sub-Activity Sub-Activity Project Project Project

  11. Integrated approach under OBB • Vertical alignments • Horizontal linkages • Integrated budgets NRF MES PPMF Budgets are built Budgets are built 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 Outcomes are the changes we bring to a problem or need situation INPUT PROCESS OUTPUT OUTCOME We have a tendency to focus on Inputs The focus should be on Outcomes …and outputs are assembled based on inputs When Planning

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

  15. 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 END OF DECEMBER Minister of Finance issues Warrant of Expenditure Budget Execution by Agencies Disbursement/Reporting by Accountant General BUDGET CYCLE FEDERAL TREASURY (NATIONAL BUDGET OFFICE) SEPTEMBER-DECEMBER Parliament Debates and Approves New Year Budget

  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 2014 - 2015 • Continuous data quality refinement • Focus on monitoring & performance reporting • Initiate COE & evaluation cycle to be operational • Budget prep. for 2016 to be fully OBB compliant • Integrated performance monitoring & reporting to be 2012-2013 • 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 2010 - 2011 • Developed OBB Conceptual Framework • Awareness Programs • Capacity Building (Trainers and RLs) • Developed Initial Results Framework for all Ministries PHASE 1 PHASE 2

  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 OUTPUTS PROCESS INPUTS 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

  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:PerformanceManagementSystem Ministry/Agency Planning Budgeting Monitoring Evaluation Reporting Demand Analysis

  22. thank you terimakasih myresults@treasury.gov.my

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