Outcome Based Budgeting

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Outcome Based Budgetingan integrated approach to public sector performance management in Malaysia

National Budget OfficeMinistry of Finance Malaysia

28 August 2014

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

2

Outcome Based Budgetingan integrated approach to public sector

performance management

Macroeconomic Planning

MTF

ResultsBased Budget

Formulation

Program Implementation

Program Delivery

Evaluation

Revenue policy

Debt policy

Formative

OutcomeplanningSummative

Setting National Priorities &

Goals

Program Rectification

Expenditure Management

Delegation and accountability

Performance Budgeting

PerformanceMonitoring

& Reporting

Performance Management in Public Sector

3

Budgetary Reforms in Malaysia

4

Detailed Controls & Discipline• Incremental

line item budgeting

Programs & Performance

• Program Performance

• Program-Activities

• Performance Indicators

• Monitoring & Evaluation

Accountability, flexibility & delegation

• Disaggregated Budget

• Budget Ceilings• Program

Agreements• Exceptions

Reporting• Monitoring &

Evaluation

Integrated Approach

• Integration• Alignment• Budgeting for

results • Results

Reporting• Monitoring &

Evaluation

TraditionalPPBS

MBSOBB

1957 - 19691969 - 1990

1990 - 20132013 - date


1 Introduction

2 Outcome Based Budgeting



5 Challenges in implementing OBB

5

SIX LEVERS

Vertical alignment of national priorities and

ministry activities

Managing cross cutting initiativesCoordination of

operating and development

budgets

Accountability in the public sector and

authority over resources

Systematic monitoring and evaluation system

Focus on outcomes

Why Change was required??

6

Greater demand for quality results Need to rationalise government expenditure & improve public

sector services delivery Government has identified six transformation levers:

7

Planning for Outcome

Budgeting for Outcome

Monitoring & Evaluation

Results Reporting

Developing the strategic Results

Framework for the Ministry

Preparing the resource

requirements to drive the ministry

results

Managing information for monitoring, evaluation and

decision support system

Performance reporting and

policy formulation

OBB Strategic Cycle

Economic Transformation

Programme• Strategic Reform

Initiatives• National Key

Economic Areas

Malaysia’s Medium-term Plan

(10th & 11th Plan)

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

TRANFORMATION PILLARS OBB ENVIRONMENT

OBB plays a key role in linking the national transformation pillars from implementation to RESULTS…

8

RESULTSPlanning for

outcome

Budgeting for Outcome

M&E

Results Reporting

5 National Programmes





9

Creating the Environment for Unleashing Economic

Growth

Moving towards Inclusive Socio-Economic Development

KRA3

Developing and Retaining a First-World Talent Base

KRA3KRA3

KRA4

KRA 1

KRA5

KRA2

KRA4

KRA1

KRA 1

KRA 2

KRA 3

KRA 4

KRA 6

KRA 2

KRA 4

KRA3

KRA 1

KRA 2 KRA 2

KRA 1

KRA 4

KRA 5

5 National Outcomes

4 National Outcomes

4 National Outcomes

5 National Outcomes

6 National Outcomes

TERAS STRATEGIK 4

TERAS STRATEGIK 5

KRA5

Source: EPU

Building an Environment that Enhances Quality of

Life

Transforming Government to Transform Malaysia

STR. THRUST 5STR. THRUST 1 STR. THRUST 2 STR. THRUST 3 STR. THRUST 4

9

National Results Framework

Strategic Thrusts

10th Malaysian Plan KRAs

10th Malaysian Plan Outcomes

National Programmes

Mini. Prog. nMin. Prog. 3

Activity 1

Activity 2

Activity 3

Activity 4

Activity 5

Activity 6

Activity 7 Activity n

Nati

onal

Res

ults

Fr

amew

ork

(NRF

)M

inis

try

leve

l Res

ults

Fra

mew

ork

Outcome 3 Outcome nOutcome 2

Min. Prog. 1 Min. Prog. 2

Outcome 1

Ministry

Activity 8

Programme-Activity Structure

S/Activity Project Sub-Activity Project Sub-Activity Project10

Activity levelActivity Outcome KPIActivity Output PI


National levelNational Strategic ThrustsNational Outcome Key Performance Indicator National Programme

Ministry levelMinistry’s OutcomeKey Perf. Indicator Programme

Ministry levelMinistry’s OutcomeKey Perf. Indicator Programme

Programme levelProg. Outcome KPIActivity





Vertical alignmentsHorizontal linkages Integrated budgets




Budgets are builtActivity level

Activity Outcome KPIActivity Output PI



Integrated approach under OBB

Budgets are built

11

NRF

MES

PPMF

APMF


1 Introduction

2 Outcome Based Budgeting



5 Challenges in implementing OBB

12

Implementation

When Planning

Linear Logic Model

INPUT PROCESS OUTPUT

…and outputs are assembled

based on inputs

We have a tendency to

focus on Inputs

OUTCOME

The focus should be on

Outcomes

Outcomes are the changes we bring to a problem or

need situation

13

NEEDS & PROBLEMSANALYSIS

OUTCOMES

Addressing Needs and Problems

Outcome Needs/Problem Triangulation

14

JANUARYCall Circularfor New Year Estimates

MarchReceive submissionsand BRO makesIndividual Study

APRIL Preliminary Analysis

Agencies Prepareand Submit NewYear Estimates

MAY-JULYBudget

examination

NOVEMBERDetermination of ET by Treasury

SEPTEMBERBudget DocumentPrinted and submitted to Parliament

FEDERAL TREASURY(NATIONAL BUDGET OFFICE)

BUDGET CYCLE

SEPTEMBER-DECEMBERParliament Debates andApproves New Year Budget

Budget Executionby Agencies

END OF DECEMBERMinister of Finance issuesWarrant of Expenditure

JULY - AUGUST Approval of New Year Estimates by the Minister of Finance and Cabinet

Disbursement/Reportingby Accountant General






5 Challenges in Implementing OBB

16

17

Developed OBB Conceptual Framework

Awareness Programs

Capacity Building (Trainers and RLs)

Developed Initial Results Framework for all Ministries

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

Full implementation of OBB recommendations including full systems and institutions

2010 - 2011

2012-2013

2014 - 2015

2016 >

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

PHASE 1

OBB Implementation Journey

PHASE 2






5 Critical Success Factors & Challenges in Implementing OBB

18

Critical Success Factors

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 buildingReport on performance through effective

monitoring and evaluation

OUTPUTS

INPUTS

PROCESS

OUTCOMES

19

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

Challenges in implementing OBB

20

MyResults: Performance Management SystemMinistry/Agency

Planning

Budgeting

Monitoring

Evaluation

Reporting

Demand Analysis

21

thank youterima kasih

[email protected]

Documents

Outcome Based Budgeting