Sep. 29, 2016 Jong Wook Lee - planejamento.gov.br · Jong Wook Lee. Outline ... 5,000 10,000 1953 GNI per Capita (US$) 1945 1990 OECD Membership 1998 2007 ... BTL/BTO program Registration

Sep. 29, 2016

Jong Wook Lee

Outline

I. Background

II. Preliminary Feasibility Study

III. Project Implementation and Monitoring

IV. Performance Management and Evaluation

V. Public-Private Partnerships

VI. Digital Budget and Accounting System

2

I-1. Korea Overview Area: 100,000㎢ (WR 109th)

* Brazil : 8,515,770㎢ (WR 5th)

Population : 49 Million(28th)

* Brazil : 204 Million (WR 6th)

2015 GDP: $1,435 Billion(11th)

* Budget $294.1 Billion(20.5%)

2015 GNI per capita

: $ 27,340(42th )

1

I-2. Background of PIM Reform

The Asian financial crisis in 1997 served as an impetus for the development of public investment management systems

2

TPCM introducedPPP Law enacted

PFSRSFPE

PPP Reform MTEFTop-DownPMSDBAC

SASPBMRDBTL

1994 1997 1999 2001 2004 2005 2006

Public Sector Reform

Asian Financial

Crisis

PB

RDF

National Finance Act

4 Fiscal Reform Initiatives

4

-* Average growth rate during 1960~2010 : 7.5%

[ Economic Development & Challenges ]

Asian Economic Crisis

19801960 1970 1995

5,000

10,000

1953

GNI per Capita (US$)

19901945

OECD Membership

1998 2007

15,000

20,000Global

Economic Crisis

2009

5-year Economic Development Plan

67 79

11,505

7,607

100(1963)1,043(1977)

21,632

17,041

2013

26,205

3

I-3. SOC Investment Trends SOC investments account for 6~7% of total central government

expenditure, but on a downward trend

Increasing social & welfare expenditure due to population aging and rising demand for better quality of life

Increased need for public investment efficiency management

6

8,7 7,7 8,4 7,9 7,1

6,6

23,8 25,7 26,6 27,9 27,9 30,8

0

10

20

30

40

2005 2006 2007 2008 2009 2010 2011 2013 2015

SOC

Welfare

(% of Central Government Expenditure)

4

I-4. Unique roles of Key Players

5

Centralized decision-making with strong MoSF

MoSF holds budget formulation authority; also in charge of project selection, feasibility study and implementation monitoring

The Legislature can not introduce new spending items without consent from the administration body (Constitution § 57)

PIMAC (Public and Private Infrastructure Investment Management Center)

Established in 2001, as an affiliated body of the KDI

Enhances expertise and objectivity of PIM

PIMAC

Policy Research Div

Public Investment Evaluation Div

Public-Private Partnership

Div

7

Outline

I. Background






8

II-1. Preliminary Feasibility Study

6

What is PFS?

Brief project evaluation for budgetary decision

Introduced first in 1999

Prerequisite for budget request (the National Finance Act)

Budget request should be follow the order

Only one stage of budgeting is allowed in a fiscal year

9

PFSFeasibility

StudyBasic

DesignWorking Design

Compensation

Construction

7

Difference with previous FS*

PFS Previous FS

Owned by MoSF Executing ministries

Focused on Financial feasibility Technical feasibility

Research Cost 80~100 Mil. Won 300 Mil.~2 Bil. Won

Duration Less than 6 months Depending on size

(months~years)

*32 out of 33 projects appraised were deemed feasible in the period of 1994-97.10

II-2. Coverage of PFS

8

All new large-scale projects with KRW 50 billion or more are subject to PFS

Local governments and PPPs are also subject to PFS if central government subsidy exceeds KRW 30 billion

The following types of projects are exempted from PFS:

Typical building projects such as government offices and schools Legally required facilities such as sewage and waste treatment facilities

Rehabilitation and restoration projects from natural disasters Military facilities and national security projects

11

II-3. Process of PFS

9

Open review process and Multi-disciplinary PFS team

Well developed evaluation guidelines by sectors

Line

Ministries PFS

Council*

PFS

Team**

(7~8

people)

(1) Proposals (2) Select

(3) Draft

(4) Comment

(5) Final Report

MoSF PIMAC

(6) Decision

12

II-4. Analytic Hierarchy Process (AHP)

10

• Consistency with policy

directions

• Project risk (financing and

environmental impacts)

• Demand analysis

• Cost-benefit analysis

• Sensitivity analysis

• Financial analysis

Economic analysis

AHP weight: 40-50%

• Overall feasibility

• Prioritization

• Financing and policy suggestion

Analytic Hierarchy Process

• Regional backwardness

index analysis

• Regional economic impacts

A multi-criteria decision-making technique, combining quantitative and qualitative evaluations into a decision with a hierarchical structure

Policy analysis

AHP weight: 25-35%

Balanced regional

development analysis

AHP weight: 25~30%

AHP

If, AHP score ≥ 0.5, a project is appraised as feasible.

13

II-5. Results of PFS (1999-2013)

11

422 out of 665 projects(63.4%) were deemed feasible

243 (36.5%) projects were not feasible, thus cancelled

budget savings of 129.4 trillion won

14

Total Feasibility-verifies

Need mid- or long-term revise

projects cost projects cost projects cost

665 304 422(63.4%)

174.5(57.4%)

243(36.5%)

129.4(42.6%)

(Number, Trillion KRW)

Outline

I. Background






15

III-1. Total Project Cost Mgt(TPCM)

13

Any changes in size, costs, and time frame throughout the project cycle require preliminary consultation with MoSF

Coverage: 892 projects (254 trillion won) as of 2014

Projects whose construction period exceeds two years; and

Civil engineering projects with 50 billion won (USD 50 Mil.) or more, or architectural projects with 20 billion won (USD 20 Mil.) or more; and

Including projects implemented by local governments or private institutions that involve central government funding

Construction contingencies of up to 8% of the contract price are allowed to accommodate increased safety features and legal changes

16

PFSFeasibility

StudyBasic

DesignWorking Design

Compensation

Construction

III-2. Re-assessment Study of Feasibility(RSF)

14

Under TPCM, projects are re-assessed for their feasibility, if

TPC increases by more then 20% or

Demand forecast decreases by more than 30% according to RDF

RSF uses the same methodology and procedures as PFS

According to RSF, the project might be stop/cancelled or adjusted

RDF (Re-assessment of Demand Forecast) is conducted, when

A large scale international event or a new city development plan that is directly related to demand for a project is cancelled

An alternative way that directly competes with is suggested

5 years have passed since the latest demand forecast conducted

RSF

RDF

17

III-2. RSF Results (2003-2013)

15

18

Request After RSF Difference

Projects(A)

Cost(B)

Projects(a)

Cost(b)

Projects(A-a)

Cost(B-b)

198 90.5 159 63.8 39 26.7

(Number, Trillion KRW)

39 projects(19.7%) out of 198 are cancelled/stopped after RSF

16

III-2. RSF Results Examples Type I (cost increase)

Project : Nat’l Road #59 (Najeon~ Jinbu, 20.3 km) Improvement

Period: ‘97~15

Status: completed working design(’07.9)

Cost : $62 Mil.→237 Mil.

RSF Result(2009)

B/C : 0.08

AHP: 0.389

17

III-2. RSF Results Examples

Type II (demand decrease)

Project : Boryeong New Harbor Construction (9 berths)

Period: ’97~11

Status: completed working design(’98)

Cost : $444 Mil.

Demand(of 2011): 4.6→0.5 Mil. Ton

RSF Result(2008)

B/C : 0.24

AHP: 0.317

18

III-2. RSF Results Examples

Type III (special reason)

Project : Geoje~Tongyeong Nat’l Highway Construction (30.4km)

Period: ’02~18

Cost : $1.5 Bil.

PFS(‘02) : B/C 0.481(infeasible)

RSF Result(2010)

B/C : 0.32

AHP: 0.366

III-3. Front-loading of Budget Expenditure

19

<Economic Effect of Front-loading>

22 Utilize budget expenditure as an anti-cyclical policy

In cases of a subdued economic growth in the first half and a rapid growth in the second half of the year,

Key programs/expenditures are front-loaded during the first half of year to support economic growth and stabilization

<Economic Effect of Front-loading>0

5

10

15

20

25

30

35

40

45

50

1Q 2Q 3Q 4Q

GDP growth rate w front-loading

B

A-B > 0.2%

GDP growth rate w/out front-loadingA

Budget Execution Special Inspection Meeting monitors not only Gov. but also SOE expenditures

Outline

I. Background




V. Unified Framework with PPPs


23

IV-1. Efforts towards PB in Korea

20

2000 ~ 2002

2003 ~

2005 ~

2006 ~

Performance Budgeting (Pilot Project)- Developed Strategic Goals, Performance Objectives and Performance Indicators

Performance Goal Management System- Expanded “Performance Budgeting” to all ministries and agencies- Annual performance plan and report are required

Self-Assessment of Budgetary Program (SABP)- 1/3 of major budgetary programs are evaluated every year- results will be reflected in the formulation of MTEF and annual budget- Ineffetive projects are subject to at least 10% budget cut or project cancel.

In-Depth Evaluation- Selected programs are subject to program evaluation- About 10 programs are subject to program evaluation every year

24

IV-2. Ex-post Performance Evaluation(PE)

21

Construction projects with TPC of 30 billion won or more are subject to PE within three years of construction completion

Analyses of PE include:

Comparison and analysis of construction cost and time;

Comparison between forecasted demand and actual demand;

Feedback to future projects

Should refer to PE reports in working out basic plan of similar project

The difference between expected and actual demand should be informed to the technology service company which estimated demand

25

Outline

I. Background






26

V-1. Active in PPPs Performance of PPPs(1994~2014)

27

22

(Number, Trillion Won)

BTO BTL Total

• Operation 163(44.5) 408(22.4) 580 (68.2)

• Under Construction 30 (16.6) 31(5.3) 63 (22.4)

• Under Preparation 20 (8.4) 13(0.8) 34 (9.4)

Total 213 (69.5) 452 (28.5) 677 (100.0)

PPP taking up around 10% of Gov. investment in SOC

1,52,8 2,7 2,7

0,8

5,1 5

2,8

5,4 5,6

8,16,1

11,29,7 9,2

7,6

4,8 5,23,6

02468

1012

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

(Trillion Won)

AHP ≥0.5

PFSTraditional

Procurement

PPPs (BTO)

PPPs (BTL)

VFM>0

User-fee applicableCancel

NoYes

No

Yes

No

Yes

28

First Stage of Test(Economic Feasibility)

Second Stage of Test(Suitability for PPPs)

PPP is one of Procurement Option

Korea has a unified project selection framework for both PPPs and traditionally implemented projects

23

V-2. Unified Framework

Outline

I. Background






29

24

Users

Policy

Decision

Maker

Public

officials

People

Central Finance Information SystemFIscal Work

Support System

Homepage

Fiscal

Portal

Electronic

Approval

Budget

5-year

Fiscal Plan

Budget

Compilation

Budget

Allocation

Total

Program

Expense

Preliminary

Feasibility

BTL/BTO

program

Registration

Performance

Management

program

Execution

Completion of

program

Individual Program

Monitoring

Execution

Monitoring

Performance

Monitoring

Accounting

National

Properties/

Inventories

AR/AP

Fund

Settlement/

Cost

Revenue/

Expenditure

EBPP/EFT

Program Management

Statistical Analysis System

OLAPfiscal

EIS

DM

Budget

DW

Fund

Assets

Debt

Accounting

EDW

Budget

Accounting

Program

Management

Fiscal

Range

Fiscal

Scope

Meta Data

Related System

Local Government

Finance

Local Education

Finance

Public Entities and

Affiliated Organizations

Board of Audit and

Inspection of Korea

Business Reference

Model (BRM)


Integrate and analyze the whole process of fiscal activities

[email protected]

Documents

Sep. 29, 2016 Jong Wook Lee - planejamento.gov.br · Jong Wook Lee. Outline ... 5,000 10,000 1953 GNI per Capita (US$) 1945 1990 OECD Membership 1998 2007 ... BTL/BTO program Registration