Orienting Public Spending towards Achieving Results:

Performance and Performance Management

Joel Turkewitz

World Bank

Performance and Performance Management

• Increasing selectivity in what the government does.

• Letting managers manage

• Letting the clients speak

• Increasing transparency of what is being accomplished

What Drives Improved Performance in the Public Sector• Selectivity – focusing on core businessSelectivity – focusing on core business

– Combat – government solves all problems

• Concentration on efficiency of Concentration on efficiency of productionproduction– Combat – over emphasis on process and rule

following

Drivers of Performance (2)

• Closely aligning program design with Closely aligning program design with needs of clientsneeds of clients– Combat – over emphasis on internal

government design setting

• Increase Transparency and Increase Transparency and AccountabilityAccountability– Combat excessive discretion for managers

Definition of Performance Management

• Process of change– Initial starting point – line-item budget– Identifying what the government is doing– Grouping activities into larger programs– Determining what is produced in each program– Improving program performance through target

setting– Establishing accountability for results

Terms for the Budget Reform Process Change

• Grouping into Programs – Program-Based Budgeting

• Allocations related to Program Outputs – Output-Based Budgeting

• Setting of Performance Targets – Performance-Based Budgeting

• Ensuring Accountability System – Performance Management

Terms (2)

• Program

– Group of activities– Under a single manager– Contributing to a specific objective

Dimensions of Orienting Budgeting Towards Performance

• Defining Programs

• Identifying Outputs

• Selecting Indicators

• Measuring and analyzing indicators

• Utilizing performance information

Defining Programs

• Not merely a reclassification exercise – Establish link between government objectives

and the work done by government– Reconsider the roles and missions of

government agencies.– Match organizational structure and function.– Revise and align accounting and financial

reporting to improve management

Principles of Program Design

• One program – one objective• Hierarchical structure: program –sub-

program-activities-projects.• Size appropriate for efficient management• Clear connection between resources used

and outputs produced (and outcomes).• Capture all related activities – integrate

capital and recurrent spending

Principles (2)

• Establish accountability for the outputs of programs, sub-programs, and activities.

• Responsibility for implementing each program aligned with a single vote in the budget.

Keys to Success in Establishing Program Structure

• Establish clear rules to guide program identification and the level of sub-program and activity aggregation.

• Align programs and organizational structure of government.

• Programs and their outputs need to be designed considering the informational resources of the government.

Defining Output and Monitoring Indicators

• Internal EvaluationInternal Evaluation• Indicators Help Managers Manage

• Need to be set to focus on what managers car about

• Especially important for projects and activities

• External EvaluationExternal Evaluation• Indicators focus on outcomes – are we achieving our

objectives

• Especially important for sub-programs and programs

Defining Indicators

• For both external and internal monitoring, when performed exclusively by people in government– Too inward looking – outcomes become

outputs, Outputs become inputs

• Importance of broadening participation in indicator setting– Ensure legitimacy and relevance

Principles of Indicator Setting

• Limited in Number

• Measurable

• Relevant

• Feasible

Monitoring Performance

• Data collection and analysis strategy – Internal and external dimension

• Determination of reporting– Who– How Frequently– In What Form

Monitoring Performance Challenges

• Technical – ensuring that the system captures all costs – direct and indirect

• Culture – Agencies frequently unfamiliar with quantitative techniques and little experience

• Managerial- Ensuring the accuracy of information and the usefulness of reporting

Utilizing Performance Information

• Managers – Managing for results– “How are we doing” exercises

• Central Agencies – Holding managers accountable– Evaluation of performance

• Oversight – Parliament and Society – Are we getting what we want?

Experiences to Date

• Assists in concentrating resources to government priorities.

• Enhances efficiency primarily through managers managing for results.

• Effectiveness continues to be an issue– The local government experience – letting the

client have more voice.

Experiences (2)

• Long term process – change of public sector culture and managerial culture

• Core issue is incentives– For managers – monetary, professional, greater

discretionary authority.– Providing information that people care about

Experiences

• Sequencing– Programs with objectives– Identification of outcomes – Information on outcomes– Incorporating information into the Budget– Utilizing budgets to contain information