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

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

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!!

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

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

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

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

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

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