1. Performance Management May 2011

2. Purpose
Align resources, activities and outputs with government objectives to achieve outcomes
Encourage improvements in efficiency (outputs) and effectiveness (outcomes)
Facilitate maintenance of aggregate fiscal discipline

3. The Quest for Performance
Program budgets 50’s, 60’s
Zero-base budgeting ‘70s
New Public Management and Performance Budgeting from 80’s
Development Effectiveness Agenda Paris 2007 & Accra 2009
P4R within WBG
Data from OECD/WBG Budget Practices Survey 2007/
N= OECD 30; Non-OECD 61 of which Africa 21, Asia 9, Latin America 8, Middle East & North Africa 4, Europe and Central Asia 19

4. Making and Letting Managers Manage
Political
Set policy objectives
Define and outcomes
Financial Management System
Flexibility in managing inputs
Medium-term expenditure framework
Agency
Delegate authority over resources to managers
Allow managers to chose delivery mechanisms
Adequate information systems

5. Program Structure Responsibilities and competencies Definition
Appropriations
Resource allocation
Management
Definition
Chart of accounts
Activities, projects
Integration
Regulatory, policy, administrative and service delivery functions
Span of control
Canada Performance Framework (OECD, 2007)

6. Costing Identify efficiency gains Benchmarking unit costs
Setting user fees
Outsourcing
Cost-benefit analysis
Full Cost Analysis ?
Within Government charges
Capital charges
Indirect costs and overheads

7. Measuring Performance
Outputs (Standardization (DRGs), Weighting, Exogenous factors)
Outcomes (Sufficiency, Responsibility, Exogenous factors, Time lags)
Perverse Incentives
Information Systems
Consultation (practitioners, users, communities)
Target setting (Top-down, bottom-up)
Quality Control (Gaming)
Oversight

8. Linking Results and Budgets
ANAO in OECD (2007)
1. Presentational Performance Budgeting
2. Performance-Informed Budgeting
3. Direct Performance Budgeting

9. Performance Informed Budgeting
Monitoring
Problem Solving and Management Support
Publication & League Tables
Budget Incentives and Sanctions
Management Interventions
Personnel Incentives and Sanctions +
Credibility ? Effectiveness ? –

10. Direct Performance Budgeting
Country
Sector
Basis for Payment
Honduras
Primary Health Care Clinics
Per capita in service areas (+Case Payments)
El Salvador
Rural Primary Education
Number of Students Enrolled
Norway
Health
Payment “Diagnostically Related Group” Case
South Africa
Primary & Secondary Education
Funding norms per student incl. private schools up to 2.5 norms
United Kingdom
General Practitioners
Per Capita Lump Sum based on Patient List + Case Payments
Chile
Vouchers for students
Sweden
Company Registration
Registration Fees
Capitation payments
Case Payments
Purchaser- Provider
Fee for Service
Market

11. Monitoring and Reporting
Evaluation
Audit ?
Short-Term
Against Targets
Outputs
Medium-Long Term
Assess Impacts
Outputs & Outcomes
Across Results Chain
Management System
Information Quality

12. Implementation Leadership Coverage Pace Australia Canada Denmark Korea
Top-Down
Bottom-Up
All
Partial
Big-Bang
Gradual
Australia
Canada
Denmark
Korea
Netherlands
Sweden
United Kingdom
United States
1. Won’t get it right first time
2. Takes years to institutionalize
3. Requires long-term commitment