Outcome Based Budgeting an integrated approach to public

Outcome Based Budgeting an integrated approach to public sector performance management in Malaysia National Budget Office Ministry of Finance Malaysia 28 August 2014 LOGO www. themegallery. com

Outcome Based Budgeting an integrated approach to public sector performance management 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 Critical Success Factors & Challenges in implementing OBB 5 2

Performance Management in Public Sector Setting National Priorities & Goals Revenue policy Macroeconomic Planning MTF Debt policy Summative Evaluation Formative Program Rectification Program Delivery Results Based Budget Formulation Program Implementation Performance Monitoring & Reporting Outcome planning Performance Budgeting Delegation and accountability Expenditure Management 3

Budgetary Reforms in Malaysia l a n o i t i Trad 69 19 1957 - Detailed Controls & Discipline • Incremental line item budgeting PPBS MBS OBB 90 19 1969 - Programs & Performance • Program Performance • Program. Activities • Performance Indicators • Monitoring & Evaluation 13 20 1990 - Accountability, flexibility & delegation • Disaggregated Budget • Budget Ceilings • Program Agreements • Exceptions Reporting • Monitoring & Evaluation te da 2013 Integrated Approach • Integration • Alignment • Budgeting for results • Results Reporting • Monitoring & Evaluation 4

Presentation outline 1 Introduction 2 Outcome Based Budgeting 3 Integrated approach to OBB using Logic Model 4 OBB implementation journey 5 Challenges in implementing OBB 5

Why Change was required? ? Greater demand for quality results Need to rationalise government expenditure & improve public sector services delivery Government has identified six transformation levers: Focus on outcomes Systematic monitoring and evaluation system Accountability in the public sector and authority over resources SIX LEVERS Coordination of operating and development budgets Vertical alignment of national priorities and ministry activities Managing cross cutting initiatives 6

OBB Strategic Cycle Performance reporting and policy formulation Results Reporting Managing information for monitoring, evaluation and decision support system Planning for Outcome Developing the strategic Results Framework for the Ministry Budgeting for Outcome Monitoring & Evaluation Preparing the resource requirements to drive the ministry results 7

OBB plays a key role in linking the national transformation pillars from implementation to RESULTS… TRANFORMATION PILLARS OBB ENVIRONMENT RESULTS Planning for outcome Government Transformation Programme Economic Transformation Results Reporting Programme Budgeting for Outcome • Strategic Reform M&E Initiatives • National Key Areasmanagement • Economic Strategic VISION 2020 tool for managers at all levels • Structured mechanisme linking national planning to implementation at agencies • Vertical alignments • Malaysia’s Horizontal linkages • Integrated Medium-term Plan budgeting (10 th & 11 th Plan) 8

National Results Framework STR. THRUST 1 STR. THRUST 2 STR. THRUST 3 Creating the Environment for Unleashing Economic Growth Moving towards Inclusive Socio-Economic Development Developing and Retaining a First-World Talent Base TERAS STR. THRUST 4 STRATEGIK 4 Building an Environment that Enhances Quality of Life TERAS STR. THRUST 5 STRATEGIK 5 Transforming Government to Transform Malaysia KRA 1 KRA 2 KRA 3 KRA 4 KRA 5 KRA 1 KRA 2 KRA 3 KRA 4 KRA 5 KRA 6 5 National Outcomes 4 National Outcomes 5 National Outcomes 6 National Outcomes 4 National Outcomes 5 National Programmes 6 National Programmes 5 National Programmes 10 National Programmes 4 National Programmes 9 Source: EPU 9

Programme-Activity Structure 10 th Malaysian Plan KRAs 10 th Malaysian Plan Outcomes National Programmes Ministry Outcome 1 Min. Prog. 1 Activity 2 Project Outcome 3 Min. Prog. 2 Activity 3 Activity 1 S/Activity Outcome 2 Outcome n Min. Prog. 3 Activity 5 Sub-Activity Project Activity n Activity 7 Activity 6 Activity 4 Mini. Prog. n Activity 8 Sub-Activity Project Ministry level Results Framework National Results Framework (NRF) Strategic Thrusts 10

Integrated approach under OBB ü Vertical alignments ü Horizontal linkages ü Integrated budgets National level National Strategic Thrusts National Outcome Key Performance Indicator National Programme Ministry level Ministry’s Outcome Key Perf. Indicator Programme level Prog. Outcome KPI Activity NRF Ministry level Ministry’s Outcome MES Key Perf. Indicator Programme level Prog. Outcome KPI PPMF Activity level Activity ltlevel Activity level i level t u Activity level l i b Activity Outcome bu Outcome re a Activity level e r s Outcome get Activity Outcome Activity KPI s a. Activity KPI t e d Outcome g KPI Bu KPIOutput Activity KPIOutput APMF Activity Output Activity Bud Activity KPIOutput Activity PI Output PI PI Activity PI 11

Presentation outline 1 Introduction 2 Outcome Based Budgeting 3 Integrated approach to OBB using Logic Model 4 OBB implementation journey 5 Challenges in implementing OBB 12

Linear Logic Model Implementation Outcomes are the changes we bring to a problem or need situation INPUT We have a tendency to focus on Inputs PROCESS OUTPUT …and outputs are assembled based on inputs OUTCOME The focus should be on Outcomes When Planning 13

Outcome Needs/Problem Triangulation NEEDS & PROBLEMS ANALYSIS OUTCOMES Addressing Needs and Problems 14

FEDERAL TREASURY (NATIONAL BUDGET OFFICE) NOVEMBER Determination of ET by Treasury JANUARY Call Circular for New Year Estimates BUDGET CYCLE March Receive submissions and BRO makes Individual Study Agencies Prepare and Submit New Year Estimates MAY-JULY Budget examination APRIL Preliminary Analysis JULY - AUGUST Approval of New Year Estimates by the Minister of Finance and Cabinet SEPTEMBER Budget Document Printed and submitted to Parliament Disbursement/Reporting by Accountant General Budget Execution by Agencies END OF DECEMBER Minister of Finance issues Warrant of Expenditure SEPTEMBER-DECEMBER Parliament Debates and Approves New Year Budget

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 Challenges in Implementing OBB 16

OBB Implementation Journey 2016 > 2014 - 2015 2012 -2013 2010 - 2011 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 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 Full implementation of OBB recommendations including full systems and institutions Initiate COE & evaluation cycle to be operational Budget prep. for 2016 to be fully OBB compliant PHASE 2 Integrated performance monitoring & reporting to be 17

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 Critical Success Factors & Challenges in Implementing OBB 5 18

Critical Success Factors OUTCOMES Performance information must be demand driven by stakeholders OUTPUTS Leaders must empower their team and execute strategy BROs must focus on program performance PROCESS INPUTS and accountability Sustainable capacity building Report on performance through effective monitoring and evaluation 19

Challenges in implementing OBB 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 20

My. Results: Performance Management System Ministry/Agency Planning Budgeting Monitoring Evaluation Reporting Demand Analysis 21

thank you terima kasih myresults@treasury. gov. my