A CIMA FM Special Report OUTCOME COSTING · 3 A CIMA FM Special Report | Outcome Costing List of...

A CIMA FM Special Report | Outcome Costing

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OUTCOME COSTING A significant advancement for determining public-sector cost-effectiveness

A CIMA FM Special Report

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By

Dr Alasdair MacnabDirector of Corporate Services,

Royal Botanic Garden Edinburgh

Jill McNaughtonCorporate Planning/Organisational

Performance Manager, Royal Botanic Garden Edinburgh

Falconer MitchellProfessor of Management Accounting,

University of Edinburgh Business School

ISBN: 978-1-85971-831-5

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List of Tables1. The problems of implementing outcome-based budgeting

2. The problems of implementing outcome-based budgeting – Have they been addressed by this paper?

List of Figures1. Outcome Costing Model

2. National Audit Office Value-For-Money Model

3. Outcome Cost-Effectiveness Model – Tourism & Recreation Impact

4. Calculating the Outcome Cost-Effectiveness Score

5. Outcome Cost-Effectiveness Model – National Collections Impact

6. Comparison of Outcome Cost-Effectiveness Scores

List of AnnexesA. Scottish Government’s National Performance Framework

B. Exemplar Performance Framework for Scottish Government

C. RBGE Strategy Map FY 2015/16

D. RBGE Activities Costed to Single Outputs and Outcomes

E. RBGE Impact and Activity Costs Summary

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INTRODUCTIONNational Performance FrameworkThe devolved Scottish Government has responsibility for a substantial proportion of the country’s public services. They have developed a National Performance Framework (reproduced at Annex A) (http://www.gov.scot/Resource/Doc/933/0124202.pdf) (NPF), which underpins delivery of this political agenda and is intended to support an outcomes-based approach to funding and performance analysis. It has five objectives designed to create a more successful country through increasing sustainable economic growth. Sixteen National Outcomes related to these objectives outline what the Government wants to achieve over the next ten years. A further 50 National Indicators track progress towards the achievement of National Outcomes and ultimately the delivery of objectives. The principles of this type of framework could be applied to strategic management in the public sector by any nation, with suitable adaptation to meet local needs.

One of the National Outcomes relating to public services requires that they, among other criteria, “provide value-for-money and are continually improving”.

Outcome CostingA key component in determining value-for-money, also known as cost-effectiveness, of an outcome is to know how much resource was allocated to its achievement. The Strategic Objective Costing (SOC) model (Macnab, Mitchell & Carr (2010); Macnab & Mitchell (2012, 2014)) is based on calculating the staff effort (allocated by percentage time of staff cost) and non-salary expenditures (attributed by appropriate coding structures) allocated to activities that directly supported a specific strategic objective. By aggregating the staff and non-salary cost allocations the total cost of the objective is calculated. By tracking the cost chain from input through output to outcome objective it is possible to determine outcome costs (Macnab & Mitchell, 2014).

The Outcome Costing Model is depicted below in Figure 1.

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Outcome costs can be seen as a proxy for effort allocated to the achievement of the specified outcome and the generation of information of this type and its subsequent analysis is the focus of this paper. In determining outcome costs difficulties have arisen over consistent outcome definitions, coherent approaches by multiple government bodies, and costing methodologies. Some of these have been addressed in Macnab & Mitchell (2014) but further work remains to be done. The aim of this paper is to devise a methodology which can analyse and, therefore, determine whether value-for-money is being achieved from the outcomes being delivered by the public sector.

Outcome Cost-Effectiveness AnalysisThe Outcome Cost-Effectiveness Analysis (OCEA) methodology described later in this paper is distinctive in that it is multi-dimensional. Firstly, it addresses organisational effort by analysing what the specific outcomes are and how they have been derived from output activity. Secondly, by having a thorough understanding of how resources are

attributed throughout the value chain to the final delivery of the desired outcomes, relevant costs can be determined. These objectives are usually described in a strategy map and often contained in four or five perspectives which, in the case of the public sector, are likely to include the Government’s political ambitions. Thirdly, by associating the costs to performance (non-financial and financial), effectiveness can be determined. Finally, the time dimension for delivery of the objectives is taken into account.

The Barriers to Achieving Outcome CostingDespite its great attractions, the implementation of outcome-based costing (and budgeting) has proved to be challenging. Table 1 summarises the numerous factors already identified as problematising the design and use of outcome-based costing systems.

Figure 1. The Outcome Costing Model

Total general ledger quantum of cost

Direct resource

1

Outcome measures Outcome 1 Outcome 2 Outcome 3

Activity 1

Output 1

Output 2

Output 3

Output 4

Activity 2

Activity 3

Activity 4

Activity 5

Direct resource

2

Direct resource

3

Direct resource

4

Overheads applied to resources based

on ABC

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Table 1. The problems of implementing outcome-based budgeting

The barriers outlined above have been experienced across a range of countries where implementation of outcome budgeting has been attempted. They have proved to be extremely diffi cult hurdles to clear and many have, to date, precluded the emergence of comprehensive and fully functioning systems of outcome costing.

Output/Outcome Defi nitions and LinkagesOutcomes and their defi nition have often been unclear or too broad to make any measurement meaningful or, indeed, possible. For example, in Scotland the NPF defi nes the following National Outcomes:● Business: We live in a Scotland that is the most attractive place for doing business in Europe.● Children: Our children have the best start in life and are ready to succeed.

While these may represent aspirational and visionary statements from a political perspective, they are framed in a manner where it is diffi cult to realistically determine their successful attainment. Consequently, these statements may need to be translated into more practical aims fi rst and then broken down into achievable and measurable milestones so progress can be judged.

Thus, it is critical to the implementation of outcome costing to have clear defi nitions of both outputs (activities) and outcomes (impacts) and to establish the causal linkages between them. If public sector managers better understand what their organisations are trying to achieve (and for what purpose), they will be better able to ensure that satisfactory outcomes can be delivered. Stakeholder engagement is essential for developing these outcome defi nitions so that there is a clear consensus understanding of what is being

Problem Citation

1Identifying, selecting and evaluating outcomes in terms of success achieved.

Kong 2005, Cole & Parston 2006

2The usefulness of outcome-based information due to responsibility and controllability issues in relation to performance.

Stiefel et al 1999

3Taking action based on the system’s output e.g. should success be rewarded and failure penalised?

Caiden 1998

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Outcome defi nition may involve subjectivity, coping with multi-dimensional performance characteristics not susceptible to single measures, societal as opposed to organisational level outcomes and lack of defi nitional agreement across bodies.

Schmidtlein 1999, Carlin & Guthrie 2003, Cole & Parston 2006

5Timing differences between resource use and outcome delivery.

Macnab & Mitchell 2014

6The absence of costing systems that can function with outcomes as the cost object.

Andrews 2004

7The new transparency of these systems can create problems by exposing performance failures.

Kristensen et al 2002, Cole & Parston 2006

8Traditional budget reliance means change resistance is strong.

Andrews 2003

9Bureaucracy in adopting organisations creates a further barrier to change.

Andrews 2004

10Outcomes may only be one factor among many that are relevant to evaluating performance success.

Kong 2005

Schmidtlein 1999, Carlin & Guthrie 2003, Cole & Parston


The new transparency of these systems can create problems by exposing performance failures.

Traditional budget reliance means change resistance is

Bureaucracy in adopting organisations creates a further

Outcomes may only be one factor among many that are relevant to evaluating performance success.



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Caiden 1998

organisational level outcomes and lack of defi nitional









Caiden 1998

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Citation


Caiden 1998

susceptible to single measures, societal as opposed to organisational level outcomes and lack of defi nitional






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Citation


Stiefel et al 1999

Caiden 1998

with multi-dimensional performance characteristics not susceptible to single measures, societal as opposed to organisational level outcomes and lack of defi nitional


The absence of costing systems that can function with outcomes as the cost object.




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Citation


Stiefel et al 1999

Caiden 1998







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Citation


Stiefel et al 1999

Caiden 1998







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Traditional budget reliance means change resistance is strong.


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Outcome defi nition may involve subjectivity, coping with multi-dimensional performance characteristics not susceptible to single measures, societal as opposed to organisational level outcomes and lack of defi nitional





Citation


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9


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Taking action based on the system’s output e.g. should







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8







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Taking action based on the system’s output e.g. should success be rewarded and failure penalised?










The new transparency of these systems can create








responsibility and controllability issues in relation to












The usefulness of outcome-based information due to responsibility and controllability issues in relation to





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Identifying, selecting and evaluating outcomes in terms of




Timing differences between resource use and outcome delivery.
























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Outcome defi nition may involve subjectivity, coping with multi-dimensional performance characteristics not

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4

Outcome defi nition may involve subjectivity, coping

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The usefulness of outcome-based information due to responsibility and controllability issues in relation to performance.


4


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Identifying, selecting and evaluating outcomes in terms of success achieved.


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3



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The usefulness of outcome-based information due to




2


2


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Andrews 2004






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Kong 2005


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Kristensen et al 2002, Cole & Parston 2006Kristensen et al 2002, Cole & Parston 2006Kristensen et al 2002, Cole & Parston 2006Kristensen et al 2002, Cole & Parston 2006

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attempted by the organisation(s). Lack of clarity in linkages makes it difficult for public sector organisations to ensure that they are measuring and describing the same object (e.g. activity, objective). Clarity is also needed because costs are more readily allocated to outputs than outcomes and clarity enables alignment of purpose, which in turn permits a greater degree of accuracy when applying costs to outcomes. For example, in the Strategic Objective Costing Model (Macnab & Mitchell, 2012) staff effort and non-salary expenditures were allocated to activities that directly supported a specific strategic objective. This type of model encourages measures to be developed which also relate directly to the activity that is being costed and enables measurement of progress in a consistent manner i.e. achievement of organisational objectives (Macnab & Mitchell, 2014). By having improved knowledge about the relevant costs, better decisions can be made about effective resource allocations.

Outcomes and the Need for a FrameworkBouckaert, Geert et al (2010) agree that the outcomes for the public sector are often produced by a number of separate public sector bodies and a range of considerations (e.g. political) are taken into account in their determinations that are beyond the influence of the individual co-ordinator or the final consumer. More often than not, it is government machinery which determines what its desired outcomes should be. Public services, often delivered in isolation by individual public bodies, may only provide an outcome when the outputs of these separate bodies are coalesced. This last issue can often be problematic if no coherent inter-organisational performance management framework is in situ at individual, multi-organisational, and governmental levels. A suitable framework permits multi-organisational strategic alignment from the costed outputs of single bodies to the overarching goals/outcomes of the national government. A proposal for such a framework is offered in Macnab & Mitchell (2014), reproduced at Annex B.

A MORE RELEVANT METHODOLOGYThe ability to cost outcomes has, until recently, relied on input-based cost information. While that type of data has been the only source of reliable financial data available it suffers from the defects identified by KPMG (2011) who stated in their report that: “Governments around the world often rely on line item and input-based budgeting. The narrower focus of this approach can lead to ad hoc spending, unclear oversight and disjointed results.” Although KPMG refer to governments the same criticisms can be levelled against individual public sector organisations attempting to identify outcomes costs.

To overcome the deficiencies identified by KPMG the SOC model was developed (Macnab, Mitchell & Carr (2010); Macnab & Mitchell (2012)) to support the Royal Botanic Garden Edinburgh (RBGE) in its strategic planning activity. This was done by matching actual costs to each of its strategic objectives. The RBGE had also connected its activities to a high number of Scottish Government’s National Outcomes (11 out of 16). However, a further challenge was to develop a model to attribute resources to cost objects that will enable outcomes to be determined in relation to resource use. The strategic objectives contained in the Governance and Resources Perspectives shown in the revised RBGE strategy map (http://www.rbge.org.uk/assets/files/about_us/Corporate_Info/RBGE_Corporate_Plan_2015.pdf) (Annex C), which could loosely be termed “overhead” objectives, were re-allocated to the output objectives using an ABC methodology. The model so far had been only concerned with costing outputs. By applying the costs of performing the tasks that contribute to the outputs and, thereafter, to the relevant outcome an outcome cost can be derived (Macnab & Mitchell, 2014). Annex D provides a schematic of the RBGE process, which reflects Figure 1 above. Clear and consistent alignment of output activities to outcomes is a key ingredient of this development.

Thus, a preliminary model for costing outcomes at organisational level has been achieved and this can be the basis for developing a model for costing outcomes from a number of organisations with a common purpose (Macnab & Mitchell, 2014) and Annex B refers.

The RBGE tested this model during FY 13/14 and has produced actual data for FY 14/15 (see Annex E). It is important that any outcome costing information should be married up with qualitative assessments from the performance management system, as well as non-financial indicators, to provide an integrated perspective of organisational performance for effective, evidence-based decision-making. Outcome costing information will also be used in the model described below to determine cost-effectiveness/value-for-money.

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Capital Investment CostsThe costs included in SOC exclude capital costs. In the public sector it is usual for capital funding to be provided from separate funding streams and hypothecated for specific purposes. Such funds are depreciated in the normal way over the projected lifespan for the resource and accounted for in the financial accounts. Capital funding cannot be transferred into revenue funding allocations. Cole & Parston (2006) argue that the amortised cost of such capital investments should be included in the cost of delivering an outcome as by including these additional costs it will demonstrate whether the investment does in reality provide substance to a business case that suggests improved outcomes as a consequence of the investment, or not. Their point has considerable credibility. However, not all investment decisions are designed to improve specific outcomes. Some may be to restore a building that does nothing for delivering a particular outcome as it is a joint resource which simply provides a location for staff engaged on a variety of projects. Due to jointness in resource provision, there is no direct correlation between the investment decision and the specific outcomes. However, where this is the case then such costs should be allocated to the Land & Buildings Objective (in the case of RBGE) and then those could be re-allocated using the ABC methodology. However, a case may be made to invest in expensive equipment (e.g. a scanning electron microscope) on the basis that outputs will increase, leading to improvements in specific outcomes. It is, therefore, appropriate to include the cost of such an investment in that specific outcome’s cost-effectiveness analysis. Thus, there need to be clear rules developed on how and when to include capital investment costs. The primary purpose of the cost-effectiveness analysis is to determine whether greater effort or expense should be allocated to a particular activity to improve outcome delivery; information systems should be designed to support this purpose.

OUTCOME COST-EFFECTIVENESS Measuring Public Sector EffectivenessIn times of financial austerity achieving value-for-money becomes increasingly important to politicians, public sector managers, and the voting public in general. All of these stakeholders want to extract maximum value from our taxes. The problem is that there is no agreed methodology for calculating whether value-for-money is being achieved and then for it to be applied consistently across the public sector. A reason for this is that there are a number of services being provided to the public for which there is no price paid at the point of delivery to determine market efficiency. The National Audit Office (NAO) (http://www.nao.org.uk/successful-commissioning/general-principles/value-for-money/assessing-value-for-money) uses three criteria (the three “Es”) to assess the value-for-money of government spending i.e. the optimal use of resources to achieve the intended outcomes:

● “Economy: minimising the cost of resources used or required (inputs) – spending less;

● Efficiency: the relationship between the output from goods or services and the resources to produce them – spending well; and

● Effectiveness: the relationship between the intended and actual results of public spending (outcomes) – spending wisely.”

These relationships are depicted in Figure 2 below.

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Figure 2. National Audit Office Value-For-Money Model

Public Sector Value ModelThis section contains an outline of the requirements to develop a system for measuring public sector effectiveness and considers a number of dimensions: timeliness, value-for-money/cost-effectiveness, measurement and analysis, interpreting, and advantages and weaknesses. Cole and Parston (2006) provide a possible solution for measuring and analysing public sector effectiveness. Their Public Sector Value (PSV) model evaluates data from each of the years under examination and compares them against the average for those years. This compares to perhaps more traditional types of analysis which looks at performance measures that review absolute performance for a given year. What the PSV model attempts to do is to show where improvements can be made in cost-effectiveness. They propose that both outcome and cost-effectiveness scores are calculated and assembled in a matrix to emphasise relationships. This methodology provides a baseline for evaluating performance by indicating relative changes in performance. A dynamic assessment for each outcome can be produced by comparing relative changes to metrics on a period-on-period basis. The primary purpose of such an analysis is to encourage and demonstrate the existence of continuous improvements to performance through ongoing appraisal of progress towards outcomes.

Carrying out this type of analysis highlights the relationships between outcomes (and their metrics) aimed at improving overall performance, their associated costs and, consequently, evaluating cost-effectiveness. Managers can, therefore, determine areas of performance which merit further investigation or redistribution of effort to effect improvement. Consequently, what this means is that the decision-makers are being asked to consider “the rate of change (increase or decrease) of costs compared to the rate of change in outcomes” (Cole & Parston, 2006, p96). If outcome delivery (measured by the indicators) increases at a faster rate than the cost of the resources allocated, or if the resources cost decreases at a faster rate than the outcomes delivery reduces then cost-effectiveness increases. Obviously, the converse is true. The PSV methodology (Cole & Parston, 2006) measures how organisations deliver their outcomes cost-effectively over a number of periods. This is achieved by comparing the current period’s performance against average performance over a number of periods. In this way, management can compare their performance against their own and others (by mutual agreement) carrying out similar work. Baxter (2003, p2) quotes Frank Knight of Chicago who stated that: “Every valuation is a comparison,” and so there is a similarity in concepts (comparisons) being adopted. What is

Commissioner/Service provider

Objectives

Resources Inputs Outputs

Processes

EconomyMinimising the cost of

resources used while having regard to quality

EfficiencyRelationship between

outputs, e.g. services and the resources used to

produce them

Cost-effectivenessThe optimal use of resources to achieve the intended outcomes

EffectivenessExtent to which objectives

are achieved and the relationship between intended and actual impacts of a service

Outcomes(intended and unintended)

Otherinfluences

Contributes to the measurement of…

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critical is that intelligent comparisons are made and that sensible benchmarking, if desired, is carried out. This makes the necessity for clear and agreed definitions of what outcomes are being measured absolutely critical for the model to have utility.

A problem with the PSV model is that it uses input costs, which do not necessarily reflect the effort expended in delivering the outcomes (Macnab & Mitchell, 2014). An adapted version of this methodology, Outcome Cost Effectiveness Analysis (OCEA), makes use of an existing outcome costing methodology (Macnab & Mitchell, 2014).

Outcome Cost-Effectiveness AnalysisOutcomes can have several measures/indicators attributed to them. A more in-depth analysis employing outcome costs and looking not only at the average outcome measures/indicators but also at the individual outcome measures/indicators is likely to lead to better-informed decisions being made about how to deploy resources for maximum benefit. The ultimate purpose of the model is to ensure that resources are directed to leverage maximum benefit from the scarce resources allocated to the attainment of each outcome and, where necessary, adjust the resource allocations to realise maximum benefit overall from the agreed strategy. Each of the dimensions mentioned in the introduction to OCEA on p5 will be examined in turn.

Value-for-Money/Cost-Effectiveness. Like many terms used in business environments, the term “cost-effectiveness” can have different meanings, particularly to those in the private sectors compared to those in the public sectors. This paper is concerned with the public sector only and, therefore, for the sake of clarity “cost-effectiveness” is defined as the outcomes achieved by an organisation(s) for the costs incurred delivering those outcome(s) (Cole & Parston, 2006). This is consistent with the NAO definition above (Figure 2). An important consideration is how to determine whether an organisation is cost-effective. Caution must be exercised to ensure that organisations do not simply reduce the input costs in the belief that there will be an improvement in cost-effectiveness. Cost-effectiveness needs to be viewed as a ratio of outcomes produced to resources employed. Using a cost analysis model only would inform an organisation which approach to delivering outcomes is the cheapest, whereas cost-effectiveness analysis will indicate which course of action returns the best value for a given resource allocation. In other words, does it achieve its target outcomes for the resources invested with reference to the three “Es” discussed above? Effectiveness which involves outcomes can be assessed by the use of KPIs, KRIs, and KIPAs (see para below). If these measures have been appropriately selected it can be assumed that their attainment represents progress being made towards the desired outcome. This can be utilised as a proxy for value. Economy and efficiency can be calculated using outcome costing as the basis for deriving relevant costs and calculating input/output measures. Similarly, Cole & Parston (2006)

suggest that value is more than simply delivering stated outcomes or reducing costs. They, too, argue that to achieve value then both outcomes and cost reduction are factors but their achievement should be balanced in a manner which allows the organisational strategic aims to be achieved.

Timescales. Measuring value-for-money in the public sector has proved challenging due to a lack of reliable outcome data and, indeed, a consensus on how such measurements should be selected and calculated. These difficulties are further compounded by the elongated timescales between delivering an output and recognising benefits (i.e. the outcome), which are attributable to the output. The challenge, therefore, is to devise measures which deal with the short, medium and longer term. This emphasises the need to be clear about what is expected from the output activities and at what point they should be delivered on the journey towards the final desired outcome. Measurable milestones should be agreed and set. This means that these measures/indicators may need to be of a qualitative nature, but should include an assessment of progress (for example, x% of project achieved against target of y%). Macnab & Mitchell (2014) described such estimations as Key Impact Progress Assessments (KIPA). Where a KIPA is being utilised then it can be designated a cost object and staff and non-salary costs can be allocated to it directly. Although the KIPA cost would subsequently be included in the specific Output Cost for the period, its cost can be accumulated over a number of periods until such time as either an intermediate or final outcome is achieved. The total costs of the KIPA plus any other in-year costs incurred over the periods would constitute the cost of the outcome. By applying costs on percentage completed basis then it may be possible to also predict likely final costs for the outcome, where appropriate or desired. This approach overcomes the difficulty of costing an outcome which may take several periods to be delivered. When necessary, the costs can be standardised should inflation, for example, be a factor requiring consideration. Macnab & Mitchell’s (2014) proposed framework could assist with collating multiple outputs from a number of public bodies at either intermediate or final stage.

Weighting Outcomes. Thus far the discussion has centred on the selection of relevant outcomes and appropriate measures/indicators. Arguably, not all outcomes or the measures relating to them are equal in importance. If this argument is accepted, then the outcome measurements could be weighted to provide a relative indication of perceived organisational importance. If the stakeholders decide that the measures reflecting outcomes contained within a particular objective are of differing levels of importance then weights could be applied to the measures.

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Year Cost KRI 1 KRI 2 KRI 3

Year 1 £4,265,864 825,026 248 1,253

Year 2 £4,267,782 795,642 252 1,261

Year 3 £4,283,571 815,728 273 1,223

Year 4 £4,301,927 835,421 281 1,426

Year 5 £4,352,847 855,498 298 1,387

By using normalised values for the costs (we have ignored infl ation for the purpose of this example, hence no standardisation has been applied) and the KRIs we can provide comparability between diff erent measures with very diff erent base levels and can plot charts to show the correlation between variables.

The discussion above explains why it is necessary to normalise the scores. As cost-eff ectiveness is defi ned as “the rate of change (increase or decrease) of costs compared to the rate of change in outcomes” it is, therefore, reasonable to derive a cost-eff ectiveness score by using the normalised

scores for the average outcome performance (KRIs) and the normalised outcome cost. Cost-Eff ectiveness Score. Cost-eff ectiveness is determined by “the outcomes that an organisation(s) has achieved against the cost incurred” (Cole & Parston, 2006; p 95).

Measurement and Analysing. Cole & Parston’s (2006) PSV model calculated cost-eff ectiveness by normalising outcomes and dividing those normalised scores over an adjusted cost per user. Standardisation and normalisation of data is necessary to permit comparability of raw data. When comparing data across multiple years’ standardisation is required (e.g. adjustments for infl ation) and normalisation permits comparability of data with diff erent base levels. To normalise data the calculation is:

Normalised Score = data point/Average of all data points across data set.

Graphical illustrations of this concept are shown in the worked example below (Figure 3). What is shown in Figure 3 is the outcome cost for delivering the RBGE’s Tourism and Recreation Outcome objective and the associated Key Results Indicators (KRIs). Due to the large variation in base numbers they have been normalised, using the mechanism described above, to facilitate meaningful analysis.

Cost = activity costs attributed to our Tourism & Recreation Impact.KRI 1 = Number of Visits to the Four Gardens.KRI 2 = Number of people engaged as Volunteers. KRI 3 = Number of Visits to the Exhibitions in Inverleith House.

Costs = Outcome Costs: shows a slight increase over the period, cost is a proxy for effort.KRI 1 = Visitors: The number of visitors to the gardens took a dip in year two but following a variety of marketing initiatives during year two we begin see an increase in visitors during years 4 and 5.KRI 2 = Volunteers: Shows the increase in the number of volunteers recruited over the period as we try to increase our output despite the limitations in the funds available.KRI 3 = Exhibitions: Shows little or no correlation to the costs. The efforts and costs of putting on an exhibition is similar regardless of the artist exhibiting. However, the popularity of artists/exhibitions varies greatly and this results in the lack of correlation between costs and number of visits.

Using NORMALISED VALUES to show our Tourism & Recreation KRIs compared to OUTCOME COST

0.850000Year 1 Year 2 Year 3 Year 4 Year 5

Cost

KRI 1

KRI 2

KRI 3

0.900000

0.950000

1.000000

1.050000

1.100000

1.150000

1,3871,387

1,426

1,387

1,426

1,387

1,223

1,426

1,223

1,426

1,223

1,426

1,261

1,223

1,261

1,223

1,261

1,253

1,261

1,253

1,261

1,253

KRI 3

1,253

KRI 3

1,253

KRI 3KRI 3KRI 3

298298298

281

298

281

273

281

273273

252

273

252252

248

252

KRI 2

248

KRI 2

248

KRI 2KRI 2KRI 2

855,498855,498855,498

835,421

855,498

835,421

855,498

835,421

855,498

815,728

835,421

855,498

815,728

835,421

795,642

815,728

835,421

795,642

815,728

835,421

795,642

815,728

825,026

795,642

815,728

825,026

795,642

825,026

795,642

825,026

795,642

825,026

KRI 1

825,026

KRI 1

825,026

£4,352,847

KRI 1

£4,352,847

KRI 1

£4,352,847

£4,301,927

£4,352,847

£4,301,927

£4,352,847

£4,301,927

£4,352,847

£4,283,571

£4,301,927

£4,352,847

£4,283,571

£4,301,927

£4,352,847

£4,283,571

£4,301,927

£4,352,847

£4,267,782

£4,283,571

£4,301,927

£4,267,782

£4,283,571

£4,301,927

£4,265,864

£4,267,782

£4,283,571

£4,301,927

£4,265,864

£4,267,782

£4,283,571

£4,265,864

£4,267,782

£4,283,571

£4,265,864

£4,267,782

£4,283,571

£4,265,864

£4,267,782

£4,265,864

£4,267,782

£4,265,864£4,265,864

Cost

£4,265,864

CostCostCost

Year 5Year 5

Year 4

Year 5

Year 4

Year 5

Year 4

Year 5

Year 3

Year 4

Year 3

Year 4

Year 3

Year 4

Year 2

Year 3

Year 2

Year 3

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

Year 1

Year

Year 1

Year

Year 1

YearYear

1,387

Figure 3. Outcome Cost-Effectiveness Model – Tourism & Recreation ImpactThis example shows the outcome costs over a period of fi ve years and the fl uctuations in the values in RBGE’s Key Results Indicators (KRI) over the same period.

12


Year 1 Year 2 Year 3 Year 4 Year 5

KRI 1Visits to the Four Gardens

Normalised Value

825,026

0.999

795,642

0.964

815,728

0.988

835,421

1.012

855,498

1.036

KRI 2No. of Volunteers

Normalised Value

248

0.917

252

0.932

273

1.010

281

1.039

298

1.102

KRI 3Visits to Exhibitions – Inverleith House

Normalised Value

1,253

0.956

1,261

0.963

1,223

0.934

1,426

1.089

1,387

1.059

CostCost of Tourism & Recreation Outcomes

Normalised Value

£4,265,864

0.993

£4,267,782

0.994

£4,283,571

0.997

£4,301,297

1.002

£4,352,847

1.014

Outcome Cost-Effectiveness Score 0.964 0.959 0.980 1.045 1.051

Indeed, if it was possible to trace costs to the individual KRI then it would also be possible to calculate the KRI cost-eff ectiveness score on the same basis. A worked example using the same data as used in Figure 3 above is shown in Figure 4

below. Because we are not able to trace the outcome costs to individual KRIs it is necessary to average the normalised KRI scores. Once the cost-eff ectiveness scores have been calculated they can be plotted on a graph.

To provide an example of using this methodology to compare one outcome objective with another the data from the RBGE’s National Collections Outcome objective has been utilised (Figure 5, below). Equally, if another organisation was employing the outcome costing methodology and was

contributing to a similar higher level (national) outcome then this scoring mechanism could be used for comparison purposes on a similar basis. Again, the KRIs diff er markedly in base levels and so normalisation is necessary to make meaningful comparisons.

This means that: average of all KRI normalised scores = Normalised outcome cost score

Outcome cost-effectiveness score

Figure 4. Calculating the Outcome Cost-Effectiveness Score

855,498

1.036

1.089

£4,301,297

Year 5855,498

1.089

£4,301,297

Year 5855,498

1,426

1.089

£4,301,297

Year 5855,498

1,426

1.089

£4,301,297

Year 5855,498

1,426

Year 5

1.039

1,426

0.980

Year 5

1.039

1,426

0.980

Year 5

1.039

0.997

0.980

281

1.039

£4,283,571

0.997

0.980

281

£4,283,571

0.997

1.012

281

£4,283,571

0.997

835,421

1.012

£4,283,571

0.997

835,421

1.012

0.934

£4,283,571

835,421

1.012

0.934

£4,283,571

Year 4835,421

0.934

£4,283,571

Year 4835,421

1,223

0.934

£4,283,571

Year 4835,421

1,223

0.934

£4,283,571

Year 4835,421

1.010

1,223

Year 4

1.010

1,223

0.959

Year 4

1.010

0.959

Year 4

273

1.010

£4,267,782

0.994

0.959

273

1.010

£4,267,782

0.994

0.959

0.988

273

£4,267,782

0.994

815,728

0.988

273

£4,267,782

0.994

815,728

0.988

£4,267,782

0.994

815,728

0.988

0.963

£4,267,782

Year 3815,728

0.988

0.963

£4,267,782

Year 3815,728

0.963

£4,267,782

Year 3815,728

1,261

0.963

£4,267,782

Year 3815,728

1,261

0.963

Year 3

0.932

1,261

0.964

Year 3

0.932

1,261

0.964

Year 3

0.932

0.964

252

0.932

£4,265,864

0.993

0.964

252

0.932

£4,265,864

0.993

0.964

0.964

252

£4,265,864

0.993

795,642

0.964

£4,265,864

0.993

795,642

0.964

£4,265,864

795,642

0.964

0.956

£4,265,864

Year 2795,642

0.956

£4,265,864

Year 2795,642

1,253

0.956

£4,265,864

Year 2795,642

1,253

0.956

£4,265,864

Year 2795,642

1,253

Year 2

0.917

1,253

Year 2

0.917

1,253

Outcome Cost-Effectiveness Score

Year 2

0.917


248

0.917

Cost of Tourism & Recreation Outcomes


248



0.999

248



825,026

0.999



825,026

0.999



825,026

0.999



Year 1825,026

Visits to Exhibitions – Inverleith House



Year 1825,026




Year 1825,026




Year 1825,026




Year 1




Year 1



Normalised Value


Year 1



Normalised Value




Normalised Value




Normalised Value




Normalised Value



Normalised Value


Normalised Value



Normalised Value


Normalised Value



Normalised Value


Normalised Value



Normalised Value


Normalised Value



Normalised Value


Normalised Value

Normalised Value


Normalised Value


Normalised Value

Normalised Value


Normalised Value


Normalised Value

Visits to the Four Gardens

Normalised Value


Normalised Value



No. of Volunteers

Normalised Value


Normalised Value



No. of Volunteers

Normalised Value


Normalised Value


Normalised Value

No. of Volunteers

Normalised Value


Normalised Value

Cost


Normalised Value

No. of Volunteers

Normalised Value


Normalised Value

Cost


Normalised Value

No. of Volunteers

Normalised Value


Cost


Normalised Value

No. of Volunteers

Normalised Value


Cost


Normalised Value

No. of Volunteers

Normalised Value

KRI 3


Normalised Value

No. of Volunteers

Normalised Value

KRI 3


Normalised Value

No. of Volunteers

Normalised Value

KRI 3


Normalised Value

No. of Volunteers

KRI 3


Normalised Value

No. of Volunteers

KRI 3


Normalised Value

KRI 2


Normalised Value

KRI 2


Normalised Value

KRI 2


KRI 2


KRI 2

KRI 1KRI 1KRI 1KRI 1KRI 1855,498

1.036

£4,301,297

855,498

1.036

£4,301,297

1.002

1.036

298

£4,301,297

1.002

298

£4,301,297

1.002

1.045

298

1.102

£4,301,297

1.002

1.045

1.102

1.045

1.102

1,387

1.045

1.102

1,387

1.045

1,3871,387

1.059

£4,352,847

1,387

1.059

£4,352,847

1.059

£4,352,847

1.059

£4,352,847£4,352,847£4,352,847

1.014

£4,352,847

1.014

£4,352,847

1.014

1.051

£4,352,847

1.014

1.0511.0511.051


0.950

Year 1 Year 2 Year 3 Year 4 Year 5

0.970

0.990

1.010

1.030

1.050

13


In summary, because we are using normalised scores we can look at:a. Relative performance of an outcome over a period of time.b. Compare the cost-eff ectiveness scores of diff erent

outcomes over a similar period(s) and, therefore, their relative performance (Figure 6 below provides a graphical representation of this comparison).

c. Compare similar outcomes from diff erent organisations that are contributing to higher outcomes (e.g. a number of public bodies contributing to a specifi c Government National Outcome).

Figure 5. Outcome Cost-Effectiveness Model – National Collections Impact

Year 1 Year 2 Year 3 Year 4 Year 5KRI 1 Herbarium Specimen Record Downloads 206,860 210,000 270,000 320,000 375,000

KRI 2Number of Herbarium Specimens Digitised

and online247,831 275,000 295,000 315,000 335,000

KRI 3Percentage of Library Collection available

digitally1 2 5 10 10

KRI 4Number of Gold Standard samples in the

DNA bank0 96 192 384 576

Cost National Collections Cost 2,555,530 2,597,160 2,664,780 2,565,650 2,597,850

375,000

335,000

384

2,565,650

Year 5375,000

384

Year 5375,000

Year 5375,000

Year 5375,000

10

Year 5

10

2,664,780

Year 5

10

2,664,780

Year 5

315,000

2,664,780

315,000

2,664,780

315,000

2,664,780

315,000

2,664,780

320,000

315,000

192

2,664,780

320,000

315,000

192

2,664,780

320,000

315,000

192

Year 4320,000

192

Year 4320,000

Year 4320,000

Year 4320,000

5

Year 4

5

2,597,160

Year 4

295,000

2,597,160

Year 4

295,000

2,597,160

295,000

2,597,160

295,000

2,597,160

270,000

295,000

2,597,160

270,000

295,000

96

2,597,160

270,000

295,000

96

2,597,160

Year 3270,000

96

Year 3270,000

Year 3270,000

Year 3270,000

Year 3

2

2,555,530

Year 3

2

2,555,530

Year 3

275,000

2,555,530

275,000

2,555,530

275,000

2,555,530

275,000

2,555,530

210,000

275,000

2,555,530

210,000

275,000

2,555,530

210,000

275,000

0

2,555,530

Year 2210,000

0

Year 2210,000

Year 2210,000

Year 2210,000

Year 2

1

Year 2Year 2

247,831247,831247,831

Number of Gold Standard samples in the

247,831


206,860

247,831


206,860

247,831


206,860

247,831


Year 1206,860

Percentage of Library Collection available


National Collections Cost

Year 1206,860




Year 1206,860




Year 1206,860




Year 1

Number of Herbarium Specimens Digitised




Year 1





Year 1









Herbarium Specimen Record Downloads
























DNA bank






DNA bank






DNA bank






DNA bank






DNA bank






DNA bank




digitally


DNA bank

Cost




digitally


Cost




digitally


Cost




digitally

KRI 4Number of Gold Standard samples in the

Cost



and online


digitally

KRI 4

Cost



and online


digitally

KRI 4



and online


KRI 4



and online


KRI 4



and online

KRI 3Percentage of Library Collection available

KRI 4



and online

KRI 3



and online

KRI 3



KRI 3



KRI 3


KRI 2


KRI 2


KRI 2KRI 2

KRI 1

KRI 2

KRI 1KRI 1KRI 1KRI 1 375,000

335,000

384

2,565,650

375,000

335,000

2,565,650

335,000

2,565,650

335,000

2,565,650

335,000

2,565,650

335,000

2,565,650

10

2,565,650

10

2,565,650

10

576576576

2,597,850

576

2,597,8502,597,8502,597,8502,597,8502,597,8502,597,8502,597,850

Using NORMALISED VALUES to show our National Collections KRIs compared to OUTCOME COST


0.500000

1.000000

1.500000

2.000000

2.500000

Cost

KRI 1

KRI 2

KRI 3

KRI 4

14


It would be extremely important for all participants to have agreed defi nitions of the outcomes under examination and to understand that the purpose of using the scores is to assist with better allocations and utilisation of scarce resources. This process should not, therefore, be used to reward/penalise performance or gaming will occur. Obviously, to make such a scheme feasible the participating bodies need to be collaborating for the greater good rather than competing against each other.

Interpreting. Like any process of evaluation care must be taken to ensure that valid deductions are made from data presented. In Figure 6 above it appears that the National Collections Outcome is much more cost-eff ective than the Tourism & Recreation Impact. However, care must be taken as in this case there was an innovative way of digitising specimens thereby increasing online availability leading to signifi cant increases in downloads (two measurable KRIs). What may be more interesting in such cases is to look at the forecast of future performance to determine whether such a dramatic improvement is sustainable in the longer term. Importantly, the question can be asked. It is pertinent to remember that the purpose of this analysis is to review the performance of an organisation in order to determine whether that performance is improving in terms of cost-eff ectiveness, a common goal of government bodies. This analysis needs to be conducted over a period of time as it is relative and not absolute performance that is useful in this analysis. Equally, cross-organisational analysis can be performed if comparative and suffi cient data is available. This means that public bodies would need to adopt a collaborative

perspective with their work and not a competitive one. This type of analysis can also lead to identifying duplication of eff ort and permit sensible benchmarking – all of which aims to improve overall cost-eff ectiveness and the delivery of value-for-money within the public sector. Those organisations that need to improve their outcome management should see the exercise as a positive learning experience and not an exposure of failure on their part.

Advantages and Weaknesses There are many approaches to public sector performance management and measurement. The approach outlined in this paper seeks to focus management’s attention on the benefi ts to society that their organisation(s) is trying to deliver. By providing cost-eff ectiveness analysis, decisions can be taken to improve the utilisation of scarce resources, particularly in times of public sector austerity. The argument is made that this model can apply to individual public sector bodies and to groups of public bodies acting in concert to deliver government outcomes. To do so would be contingent on having a satisfactory performance management framework to aid focus and alignment of purposes. Conversely, all methodologies have their weaknesses. This model is dependent on having agreed defi nitions of both outcomes and measures/indicators and varying opinions on these may abound. Additionally, to make the model manageable there could be a temptation to reduce the complexity of the outcomes and objectives to a level that is too simple to be useful.

Figure 6. Comparison of Outcome Cost-Effectiveness Scores

OUTCOME COST-EFFECTIVENESS SCOREof our National Collections and Tourism & Recreation KRIs


1.000

1.200

1.400

1.600

2.000

1.800

2.200

National Collections

Tourism & Recreation

15


Problem Solution Page No

1.Identifying, selecting and evaluating outcomes in terms of success achieved.

Visionary outcome statements to be broken down into achievable, measurable objectives/milestones.

7

2.The usefulness of outcome-based information due to responsibility and controllability issues in relation to performance.

By using a framework alignment responsibility for the delivery of outcomes can be managed and reviewed through judicious use of KPIs.

7

3.


Purpose is to better understand allocations of resources and how that process can be improved. To avoid gaming the system should not be used to reward/penalise.

14

4.


By having clearly articulated and stakeholder agreed defi nitions of outputs and outcomes causal linkages will be possible. An outcome may have more than one measure relating to its different dimensions.

6

5.


Outcomes may be delivered in short/medium, or long term. A KIPA provides a milestone measurement system to which costs can be attributed and totalled over the whole period of delivery to provide the fi nal outcome cost, if appropriate.

10

Page No

into achievable, measurable objectives/milestones.

By using a framework alignment responsibility for the delivery of outcomes can be managed and reviewed

Purpose is to better understand allocations of resources and how that process can be improved. To avoid gaming the system should not be used to


Page





Page
























By having clearly articulated and stakeholder agreed defi nitions of outputs and outcomes causal linkages will be possible. An outcome may have more than one




By having clearly articulated and stakeholder agreed defi nitions of outputs and outcomes causal linkages will be possible. An outcome may have more than one

Timing differences between resource use and




opposed to organisational level outcomes and lack of

By having clearly articulated and stakeholder agreed defi nitions of outputs and outcomes causal linkages






By having clearly articulated and stakeholder agreed defi nitions of outputs and outcomes causal linkages






By having clearly articulated and stakeholder agreed






By having clearly articulated and stakeholder agreed










with multi-dimensional performance characteristics






with multi-dimensional performance characteristics






Outcome defi nition may involve subjectivity, coping with multi-dimensional performance characteristics not susceptible to single measures, societal as opposed to organisational level outcomes and lack of












Solution






Solution



Purpose is to better understand allocations of resources and how that process can be improved.



Solution



Purpose is to better understand allocations of resources and how that process can be improved.



Solution



Purpose is to better understand allocations of



Solution



Purpose is to better understand allocations of



Solution





Solution





Solution





Solution



should success be rewarded and failure penalised?



Solution






Solution






Solution






Solution


By using a framework alignment responsibility for the





By using a framework alignment responsibility for the





























Visionary outcome statements to be broken down





Visionary outcome statements to be broken down












5.





5.








Identifying, selecting and evaluating outcomes in



















Outcome defi nition may involve subjectivity, coping with multi-dimensional performance characteristics not susceptible to single measures, societal as




Outcome defi nition may involve subjectivity, coping with multi-dimensional performance characteristics not susceptible to single measures, societal as




Outcome defi nition may involve subjectivity, coping with multi-dimensional performance characteristics












4.





4.





4.
















Problem




Problem




Problem




Problem



Taking action based on the system’s output e.g.

Problem



3.

Taking action based on the system’s output e.g.

Problem



3.

Problem



3.

Problem



Problem



Problem



Problem



Problem








2.


2.

Identifying, selecting and evaluating outcomes in terms of success achieved.Identifying, selecting and evaluating outcomes in terms of success achieved.Identifying, selecting and evaluating outcomes in Identifying, selecting and evaluating outcomes in

1.1.1.

Page No

into achievable, measurable objectives/milestones.




Outcomes may be delivered in short/medium, or

Page No




Outcomes may be delivered in short/medium, or

No




Outcomes may be delivered in short/medium, or long term. A KIPA provides a milestone measurement

7




Outcomes may be delivered in short/medium, or long term. A KIPA provides a milestone measurement

7




Outcomes may be delivered in short/medium, or long term. A KIPA provides a milestone measurement system to which costs can be attributed and totalled




Outcomes may be delivered in short/medium, or long term. A KIPA provides a milestone measurement system to which costs can be attributed and totalled




Outcomes may be delivered in short/medium, or long term. A KIPA provides a milestone measurement system to which costs can be attributed and totalled over the whole period of delivery to provide the fi nal





delivery of outcomes can be managed and reviewed







7




7

resources and how that process can be improved. To avoid gaming the system should not be used to












To avoid gaming the system should not be used to












14



14



14













defi nitions of outputs and outcomes causal linkages will be possible. An outcome may have more than one measure relating to its different dimensions.


defi nitions of outputs and outcomes causal linkages will be possible. An outcome may have more than one


will be possible. An outcome may have more than one



6



6







long term. A KIPA provides a milestone measurement system to which costs can be attributed and totalled over the whole period of delivery to provide the fi nal




long term. A KIPA provides a milestone measurement system to which costs can be attributed and totalled over the whole period of delivery to provide the fi nal system to which costs can be attributed and totalled over the whole period of delivery to provide the fi nal system to which costs can be attributed and totalled over the whole period of delivery to provide the fi nal

10

over the whole period of delivery to provide the fi nal

10


10


CONCLUSIONGovernments have had long-held ambitions to improve cost-eff ectiveness and deliver value-for-money for their taxpayers. In recent times, focus has turned from outputs (activities) to outcomes (benefi ts). Moving to an outcomes-based focus has highlighted complex challenges in respect of defi nitions, coherent management frameworks, timescales, and costing. Hitherto, outcome budgeting has been based on input costs, often derived from the fi nancial accounts. Outcome costing can provide superior information on costs directly attributable to their delivery and is a key ingredient of Outcome Cost-Eff ectiveness Analysis, the model discussed and proposed in this paper. By using this proposed model and calculating Outcome Cost-Eff ectiveness scores an improved assessment of the relative use of scarce resources when delivering outcomes can be made, thereby improving public sector governance and value-for-money.

In order to develop the system outlined in this paper many of the hurdles to outcome costing, listed at the start, had to be tackled. Table 2 below summarises where progress was made and explained in the paper.

Table 2. The problems of implementing outcome-based budgeting – have they been addressed by this paper?

16


Problem Solution Page No

6.


Input-based cost systems provided unclear oversight and disjointed results. Outcome costing overcomes that defi ciency and leads to improved resource allocations based on an understanding of desired results.

7

7.


Having a system that compares effectiveness either internally or between organisations exposes existing weaknesses in management. Providing enabled-learning occurs that can be seen as positive but if “punishment” occurs there will be a disincentive to participate.

14

8.


People are used to and comfortable with cost centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control. Any change in operational procedures can give rise to resistance due to discomfort with novel working practices.

No*

9.


Bureaucracy often exists for control purposes, including budget allocations. By introducing any form of outcome budgeting inevitably means that a budget holder will need to coordinate usage of resources outside his/her direct control – a novel way of working and another barrier to change.

No*

10.


Outcomes are usually related to the specifi c purpose of the organisation. However, other factors such as reputation, fi nancials, risk management, talent management, environmental consideration may all contribute to evaluating success.

No*

Page

Input-based cost systems provided unclear oversight and disjointed results. Outcome costing overcomes that defi ciency and leads to improved resource allocations based on an understanding of desired

Having a system that compares effectiveness either internally or between organisations exposes existing weaknesses in management. Providing enabled-learning occurs that can be seen as positive but if “punishment” occurs there will be a disincentive to

People are used to and comfortable with cost centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control. Any change in operational procedures can give rise

Bureaucracy in adopting organisations creates a


Page



People are used to and comfortable with cost centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control. Any change in operational procedures can give rise



Page



People are used to and comfortable with cost centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control.





People are used to and comfortable with cost centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control.





People are used to and comfortable with cost centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new





People are used to and comfortable with cost centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new





People are used to and comfortable with cost centre budgeting, which is input-based. To manage





People are used to and comfortable with cost centre budgeting, which is input-based. To manage





People are used to and comfortable with cost





People are used to and comfortable with cost

















Traditional budget reliance means change resistance



















Having a system that compares effectiveness either internally or between organisations exposes existing weaknesses in management. Providing enabled-learning occurs that can be seen as positive but if





Having a system that compares effectiveness either internally or between organisations exposes existing weaknesses in management. Providing enabled-learning occurs that can be seen as positive but if



10.

Outcomes may only be one factor among many that

Solution


Having a system that compares effectiveness either internally or between organisations exposes existing weaknesses in management. Providing enabled-



10.


Solution





10.

Solution





Solution


Having a system that compares effectiveness either internally or between organisations exposes existing



Solution


Having a system that compares effectiveness either internally or between organisations exposes existing



Solution


Having a system that compares effectiveness either



Solution


Having a system that compares effectiveness either



Solution




Solution




Solution




Solution




Solution









Input-based cost systems provided unclear oversight and disjointed results. Outcome costing overcomes that defi ciency and leads to improved resource



9.





9.





9.


Input-based cost systems provided unclear oversight and disjointed results. Outcome costing overcomes



Input-based cost systems provided unclear oversight and disjointed results. Outcome costing overcomes



Input-based cost systems provided unclear oversight



Input-based cost systems provided unclear oversight













The absence of costing systems that can function

















8.




8.




8.





















Problem



Problem



Problem



Problem



Problem


7.


Problem


7.


Problem


7.


Problem


Problem


Problem


Problem


Problem

The absence of costing systems that can function with outcomes as the cost object.The absence of costing systems that can function with outcomes as the cost object.The absence of costing systems that can function with outcomes as the cost object.The absence of costing systems that can function with outcomes as the cost object.The absence of costing systems that can function with outcomes as the cost object.The absence of costing systems that can function with outcomes as the cost object.The absence of costing systems that can function with outcomes as the cost object.

6.


6.


6.


Page No



People are used to and comfortable with cost centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control. Any change in operational procedures can give rise to resistance due to discomfort with novel working



Page No

and disjointed results. Outcome costing overcomes

allocations based on an understanding of desired




No










7




7









Bureaucracy often exists for control purposes,




Bureaucracy often exists for control purposes,




Bureaucracy often exists for control purposes, including budget allocations. By introducing any




Bureaucracy often exists for control purposes, including budget allocations. By introducing any




Bureaucracy often exists for control purposes, including budget allocations. By introducing any form of outcome budgeting inevitably means that




Bureaucracy often exists for control purposes, including budget allocations. By introducing any form of outcome budgeting inevitably means that




Bureaucracy often exists for control purposes, including budget allocations. By introducing any form of outcome budgeting inevitably means that a budget holder will need to coordinate usage of


internally or between organisations exposes existing weaknesses in management. Providing enabled-learning occurs that can be seen as positive but if “punishment” occurs there will be a disincentive to




internally or between organisations exposes existing

learning occurs that can be seen as positive but if “punishment” occurs there will be a disincentive to






Bureaucracy often exists for control purposes, including budget allocations. By introducing any form of outcome budgeting inevitably means that a budget holder will need to coordinate usage of resources outside his/her direct control – a novel way



14


Bureaucracy often exists for control purposes, including budget allocations. By introducing any form of outcome budgeting inevitably means that a budget holder will need to coordinate usage of resources outside his/her direct control – a novel way


“punishment” occurs there will be a disincentive to

14





14












Outcomes are usually related to the specifi c purpose




centre budgeting, which is input-based. To manage outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control. Any change in operational procedures can give rise to resistance due to discomfort with novel working


Outcomes are usually related to the specifi c purpose of the organisation. However, other factors such









Outcomes are usually related to the specifi c purpose of the organisation. However, other factors such as reputation, fi nancials, risk management, talent



Outcomes are usually related to the specifi c purpose of the organisation. However, other factors such as reputation, fi nancials, risk management, talent



Outcomes are usually related to the specifi c purpose of the organisation. However, other factors such as reputation, fi nancials, risk management, talent management, environmental consideration may all

outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control. Any change in operational procedures can give rise to resistance due to discomfort with novel working



outcomes on a cross-divisional basis requires new levels of collaboration and apparent loss of control. Any change in operational procedures can give rise to resistance due to discomfort with novel working



levels of collaboration and apparent loss of control. Any change in operational procedures can give rise to resistance due to discomfort with novel working

No*




No*




No*



Any change in operational procedures can give rise to resistance due to discomfort with novel working

No*



Any change in operational procedures can give rise to resistance due to discomfort with novel working



to resistance due to discomfort with novel working



to resistance due to discomfort with novel working









including budget allocations. By introducing any form of outcome budgeting inevitably means that a budget holder will need to coordinate usage of resources outside his/her direct control – a novel way of working and another barrier to change.








form of outcome budgeting inevitably means that a budget holder will need to coordinate usage of resources outside his/her direct control – a novel way of working and another barrier to change.








a budget holder will need to coordinate usage of resources outside his/her direct control – a novel way

No*


resources outside his/her direct control – a novel way

No*



No*



No*












as reputation, fi nancials, risk management, talent management, environmental consideration may all


as reputation, fi nancials, risk management, talent management, environmental consideration may all as reputation, fi nancials, risk management, talent management, environmental consideration may all management, environmental consideration may all management, environmental consideration may all

No*

management, environmental consideration may all

No*

management, environmental consideration may all

No*No*

*Note: Although this paper does not address items 8 -10 specifi cally they have been covered in Macnab, Mitchell & Carr (2010) and Macnab & Mitchell (2012) – both these papers provided the foundation for Macnab & Mitchell 2014 and this paper builds on the latter.

More work remains to be done to gain experience in using outcome costing and meaningful value-for-money analyses. It is, however, work that can prove highly benefi cial as this type of analysis can aid public sector governance and encourage evidence-based management decision–making by facilitating the evaluation of the success of diff erent strategies followed.

17


ReferencesAndrews M. (2003). The impact of traditional budgeting systems on performance-based budgeting. International Journal of Public Administration 26(2), 135-155.

Andrews M. (2004). Authority, acceptance, ability and performance-based budgeting reforms. International Journal of Public Sector Management, 17(4), 332-344.

Baxter W. (2003). The Case for Deprival Value. ICAS.

Bouckaert, Geert; Halligan, John; Dooren, Wouter Van (2010). Performance Management in the Public Sector, 21. Taylor & Francis. Kindle Edition.

Caiden N. (1998). Public service professionalism for performance measurement and evaluation. Public Budgeting and Finance, 18(2), 35-52.

Carlin T., Guthrie J. (2003). Accrual output-based budgeting systems in Australia. The rhetoric reality gap. Public Management Review, 5(2), 145-162.

Cole M. & Parston G. (2006), Unlocking Public Value: A New Model for Achieving High Performance in Public Service Organizations; Wiley & Sons, Hoboken, N.J.

Kong D. (2005). Performance-based budgeting: the United States experience. Public Organisation Review: a Global Journal, 5, 91-107.

KPMG Case Study Pack (2011) Making the Transition to Outcome-based Budgeting: A Six Nation Study.

Kristensen J.K., Groszyk W.S., Buhler B. (2002). Outcome-focused management and budgeting. OECD Journal of Budgeting, 7-34.

Macnab A.J., Mitchell F., & Carr C. (2010) Garden designs to improve the line of sight: Implementation of the balanced scorecard and an alternative costing system at the Royal Botanic Garden Edinburgh, CIMA Research Executive Summary series, Volume 6, Issue 7.

Macnab A.J. and Mitchell F. (2012) Strategic Objective Costing – Supporting the Balanced Scorecard. CGMA Report.

Macnab A.J. and Mitchell F. (2014) Outcome Budgeting in the Public Sector: Challenges and Solutions. An Exploratory Empirical Study World Congress of Accountants 2014, Rome, Italy.

Schmidtlein F.A. (1999). Assumptions underlying performance-based budgeting. Tertiary Education and Management, 5(2), 159-174.

Stiefel L., Rubenstein R., Schwartz A., (1999). Using adjusted performance measures for evaluating resource use. Public Budgeting and Finance, 19(3), 67-87.

18


ANNEX ASCOTTISH GOVERNMENT’S NATIONAL PERFORMANCE FRAMEWORK

NATIONAL PERFORMANCE FRAMEWORK

THE GOVERNMENT’S PURPOSE

To focus government and public services on creating a more successful country, with opportunities for all Scotland to fl ourish, through increasing sustainable economic growth

STRATEGIC OBJECTIVES

HIGH LEVEL TARGETS RELATING TO THE PURPOSE

Growth Productivity Participation Population Solidarity Cohesion Sustainability

WEALTHIER & FAIRER SMARTER HEALTHIER SAFER & STRONGER GREENER

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We live in a Scotland that is the most attractive place for doing business in Europe

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We realise our economic potential with more and better employment opportunities for our people

We are better educated, more skilled and more successful, renowned for our research and innovation

Our young people are successful learners, confi dent individuals, effective contributors and responsible citizens

Our children have the best start in life and are ready to succeed

We live longer, healthier lives

We have tackled the signifi cant inequalities in Scottish society

We have improved the life chances for children, young people and families at risk

We live our lives safe from crime, disorder and danger

We live in well-designed, sustainable places where we are able to access the amenities and services we need

We have strong, resilient and supportive communities where people take responsibility for their own actions and how they affect others

We value and enjoy our built and natural environment and protect it and enhance it for future generations

We take pride in a strong, fair and inclusive national identity

We reduce the local and global environment impact of our consumption and production

Our people are able to maintain their independence as they get older and are able to access appropriate support when they need it

Our public services are high quality, continually improving, effi cient and responsive to local people’s needs

We realise our economic potential with more and better employment opportunities for our

We are better educated, more skilled and more successful, renowned for our research and

Our young people are successful learners, confi dent individuals, effective contributors and



We live in well-designed, sustainable places where we are able to access the amenities and


We value and enjoy our built and natural environment and protect it and enhance it for




Our public services are high quality, continually improving, effi cient and responsive to local


























GREENER














GREENER














GREENER















GREENER















GREENER















GREENER
















GREENER
















GREENER
















GREENER










































































































SAFER & STRONGER
















SAFER & STRONGER
















SAFER & STRONGER















SAFER & STRONGER















SAFER & STRONGER















SAFER & STRONGER














Our people are able to maintain their independence as they get older and are able to access

SAFER & STRONGER















SAFER & STRONGER















SAFER & STRONGER














SAFER & STRONGER














SAFER & STRONGER














SAFER & STRONGER













SAFER & STRONGER













SAFER & STRONGER













SAFER & STRONGER












SAFER & STRONGER













SAFER & STRONGER













SAFER & STRONGER

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HEALTHIER

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We have strong, resilient and supportive communities where people take responsibility for

HEALTHIER

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HEALTHIER

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HEALTHIER

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HEALTHIER

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HEALTHIER

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HEALTHIER

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HEALTHIER

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HEALTHIER

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HEALTHIER

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HEALTHIER

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SMARTER

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SMARTER

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SMARTER

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SMARTER

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SMARTER

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SMARTER

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SMARTER

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SMARTER

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SMARTER

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WEALTHIER & FAIRER




WEALTHIER & FAIRER



WEALTHIER & FAIRER



WEALTHIER & FAIRER



WEALTHIER & FAIRER



WEALTHIER & FAIRER



WEALTHIER & FAIRER



WEALTHIER & FAIRER


WEALTHIER & FAIRER


WEALTHIER & FAIRER


WEALTHIER & FAIRERWEALTHIER & FAIRERWEALTHIER & FAIRERWEALTHIER & FAIRERWEALTHIER & FAIRERWEALTHIER & FAIRERWEALTHIER & FAIRERWEALTHIER & FAIRERWEALTHIER & FAIRER

















































































































































































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Our public services are high quality, continually improving, effi cient and responsive to local Our public services are high quality, continually improving, effi cient and responsive to local Our public services are high quality, continually improving, effi cient and responsive to local Our public services are high quality, continually improving, effi cient and responsive to local Our public services are high quality, continually improving, effi cient and responsive to local Our public services are high quality, continually improving, effi cient and responsive to local

To focus government and public services on creating a more successful country, with opportunities for all Scotland to





























































































































































































































































To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to To focus government and public services on creating a more successful country, with opportunities for all Scotland to











Growth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion SustainabilityGrowth Productivity Participation Population Solidarity Cohesion Sustainability

NATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORKNATIONAL PERFORMANCE FRAMEWORK

19


NATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SET

Increase Scotland’s economic growth

Improve productivity

Improve economic participation

Increase population growth

PURPOSE TARGETS

Population – increase healthy life expectancy

Solidarity – reduce income inequality

Cohesion – reduce inequalities in economic participation

across Scotland

Sustainability – reduce greenhouse gas emissions

NA

TIO

NA

L IN

DIC

ATO

RS

Increase the number of businesses Reduce the percentage of adults who smoke

NA

TIO

NA

L IN

DIC

ATO

RS

Increase exports Reduce the alcohol-related hospital admissions

Improve digital infrastructure Reduce the number of individuals with problem drug use

Reduce traffi c congestion Improve people’s perceptions about the crime rate in their area

Improve Scotland’s reputation Reduce reconviction rates

Increase research and development spending Reduce crime victimisation rates

Improve knowledge exchange from university research Reduce deaths on Scotland’s roads

Improve the skill profi le of the population Improve people’s perceptions of the quality of public services

Increase the proportion of pre-school centres receiving positive inspection reports

Improve the responsiveness of public services

Increase the proportion of schools receiving positive inspection reports

Reduce the proportion of individuals living in poverty

Improve the levels of educational attainment Reduce children’s deprivation

Increase the proportion of young people in learning, training or work

Improve access to suitable housing options for those in housing need

Increase the proportion of graduates in positive destinations Increase the number of new homes

Improve children’s services Widen use of the internet

Improve children’s dental health Improve peoples perceptions of their neighbourhood

Increase the proportion of babies with a healthy birth weight Increase cultural engagement

Increase the proportion of healthy weight children Improve the state of Scotland’s historic sites

Increase physical activity Increase peoples use of Scotland’s outdoors

Improve self-assessed general health Improve the condition of protected nature sites

Improve mental wellbeing Increase the abundance of terrestrial breeding birds; biodiversity

Reduce premature mortality Improve the state of Scotland’s marine environment

Improve end-of-life care Reduce Scotland’s carbon footprint

Improve support for people with care needs Increase the proportion of journeys to work made by public or active transport

Reduce emergency admissions to hospital Reduce waste generated

Improve the quality of healthcare experience Increase renewable electricity production

research and development

knowledge exchange from university research

skill profi le of the population

Increase the proportion of positive inspection reports

Increase the proportion of inspection reports

Improve the levels of

Increase the proportion of


knowledge exchange

skill profi le of the population





knowledge exchange

skill profi le





knowledge exchange

skill profi le





knowledge exchange

skill profi le



Scotland’s reputation


knowledge exchange

skill profi le





knowledge exchange

skill profi le





knowledge exchange

skill profi le





knowledge exchange

Improve the skill profi le





knowledge exchange

Improve the skill profi le




knowledge exchange

Improve the




knowledge exchange

Improve the




knowledge exchange

Improve the


digital infrastructure

traffi c congestion



knowledge exchange

Improve the


traffi c congestion



Improve knowledge exchange

Improve the


traffi c congestion



Improve

Improve the

number of businesses


traffi c congestion



Improve

Improve the



traffi c congestion


Increase research and development

Improve

Improve the



traffi c congestion


Increase

Improve



traffi c congestion


Increase

Improve



traffi c congestion

Improve Scotland’s reputation

Increase

Improve



traffi c congestion

Improve

Increase



traffi c congestion

Improve

Increase



traffi c congestion

Improve

Increase



traffi c congestion

Improve


exports


traffi c congestion

Improve


exports


Reduce traffi c congestion

Improve


exports


Reduce


exports

Improve digital infrastructure

Reduce


exports

Improve

Reduce


exports

Improve

Reduce


Increase exports

Improve

Reduce

Increase the

Increase

Improve

Increase the

Increase

Improve

Increase the

Increase

Improve

Increase the

Increase

Increase the

Increase

Increase the

Increase

Increase the Increase the Increase the

research and development spending

knowledge exchange from university research

of the population





research and development spending

from university research

of the population




Increase the proportion of or work

spending


of the population





spending


of the population





spending


of the population

Increase the proportion of pre-school centres receiving positive inspection reports





spending


of the population

pre-school centres receiving positive inspection reports





spending


of the population






spending


of the population






Improve


of the population






Improve


of the population

pre-school centres receiving

Increase the proportion of schools receiving positive




Improve


of the population


schools receiving positive

Improve the levels of educational attainment



Improve

Improve




educational attainment



Improve

Improve







Improve children’s services

Improve







Improve children’s services

Improve

Increase the proportion of babies with a







children’s services

Improve









Improve children’s dental health






Increase the proportion of young people in learning, training



Improve children’s dental health






Increase the proportion of young people in learning, training



children’s dental health






young people in learning, training















Increase










Increase





Increase the proportion of graduates





Increase





graduates





Increase

Improve self-assessed





graduates





Increase






graduates





Increase





graduates





physical activity


Improve




graduates




physical activity


Improve




graduates




physical activity


Improve


graduates in positive destinations




physical activity


Improve


graduates in positive destinations




physical activity


Improve

Reduce


in positive destinations




physical activity


Improve

Reduce






physical activity


Improve mental wellbeing

Reduce






physical activity


mental wellbeing

Reduce




Increase the proportion of healthy weight children

physical activity


mental wellbeing

Reduce

Improve




healthy weight children

physical activity


mental wellbeing

Reduce

Improve





physical activity


mental wellbeing

premature mortality

Improve





physical activity

Improve self-assessed general health

mental wellbeing

premature mortality

Improve

Improve support for people with





Improve self-assessed general health

mental wellbeing

premature mortality

Improve






general health

mental wellbeing

premature mortality

Improve end-of-life care




Increase the proportion of babies with a healthy birth weight


general health

mental wellbeing

premature mortality

end-of-life care




Increase the proportion of babies with a healthy birth weight


general health

mental wellbeing

premature mortality

end-of-life care


Reduce


healthy birth weight


general health

mental wellbeing

premature mortality

end-of-life care


Reduce




general health

mental wellbeing

premature mortality

end-of-life care


Reduce




general health

mental wellbeing

premature mortality

end-of-life care


Reduce

Improve the quality of




general health

premature mortality

end-of-life care


Reduce




general health

premature mortality

end-of-life care


Reduce emergency admissions




general health

premature mortality

end-of-life care


emergency admissions




general health

premature mortality

end-of-life care






premature mortality

end-of-life care






premature mortality

end-of-life care































Improve support for people with care needs



care needs


Improve the quality of healthcare experience

care needs


healthcare experience

care needs



care needs

emergency admissions to hospital


care needs

to hospital


care needs

to hospital


care needs

to hospital


care needs

to hospital


to hospital


to hospital


to hospital


to hospital

healthcare experience healthcare experience healthcare experience healthcare experience healthcare experience healthcare experience

Sustainability – greenhouse gas emissions

population


population


population


population growth


population growth


population growth


population growth

Sustainability –

population growth

population growth

Increase population growth

Increase

– reduce inequalities in economic participation

Increase


Increase


Increase


across Scotland

Increase


across Scotland

Increase


across Scotland


across Scotland


across Scotland


across Scotland


across Scotland


across Scotland


across Scotland


across Scotland


across Scotland


across Scotland

economic participation



Cohesion – reduce inequalities in economic participation


Cohesion in economic participation




PURPOSE TARGETS



PURPOSE TARGETS



PURPOSE TARGETS

Cohesion


PURPOSE TARGETS

Cohesion


PURPOSE TARGETS

Cohesion

Improve participation

PURPOSE TARGETS

Cohesion

Improve participation

PURPOSE TARGETS

– reduce income

Improve

PURPOSE TARGETS

– reduce income

Improve

PURPOSE TARGETS

– reduce income

Improve

PURPOSE TARGETS

– reduce income

Improve

PURPOSE TARGETS

– reduce income

PURPOSE TARGETS

– reduce income inequality

PURPOSE TARGETS


PURPOSE TARGETS


PURPOSE TARGETS


PURPOSE TARGETS


PURPOSE TARGETS


PURPOSE TARGETS


PURPOSE TARGETS


Solidarity – reduce income

productivity

Solidarity

productivity

Solidarity

productivity

Solidarity

productivity

Solidarity

Improveproductivity

Solidarity

Improveproductivity

Solidarity

Improveproductivity

Solidarity

Improveproductivity

Solidarity

Improveproductivity

Improveproductivity

– increase healthy

Improveproductivity

– increase healthy – increase healthy – increase healthy – increase healthy life expectancy

– increase healthy life expectancy









economic growth

Population – increase healthy life expectancy

economic growth

Population life expectancy


Population life expectancy


Population


Population


Population


Population


Population


Population


Population

Increase Scotland’s economic growthIncrease Scotland’s economic growthIncrease Scotland’s economic growthIncrease Scotland’s economic growthIncrease Scotland’s economic growthIncrease Scotland’s Increase Scotland’s






Sustainability – reducegreenhouse gas emissions

reducegreenhouse gas emissions




reducegreenhouse gas emissionsgreenhouse gas emissionsgreenhouse gas emissionsgreenhouse gas emissions

NATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SETNATIONAL PERFORMANCE FRAMEWORK- MEASUREMENT SET

in their

Improve people’s perceptions of the

responsiveness of public services

Reduce the proportion of individuals living in

children’s deprivation


Increase the number of

problem drug use

in their







problem drug use

crime rate in their

deaths on Scotland’s roads






problem drug use

crime rate





Reduce children’s deprivation


problem drug use

crime rate





Reduce

Improve access to suitable housing options for those in

problem drug use

crime rate





Reduce


problem drug use

crime rate

rates





Reduce

problem drug use

crime rate

rates





Reduce

problem drug use

crime rate

rates





Reduce

alcohol-related hospital admissions

problem drug use

Improve people’s perceptions about the crime rate

rates



Improve the responsiveness of public services



problem drug use

Improve people’s perceptions about the

crime victimisation rates



Improve the



problem drug use


crime victimisation



Improve the



problem drug use


crime victimisation



Improve the



Reduce the number of individuals with problem drug use


crime victimisation



Improve the



Reduce the number of individuals with


reconviction rates

crime victimisation



Improve the

adults who smoke




reconviction rates

crime victimisation


Improve people’s perceptions of the services

Improve the

adults who smoke




reconviction rates

crime victimisation



Improve the

adults who smoke




reconviction rates

crime victimisation



Improve the

adults who smoke




reconviction rates

crime victimisation



Improve the

adults who smoke




reconviction rates

crime victimisation



adults who smoke




reconviction rates

crime victimisation

Reduce deaths on Scotland’s roads


adults who smoke




reconviction rates

crime victimisation

Reduce


adults who smoke




reconviction rates

crime victimisation

Reduce


adults who smoke




reconviction rates

Reduce crime victimisation

Reduce

adults who smoke




reconviction rates

Reduce

Reduce

adults who smoke




reconviction rates

Reduce

Reduce

adults who smoke




Reduce reconviction rates

Reduce

adults who smoke




Reduce

Reduce

Reduce the percentage of adults who smoke




Reduce

Reduce

Reduce the percentage of




Reduce





Reduce




Improve people’s perceptions about the area

Reduce














Reduce the




Reduce the




Reduce the



Reduce the



Reduce the



Reduce the


Reduce the


Reduce the

Reduce the percentage of Reduce the percentage of Reduce the percentage of

in their







in their

Improve people’s perceptions of the quality of public






Widen

in their

quality of public






Widen

quality of public






Widen

quality of public






Widen

Improve peoples perceptions of their

quality of public






Widen


quality of public






Widen use of the internet


quality of public






use of the internet


quality of public






use of the internet


Increase

quality of public






use of the internet


Increase

quality of public






use of the internet


Increase

Improve the state of Scotland’s

quality of public






use of the internet


Increase


quality of public





use of the internet


Increase


quality of public





use of the internet


Increase cultural engagement




Increase the number of new homes

use of the internet


cultural engagement


Increase peoples use of Scotland’s



new homes

use of the internet


cultural engagement



Reduce the proportion of individuals living in poverty


new homes

use of the internet


cultural engagement



poverty


new homes

use of the internet


cultural engagement



Improve the condition of

poverty


new homes

use of the internet


cultural engagement




poverty


new homes

use of the internet


cultural engagement




poverty


new homes


cultural engagement




Increase the abundance of terrestrial breeding birds;

NA

TIO

NA

L IN

DIC

ATO

RS

poverty


new homes


cultural engagement




Increase the abundance of terrestrial breeding birds; biodiversity

NA

TIO

NA

L IN

DIC

ATO

RS

poverty


new homes


cultural engagement





NA

TIO

NA

L IN

DIC

ATO

RS



cultural engagement





NA

TIO

NA

L IN

DIC

ATO

RS



cultural engagement






NA

TIO

NA

L IN

DIC

ATO

RS



cultural engagement






NA

TIO

NA

L IN

DIC

ATO

RS



cultural engagement






NA

TIO

NA

L IN

DIC

ATO

RS



cultural engagement






Reduce Scotland’s

NA

TIO

NA

L IN

DIC

ATO

RS



cultural engagement






Reduce Scotland’s

NA

TIO

NA

L IN

DIC

ATO

RS


Improve peoples perceptions of their neighbourhood






Reduce Scotland’s

NA

TIO

NA

L IN

DIC

ATO

RS


neighbourhood






Reduce Scotland’s

Increase the proportion of journeys to work made by

NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

Improve the state of Scotland’s historic sites





Reduce Scotland’s


NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

Improve the state of Scotland’s historic sites





Reduce Scotland’s

Increase the proportion of journeys to work made by or active transport

NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

historic sites


Improve the condition of protected nature sites



Reduce Scotland’s


NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

historic sites


protected nature sites



Reduce Scotland’s


NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

historic sites





Reduce Scotland’s


Reduce

NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

historic sites

Increase peoples use of Scotland’s outdoors




Reduce Scotland’s


Reduce

NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

historic sites

outdoors




Reduce Scotland’s


Reduce

NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

historic sites

outdoors




Reduce Scotland’s


Reduce

Increase

NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

historic sites

outdoors




Reduce Scotland’s carbon footprint


Reduce

Increase

NA

TIO

NA

L IN

DIC

ATO

RS

neighbourhood

historic sites

outdoors




carbon footprint


Reduce waste

Increase

NA

TIO

NA

L IN

DIC

ATO

RS

outdoors




carbon footprint


waste

Increase

NA

TIO

NA

L IN

DIC

ATO

RS

outdoors




carbon footprint


waste

Increase

NA

TIO

NA

L IN

DIC

ATO

RS

outdoors




carbon footprint


waste

Increase

NA

TIO

NA

L IN

DIC

ATO

RS




carbon footprint


waste generated

renewable electricity

NA

TIO

NA

L IN

DIC

ATO

RS



Improve the state of Scotland’s marine environment

carbon footprint


generated


NA

TIO

NA

L IN

DIC

ATO

RS



marine environment

carbon footprint


generated


NA

TIO

NA

L IN

DIC

ATO

RS



marine environment

carbon footprint


generated


NA

TIO

NA

L IN

DIC

ATO

RS



marine environment

carbon footprint


generated


NA

TIO

NA

L IN

DIC

ATO

RS



marine environment

carbon footprint


generated


NA

TIO

NA

L IN

DIC

ATO

RS


marine environment

carbon footprint


generated


NA

TIO

NA

L IN

DIC

ATO

RS


marine environment

carbon footprint


generated


NA

TIO

NA

L IN

DIC

ATO

RS


marine environment



NA

TIO

NA

L IN

DIC

ATO

RS


marine environment



NA

TIO

NA

L IN

DIC

ATO

RS


marine environment



NA

TIO

NA

L IN

DIC

ATO

RS

marine environment



NA

TIO

NA

L IN

DIC

ATO

RS

marine environment



NA

TIO

NA

L IN

DIC

ATO

RS

marine environment



NA

TIO

NA

L IN

DIC

ATO

RS

marine environment


renewable electricity production

NA

TIO

NA

L IN

DIC

ATO

RS

marine environment


renewable electricity production


production


production


production


production


production

Increase the proportion of journeys to work made by public

production

Increase the proportion of journeys to work made by public

production

public public public public

20


ANNEX BExemplar Performance Framework for Scottish Government

WEALTHIER & FAIRER

SCOTTISH GOVERNMENT


SCOTTISH GOVERNMENT

NATIONAL OUTCOMES

INTERMEDIATE OUTCOMES (EXAMPLES)

DIRECTORATES OUTCOMES

DIRECTORATES

PUBLIC BODIES

RESOURCES

GOVERNANCE

We live in a Scotland that is

the most attractive place for doing

business in Europe

Science and conservation

We are better educated, more

skilled and more successful,

renowned for our research and

innovation

Water quality and environment

protection

Our children have the best start in

life and are ready to succeed

Listed buildings protection

We have tackled the signifi cant inequalities in

Scottish society

Digital mapping services

We realise our full economic potential with

more and better employment opportunities

Flood protection

Our young people are successful

learners, confi dent individuals,

effective contributors and

responsible citizens

Small-scale farming regulation


Aerial mapping

We have improved the life chances

of children, young people and

families at risk

Tourism

We live our lives safe from crime,

disorder and danger

Raise educational standards

Improve effi ciency of justice system

LEARNING & JUSTICE DIRECTORATE

Public bodies in the Learning and Justice

Directorate

FUNDING

National Strategies and National Performance Framework

We have strong, resilient and supportive

communities where people take responsibility for their own actions

and how they affect others

Protect Scotland’s biodiversity

Increase production across Scottish economy

ENTERPRISE, ENVIRONMENTAL AND DIGITAL DIRECTORATE

Public bodies in the Enterprise, Environmental

and Digital Directorate

We take pride in a strong, fair and inclusive national

identity

Balance climate change aspirations with

sustainable economic growth

Reform public services

LOCAL GOVERNMENT AND COMMUNITY

DIRECTORATE

Public bodies in the Local Government and Community Directorate

Our people are able to maintain

their independence as they get older and are able to

access appropriate support when they

need it

We live in well-designed,

sustainable places where we are

able to access the amenities and

services we need

Enable procurement reform

Deliver savings through procurement and

commercial contracts

FINANCE DIRECTORATE

Public bodies in the Finance Directorate

We value and enjoy our built

and natural environment and

protect it and enhance it for

future generations

Reduce health inequalities

Deliver health services with reduced carbon

footprint

HEALTH AND SOCIAL CARE DIRECTORATE

Public bodies in the Health and Social Care

Directorate

We reduce the local and global environmental impact of our

consumption and production

Increase access to all forms of cultural and

creative activities

Implementation of business strategy and

promote innovative ways of working

STRATEGY AND EXTERNAL AFFAIRS

DIRECTORATE

Public bodies in the Strategy and External

Affairs Directorate

Our public services are of a high

quality, continually improving,

effi cient and responsive to local

people’s needs

SMARTER HEALTHIERSAFER &

STRONGERGREENER

SCOTTISH GOVERNMENT OUTCOMES-BASED FRAMEWORKScottish Government Vision: this Government’s vision for Scotland is a nation where people value the natural environment; have access to

the services to thrive wherever they might live, and where every effort is made to ensure growth and opportunity exist across all of Scotland.

21


ANNEX CRBGE STRATEGY MAP FY 2015/16

ROYAL BOTANIC GARDEN EDINBURGH

RBGE MISSION: TO EXPLORE, CONSERVE AND EXPLAIN THE WORLD OF PLANTS FOR A BETTER FUTURE

Scottish Government Vision – this Government’s vision for Scotland is a nation where people value the natural environment, have access to the services to thrive wherever they might live, and where every effort is made to ensure growth and opportunity exist across all of Scotland.

WEALTHIER & FAIRER

SMARTER HEALTHIER GREENERSCOTTISH GOVERNMENT


SCOTTISH GOVERNMENT NATIONAL OUTCOMES

OUR IMPACTS

OUR ACTIVITIES

OUR GOVERNANCE

OUR RESOURCES

Better EDUCATED, more SKILLED and renowned for

RESEARCH & INNOVATION

SCIENCE & CONSERVATION

BIODIVERSITY RESEARCH

NATIONAL COLLECTIONS

COLLECTIONS MANAGEMENT

PEOPLE

STRATEGY

TOURISM & RECREATION

VISITOR ATTRACTION

LAND & BUILDINGS

MANAGEMENT & CONTROL

EDUCATION & SKILLS

FORMAL EDUCATION

FACILITIES

FUNDS

ENVIRONMENTAL & FINANCIAL SUSTAINABILITY

Our YOUNG PEOPLE are successful learners,

confi dent individuals, effective contributors and

responsible citizens

More and better EMPLOYMENT opportunities

Our PUBLIC SERVICES are of a high quality, continually

improving, effi cient and responsive to local

people’s needs

Protect and enhance our NATURAL ENVIRONMENT for

future generations

22


ANNEX DRBGE ACTIVITIES COSTED TO SINGLE OUTPUTS AND OUTCOMES

Activities Outputs Outcomes

Science & Conservation KRIs & KIPAs

Tourism & RecreationKRIs & KIPAs

Education & SkillsKRIs & KIPAs

Learning KPIs & Work Programmes

Visitor Attraction KPIs & Work Programmes

Collections Management KPIs & Work Programmes

Staff Costs + Non-Salary Costs Using SOC Applied

to Tasks

(Governance and Resource

Objective Costs

allocated to Outputs employing

ABC)

Taxonomic Research – UK & International

Conservation Research – UK & International

Evolution Research – UK & International

Research Staff: Presentations

Research Staff: Committee/review/advisory

Publication of scientific research

Edinburgh Journal of Botany

Biodiversity informatics

Collection Staff: Committee/review/advisory

Historical Collection: Research

Collections Data management

Herbarium Collection: R&D

Herbarium Collection: Management

Herbarium Collection: Data capture

Library Collection: R&D

Library Collection: Management

Library Collection: Data capture

Living Collection: R&D

Living Collection: Management

Living Collection: Data capture

Horticulture Publications

Horticulture Apprenticeship Training

External Engagement – Public

Living Collection (public garden) maintenance

Visitor Communication & Interpretation

Visitor Welcome

Organisation of Exhibition & Events

Publications: General interest Publications

Marketing & Media activities

Teaching/Training: Schools

Teaching/Training: Professional

Teaching/Training: Adult education

Capacity Building/Knowledge exchange

Education administration

Collection Staff: Presentations

Biodiversity Research KPIs & Work Programmes

23


ANNEX ERBGE IMPACT & ACTIVITY COSTS SUMMARY

A Strategic Objective Costing methodology is employed at the RBGE to illustrate the non-salary expenditure and the staff effort directed towards achieving our corporate objectives. These costs are derived from time sheets indicating the tasks that the staff members have engaged in, which support specific objectives, and from the finance system in which all expenditure is double-coded to show cost centre and activity allocations.

The objectives contained in the Governance and Resources perspectives of our strategy map are what could loosely be

termed “overhead” objectives and these costs are allocated on an activity basis in addition to the direct costs to determine our Activity (Output) objectives. Through clear alignment of our Activities to our Impacts we are able to ascribe a cost to those Impacts. By matching performance (KPIs/KRIs) with resource allocations (objective costs) we can make evidence-based decisions on how best to deploy our resources in the future to meet our corporate aspirations.

2% Environmental & Financial Sustainability £216,323

11% Biodiversity Research £1,157,175

11% Collections Management £1,208,129

22% Visitor Attraction £2,305,381

6% Formal Education £673,810

2% People £215,978

25% Land & Buildings £2,725,738

8% Facilities £893,332

1% Strategy £89,461

12% Management & Control £1,305,701

FY 2014/15

* Objective Costs

* These costs are derived from staff time sheets and the finance system allocation to Objectives.


24

*** These costs are derived from the alignment of Activities to one or more relevant Impacts.

12% Formal Education £1,500,000

9% Education & Skills £1,200,000

24% Biodiversity Research £3,100,000

49% Science & Conservation £6,300,000

22% Collections Management £2,900,000

42% Tourism & Recreation £5,500,000

42% Visitor Attraction £5,500,000

** Activity (Output) Objective Costs

*** Impact (Outcome) Costs

** These costs are derived from re-allocating Governance and Resource costs to the principal Activities.

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