Slide 1 PMB Conference 22 May 2006 Budget-Performance Integration: Map to the Future ABC Performance...
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Transcript of Slide 1 PMB Conference 22 May 2006 Budget-Performance Integration: Map to the Future ABC Performance...
Slide 1
PMB Conference22 May 2006
Budget-Performance Integration:Map to the Future
ABC
Performance
Finance
Budget
Slide 2
PMB Conference22 May 2006
Objectives of Budget and Objectives of Budget and Performance IntegrationPerformance Integration
Measure and improve performance
Drive decision making through performance information
Institutionalize focus on performance
Slide 3
PMB Conference22 May 2006
Government-wide Emphasis on Government-wide Emphasis on Increasing Demonstrated Increasing Demonstrated
Performance and EfficienciesPerformance and Efficiencies
OMB is requesting that all agencies:
Report the full cost of achieving performance goals accurately in budget and performance documents and accurately estimate the marginal cost of changing performance goals
Have at least one efficiency measure for all PARTed programs
Use PART evaluations to direct program improvements, hold managers accountable for those improvements
Use PART ratings findings and performance information consistently to justify funding requests, management actions, and legislative proposals
Use marginal cost analysis to inform resource allocations
Improve efficiency each year/achieve efficiency targets.
Slide 4
PMB Conference22 May 2006
Integrating Performance Planning Integrating Performance Planning with Budget Formulationwith Budget Formulation
Performance planning process is being integrated with the budget formulation process
– Performance expected to be reviewed in concert with, and not after, budget formulation
– Budget estimates need to be reviewed in context with performance information, both achieved and predicted
– Table formats in bureau budget submissions include provision of total costs and costs-per-unit-of-performance along with performance results and targets from FY 2004 thru FY 2008
– Performance targets through FY 2008, and a FY 2012 long term target, need to be provided as part of bureau FY 2008 budget submission
– Need to review trends in how funding levels and performance results relate over time
– Providing costs of achieving performance at the Strategic Planning level provides an added overarching context to the collective benefits of various programs
Slide 5
PMB Conference22 May 2006
BPI -- The Road So FarBPI -- The Road So Far
Our progress can be gauged in three areas
InfrastructureBudget Documents and Decisions
Our Performance
Slide 6
PMB Conference22 May 2006
Budget Documents and DecisionsBudget Documents and Decisions
What are we looking for in budget formulation?– Bureaus and programs are using performance and cost information to:
• Maximize performance (even when no budgetary changes are proposed)• Direct resources to higher priority goals in both budget formulation and budget execution
– Bureaus and programs implement PART recommendations to improve program performance
– Bureau and program performance targets are ambitious, yet achievable, in relation to reliable baseline and trend data
– Performance targets and cost projections factor in planned performance improvements from management efficiencies and strategic reallocations of resources across programs, projects, and operating units (adjustments to historical cost information)
– Performance and cost information to support Departmental level budget decisions– Performance and cost information distinguishes between performance of programs
that share common goals, but are managed differently– Cost information presented to allow comparisons across bureaus, programs, and
with other Federal agencies (full costs)
What is the outcome?– Limited budgets are applied to maximize priority results
Slide 7
PMB Conference22 May 2006
Budget Documents and DecisionsBudget Documents and DecisionsFirst integrated Performance Budget based upon unified Strategic Plan and Budget in
Brief by Mission Goals; array funding by Goals
Performance information focused at program level; performance information presented in request to DOI and OMB for programs with proposed budget changes only; Budget Justifications required to include performance summaries at the budget line item level
First PARTs
2004
2005 OMB requires Integrated Performance Budget. For OMB submission, first time include budget and performance information on same table – but only for budget changes and performance by year (not incremental or out-year)
Budget Justifications focus on program performance – required reporting of 100% of strategic plan measures at program level. Bureau-wide information limited in scope.2006
2007
Experiment with incremental performance table for President’s budget.
Full suite of 2007 performance targets due with budget submission to the Department. Program specific limited to most important.
Goal performance table modified to provide explanation of changes
Experimented and perfected formats for presenting performance attributable to budgetary changes in the budget year and outyears – Program Performance Change Table (key to presenting projected marginal cost for Budget Year)
Have 2004/2005 trend data available to assess proposed target levels (but not until President’s Budget preparation)
Slide 8
PMB Conference22 May 2006
Budget Documents and DecisionsBudget Documents and DecisionsFor the 2008 budget:
– Stabilized formats, improving content– Emphasis on cost information at performance measure level (total and per
unit)– Increased trend data available for target setting– Cost information in program performance change table important to
demonstrate that we can accurately estimate the marginal cost of changing performance goals
Presently we can determine through ABC/M system how much funding has been applied to pursuing an end outcome goal (helps with priority setting)
We are progressing to defining how much results can be achieved for how much funding by costing to Strategic Plan performance measures (maximizing performance)
Slide 9
PMB Conference22 May 2006
Infrastructure to Support Infrastructure to Support Performance BudgetingPerformance Budgeting
Current State: – Performance Budgets are paper documents– Extensive manual effort to complete budgets – not all data elements
needed for budget documents in ABC/M system• Bureau specific measures• Program level contributions to Strategic Plan measures• Impacts of budgetary changes (marginal costs and change in performance)• Outyear impacts of budgetary changes• Rationale/Documentation for target changes• Textual explanations
– Different Methodologies to cost performance measures – Not all bureaus can cost to measures– Limited capability to present cost information at various levels relevant to
different users (e.g. Department versus unit manager)
Future State:– Performance and cost data included in performance budgets is derived
from a single system– Reduction in the size of the budget documents
Slide 10
PMB Conference22 May 2006
Our PerformanceOur Performance
To achieve green in BPI, we must demonstrate that:
– We are improving performance and that we achieve planned improvements in program performance and efficiency in achieving results each year
– PART findings and performance information are used to justify funding requests, management actions, and legislative proposals
Increased trend data will allow us to determine if we are improving performance levels, however, cost information is required to put performance levels in context
Demonstrating efficiency improvements depend upon PART efficiency measures, including establishing targets for improving performance and meeting those targets
Slide 11
PMB Conference22 May 2006
Road to Come: Budget-Performance Integration
#1Link ABC
to performance
measures
#3Research
BestPractices
#2Develop costing
methodology
#4Put
linkage & costing
in budget guidance
#5Implement
BPImethodology
#6Process
Refinement
2007
Slide 12
PMB Conference22 May 2006
Plan of Action - AlignmentPlan of Action - Alignment
Review input from bureau ABC/M program reps; develop consolidated model of work activity linkage to performance measures
Review budget submittals; compare alignment of work activity to performance measures (where applicable) to input from bureau ABC/M program reps
Identify alignment issues:– Inconsistencies between ABC/M program rep input and budget submittal alignment models– Bureau alignment to goals instead of performance measures – validate– Performance measures that could be costed – work can contribute to performance measure
Resolve issues, validate “uncostable performance measures”, develop corporate approach for linking work activities to performance measures
Slide 13
PMB Conference22 May 2006
Plan of Action - AlignmentPlan of Action - Alignment
Assess impact of new/revised measures in draft Strategic Plan update on alignment model; identify adjustments to alignment model that the draft Strategic Plan update would precipitate if adopted as currently presented
Consolidate alignment model with performance measure costing methodology
Coordinate model and costing methodology with PPP, POB, bureaus
Present model and costing methodology to budget, performance, finance, and ABC communities
Incorporate use of model and costing methodology into budget guidance
Slide 14
PMB Conference22 May 2006
Plan of Action – Costing MethodologyPlan of Action – Costing Methodology• Partnership between PFM, GT, AOT and Finance Community• Select three bureaus – FWS, BLM, and NPS• GT will trace Statement of Net Cost to Standard General Ledger expense accounts for selected bureaus
• GT will document three methodologies• PFM, AOT, and Finance Community will select best practice• PFM, AOT, Finance Community and GT will modify best practice for suitability
• Use alignment of activity cost to performance measures to cost performance
Statement of Net Cost
End Outcome GoalResource Protection
Activity
EOG Activity
Task 1Task 2Task 3
Task 1
Labor (11/1200)Travel (2100)
Contract (2500)Supplies (2600)
StandardGeneralLedger61/6400
610061006100
Slide 15
PMB Conference22 May 2006
Activities to Task Relationship ExampleActivities to Task Relationship Example
Administration of Leases
Review New Exploration and Development Plans
Examination of Pipeline Right-of-Way
Annual Safety Inspection
Activities
Annual Safety Inspection TasksActivity Cost Code – ASI12
1 Assign inspector – OC Code 11/1200 or 25002 Prepare for inspection i.e. checklists, sample kits, etc. OC Code 11/1200 or 25003 Travel to site. OC Code 2100 or 25004 Conduct inspection. OC Code 11/1200 or 25005 Submit samples to lab. OC Code 11/1200 or 25006 Prepare final report. OC 11/1200 or 2500
Slide 16
PMB Conference22 May 2006
Best Practice AnalysisBest Practice Analysis
Determine best practice of aligning cost and performance
Gather information from Bureaus on their cost and performance:
– Process – Methodology– Technology
Research non-DOI BPI methodology and recommend best of breed for DOI in aligning cost and performance
Slide 17
PMB Conference22 May 2006
Work ScheduleWork Schedule
Date Event
6 Apr Bureau aligns bureau and DOI ABC activities to Strategic Plan performance measures
19 Apr Consolidate bureau alignments into DOI corporate view (1st iteration of alignment model)
17 May Present corporate view and plan of action to AOT
23 May Review budget submittals; compare alignment of work activity to performance measures (where applicable) to bureau homework; identify alignment issues
30 May Bureaus submit algorithms for Bureaus cost spread to DOI Strategic Plan Performance Measures
19 Jun Review AOT Budget Costing Models and algorithms
19 Jun Trace BLM, NPS, FWS Mission Area cost to the Bureau SGL
29 Jun Resolve issues/develop corporate approach for linking work activities to performance measures (2nd iteration of alignment model); validate uncostable performance measures
Note: Costing Methodology schedule indicated in red
Slide 18
PMB Conference22 May 2006
Work ScheduleWork Schedule
Date Event
29 Jun Assess impact of new/revised measures in draft Strategic Plan update on alignment model
29 Jun Validate algorithms through review of cost reported in the Consolidated Statement of Net Cost
13 Jul Present reconciled alignment model to AOT – (AOT meeting)
17 Jul Produce Bureau Algorithm
26 Jul Document and present to the AOT three methodologies to trace standard general ledger cost to cost allocated to performance measures – (AOT meeting)
26 Jul Select best practice
31 Jul Modify best practice for suitability
4 Aug Document and deliver methodology to trace standard general ledger cost to cost allocated to performance measures to DOI
Note: Costing Methodology schedule indicated in red
Slide 19
PMB Conference22 May 2006
Work Schedule Work Schedule
Date Event
9 Aug Consolidate alignment model with performance measure costing methodology
14 Aug Coordinate model and costing methodology with PPP, POB, bureaus
23 Aug Present alignment model and methodology for costing performance measures to ABC, budget, finance and performance communities
Fall 2006 POB incorporates alignment model and costing methodology into budget guidance
Note: Costing Methodology schedule indicated in red
Slide 20
PMB Conference22 May 2006
Process RefinementProcess Refinement
Periodic review of new BPI process for refinementwill be ongoing throughout FY06/07, particularlyas we move to FBMS
Validation and verification of information in ABC/Mand performance reporting - used in budgetformulation - will be an ongoing process throughout FY06/07
Slide 21
PMB Conference22 May 2006
What is the Objective?What is the Objective?
Present a summary level view of resource requirements and cost against Strategic Plan end outcome goals and performance measures
Use cost information to develop budgetrequests for targeted levels of performance
Understand the budget sensitivity of themarginal cost of performance and whatresults from work done
View the data and ask questions aboutwhat the data seems to indicate
Slide 22
PMB Conference22 May 2006
SummarySummary
We are making significant progress to the effective integration of financial, performance, and budget information for improved decision making and definition of our future prospects, progress, and resource needs
Success involves the combined talents of the finance, planning, ABC/M and budget communities to ensure the effective application of ABC/M and performance assessment capabilities along with our financial accounting and budget planning activities
These efforts will help improve our own planning and management processes, and increase our credibility with stakeholders to deliver on our commitments, thereby helping to ensure a better future for our programs