Programme budgeting
Encyclopedia
Programme budgeting is the budget
ing system that, contrary to conventional budgeting, describes and gives the detailed costs of every activity or programme that is to be carried out in a budget.
Objectives, outputs and expected results are described fully as are their necessary resource costs, for example, raw materials, equipment and staff. The sum of all activities or programmes constitute the Programme Budget. Thus, when looking at a Programme Budget, one can easily find out what precisely will be carried out, at what cost and with what expected results in considerable detail.
Robert S. McNamara in the Pentagon
in the 1960s. McNamara allegedly wanted to control the many costly weapons development programmes that were plagued by ever increasing costs and delays. He called this new system: Planning, Programming and Budgeting System (PPBS). The system was taught at the John F. Kennedy School of Government
of Harvard University
but it evoked little interest except from critics.
This new approach introduced an unprecedented transparency into management operations together with a concommitant precise pinpointing of manager's responsibilities, and so was widely resisted throughout the entire public sector
. However, in the eighties, the UN Inspectorate General picked up the idea and recommended that the United Nations
use it to improve its performance. A few institutions tried half-heartedly but only the International Atomic Energy Agency
(IAEA) went about it seriously and introduced a complete programme budgeting system that is still in place today.
However, over the years, strong opposition by managers and lack of interest by top management as well as member States have taken the sting out of the system and reduced its transparency. A few years later, the Government of New Zealand
was the first to introduce it with great success: within a few years it had solved an intractable stagflation
problem. More recently, the United Kingdom
Government discovered it and now, one Government after another is following suit. The need to improve public sector and government performance has worked wonders for Programme Budgeting.
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
ing system that, contrary to conventional budgeting, describes and gives the detailed costs of every activity or programme that is to be carried out in a budget.
Objectives, outputs and expected results are described fully as are their necessary resource costs, for example, raw materials, equipment and staff. The sum of all activities or programmes constitute the Programme Budget. Thus, when looking at a Programme Budget, one can easily find out what precisely will be carried out, at what cost and with what expected results in considerable detail.
History
This programme budgeting system was first introduced by the then United States Secretary of DefenseUnited States Secretary of Defense
The Secretary of Defense is the head and chief executive officer of the Department of Defense of the United States of America. This position corresponds to what is generally known as a Defense Minister in other countries...
Robert S. McNamara in the Pentagon
The Pentagon
The Pentagon is the headquarters of the United States Department of Defense, located in Arlington County, Virginia. As a symbol of the U.S. military, "the Pentagon" is often used metonymically to refer to the Department of Defense rather than the building itself.Designed by the American architect...
in the 1960s. McNamara allegedly wanted to control the many costly weapons development programmes that were plagued by ever increasing costs and delays. He called this new system: Planning, Programming and Budgeting System (PPBS). The system was taught at the John F. Kennedy School of Government
John F. Kennedy School of Government
The John F. Kennedy School of Government at Harvard University is a public policy and public administration school, and one of Harvard's graduate and professional schools...
of Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
but it evoked little interest except from critics.
This new approach introduced an unprecedented transparency into management operations together with a concommitant precise pinpointing of manager's responsibilities, and so was widely resisted throughout the entire public sector
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
. However, in the eighties, the UN Inspectorate General picked up the idea and recommended that the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
use it to improve its performance. A few institutions tried half-heartedly but only the International Atomic Energy Agency
International Atomic Energy Agency
The International Atomic Energy Agency is an international organization that seeks to promote the peaceful use of nuclear energy, and to inhibit its use for any military purpose, including nuclear weapons. The IAEA was established as an autonomous organization on 29 July 1957...
(IAEA) went about it seriously and introduced a complete programme budgeting system that is still in place today.
However, over the years, strong opposition by managers and lack of interest by top management as well as member States have taken the sting out of the system and reduced its transparency. A few years later, the Government of New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
was the first to introduce it with great success: within a few years it had solved an intractable stagflation
Stagflation
In economics, stagflation is a situation in which the inflation rate is high and the economic growth rate slows down and unemployment remains steadily high...
problem. More recently, the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
Government discovered it and now, one Government after another is following suit. The need to improve public sector and government performance has worked wonders for Programme Budgeting.