DR. JO BITONIO

Professor

JOYCE R. BASCOS Discussant

TOPICAL OUTLINE

• BUDGETING Approaches in Budgeting Budget Cycle in Government and PANELCO III Expenditure by Class and Object Budgeting Structure and Processes

• IMPLEMENTATION OF THE PLAN Structure and Governance Institutional and Individual Accountability Plan Financing Plan Execution

• EVALUATION AND PLAN UPDATE Evaluation Framework Stages and Levels of Evaluation

BUDGETING THE PLAN

BUDGETING

- is the process of allocating financial resources for intended programs, projects, services, and activities to empower the organization to carry out stated goals and objectives (Briones, 1996)

Want

Need

Budget

BUDGETING THE PLAN

CAN

Three Major Orientation

• process of enforcing or applying limitations and conditions that are set in the budget and in appropriation and at the same time securing compliance with the spending restrictions imposed by central authorities

CONTROL

• involves the use of budgetary authority at both agency levels to ensure the efficient use of resources in the conduct of authorized activities

MANAGEMENT

• process of determining public objectives and the evaluation of alternative programs. Authorities must have the information concerning the purpose and effectiveness to the program

PLANNING

APPROACHES IN BUDGETING

1. LINE ITEM BUDGETING - emphasizes listing of objects for itemized

expenditure such as personnel, supplies, and equipment without much regard for the purpose of programs or projects for which such items are proposed.

2. PERFORMANCE BUDGETING - Performance budgets use statements of

missions, goals and objectives to explain why the money is being spent. It is a way to allocate resources to achieve specific objectives based on program goals and measured results. (Carter)

APPROACHES IN BUDGETING 3. PLANNING PROGRAMMING AND

BUDGETING SYSTEM (PPBS) -The scheme requires agency managers to identify

program objectives, develop measuring program output, calculate total program costs over the long-run, prepare detailed multi-year program and financial plans, and analyze the costs and benefits of alternative program designs.

4. ZERO BASED BUDGETING - a method of budgeting in which all expenses must

be justified for each new period. Starts from a “zero base” and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period.

BUDGET CYCLE IN GOVERNMENT

There are four phases in managing the National Budget:

BUDGET CYCLE IN GOVERNMENT

During the preparation phase, the Executive

prepares the proposed National Budget.

This is followed by the legislation phase

where the Congress authorizes the

General Appropriations Act. In the

execution phase, agencies utilize their

approved budgets and during the

accountability phase, the executive

monitors and evaluates the use of the

budget.

PANELCO III BUDGET CYCLE

Corporate Services Department

• Inform all Departments and Areas thru writing the schedule of budget hearing, provide work plan format, costing and forecast sales, system loss, house connection.

Departments/ Areas

• Presentation of accomplishments for the first three quarters of the current year

Budget Analyst

• Analyze accomplishments as compared to actual expenses over budgeted. (variances)

Departments/ Areas

• Budget deliberation, justification, ratification

Corporate Services Department

• Prepares Consolidated final report, for presentation to the board together with representatives per Department.

Board of Directors

• Final Deliberation and Approval.

• Approves Budget Supplementation.

CURRENT OPERATING EXPENSES

Nature of Expenditures

2008 2009 2010 2011 2012

Distribution

65,660,600

55,477,654

76,831,855

92,338,076

79,005,114

Consumer Accounts

42,013,831

49,407,977

85,845,916

86,521,192

77,770,469

Depreciation

44,137,376

46,455,188

47,975,918

53,393,067

54,894,901

General and Administrative

63,265,382

64,175,311

77,617,372

90,717,553

89,246,017

Interest Expense

1,936,963

1,745,681

1,346,739

618,815

305,306

EXPENDITURE BY CLASS AND OBJECT

CAPITAL OUTLAYS

Nature of Expenditures

2008

2009

2010

2011

2012

Distribution Plant

35,322,469

26,526,526

39,847,544

45,108,294

45,235,846

General Plant

18,938,957

4,900,981

12,281,385

7,551,839

13,898,008

EXPENDITURE BY CLASS AND OBJECT

PANELCO III

Calendar Year

COE % Increase CO % Increase Total

2008

217,014,152

54,261,426

271,275,578

2009

217,261,811

0.11 %

31,427,507

(42.08) %

248,689,318

2010

289,617,800

33.30 %

52,128,929

65.87 %

341,746,729

2011

323,588,703

11.73 %

52,660,133

1.02 %

376,248,836

2012

301,221,807

(6.91) %

59,133,854

12.29 %

360,355,661

IMPLEMENTATION OF THE PLAN This phase answers the following: 1. How do we execute the plan? 2. Who is responsible with which activity? 3. How do we determine whether plan are implemented as

planned?

IMPLEMENTATION - act of carrying out the plans, programs and projects in accordance

with the strategic plan in order to attain set goals and objectives. (K. Mathur and Inayatullah, 1980).

Strategy Quality Management - process by which an organization formulated plans, objectives and

strategies, allocates resource for plans, programs and projects, identifies accountable entities, managers and front line workers, in the implementation, monitoring and evaluation of plan and programs.

STRUCTURE AND GOVERNANCE

Formal Structure – is the established patterns of relationships among the component units of the organization.

Three basic functions: 1. Designates formal reporting relationships

including the number of levels in the hierarchy and the span of control of managers and supervisors.

2. Identifies the grouping together of individuals into departments and of the different department’s into the total organization.

3. Structure includes across departments.

Institutional and Individual Accountability - accountable executives, managers and administrative officers of major programs and projects should be identified and their functions and support staff in these activities.

Plan Financing

- Indicate in summary table the projected amounts by calendar year broken down into current operating expenses and capital outlay.

PANGASINAN III ELECTRIC COOPERATIVE

(PANELCO III)

Urdaneta City

5 YEAR PERFORMANCE IMPROVEMENT PLAN

FOR THE YEARS 2013-2017

TOTAL COST

PLAN FINANCING

0

50000000

100000000

150000000

200000000

250000000

206708036.7

122003787.5

154988619.6 169480344.5

91502093.87

Funding Requirements

2013 2014 2015 2016 2017

PLAN EXECUTION

Requires:

1. Preparation of Annual Action Plans and Budget Estimates

2. Monitoring of Programs and Projects.

3. Evaluation and Plan Update.

PANELCO III BUDGETARY and IMPLEMENTATION ISSUES

1. Inaccurate or unreasonable assumptions lead to Unrealistic Budget

2. Failure to follow up and analyze variances

3. Compliance Reports by Departments/Areas are not submitted to CSD.

4. Unaccomplished projects

5. CAPEX Prioritization

6. No ocular inspection and visitation of reported accomplishments.

7. Lack of Evaluation framework

People at operations

are in the best

position to decide

on the most effective

and efficient use of

resources

to obtain the best

value for money.