PPBS Performance Programming

Budgeting System&

PPBEPerformance Programming

Budget Execution

Georgina AnthonyAntonella DemartiniChanell FletcherJacob LileSerenay Usta

Overview of PPBS & PPBE• PPBS was developed in 1961 by the

Department of Defense

• Designed to improve efficiency through long-term planning and cost-benefit analysis of alternative programs

• Not expenditure driven, not limited to a single year

• Linked policies and priorities with available financial resources

• PPPS became PPBE in 2003 to streamline connection between priorities and decisions

• PPBE is a high-level multi-year continuous budgetary process

• Used by DoD, NASA and NOAA

Four Phases of PPBE (Planning)

• Provides strategic rationale for agency programming and budgeting

• Articulates long-range goals superimposed over ever-changing conditions and trends

• Forecasting is conducted from a cost-benefit perspective

• Relates resource allocation to alternative uses of capabilities and capacities

• Produces the Strategic Planning Guidance which provides overall policy and strategy guidance to be used in program development

• Example: DoD forecasts the number of troops/ equipment/services required for specific military operations and approaches

Four Phases of PPPB (Programming)

• Aligns resources with specific actions to achieve department goals

• Programs are the actual activities, supporting equipment, goods and services purchased/developed

• Translates planning into action

• Compares current capability with needed future capability

• Evaluates existing programs for efficiency and guideline development

• Example: DoD FY 2012 Budget Request includes a 374 page document addressing programming changes/terminations i.e. promoting joint service solutions to address strategic needs

Four Phases of PPBE (Budgeting)

• Budget Estimate Submission (BES) four years: Last completed, current, next two years

• Goal of BES is to estimate, formulate, justify, document to support and implement directives

• Using categories to associate programs to each objective, the budget phase clearly connects budget decisions and strategic planning

• Example: DoD FY 2012 Budget Request includes a 87 page section: “Program Acquisition Costs by Weapon System” reporting FY 10 and 11 quantity and cost detail for the military’s combined weapon system

• DoD uses this data to forecast cost estimates for maintaining required programs for strategic compliance

Four Phases of PPBE (Execution)

• The real world manifestation of the budget (where the rubber meets the road)

• A critical element of PPBE’s core strategic purpose

• Matches planned programs with actual resources

• Measures performance

• Provides feedback for more efficient and effective future execution

• Example: DoD FY 2012 Budget Request features the Department of Defense Efficiency Initiatives, including reviews of program costs, discussion of reduced overlap, emerging best practices and potential for program reductions

Advantages to PPBE

• Allows for long-term forecasting

• Provides the ability to connect budgetary decision making with strategic outcomes

• Allows visualizing trade-off options as needs and costs are considered simultaneously

• Provides prioritization by conducting gap and excess analysis

• Offers flexibility, continual revision and ease of program performance tracking

Challenges to PPBE

• High financial and administrative costs (requires a high number of specialized analysts over an extended period of time)

• Requires a high level of management and department acceptance and participation

• Limits creativity (long-term projection could lead to a “uniform approach” to treating an evolving issue

• PPBE is only useful when units of an agency perform similar tasks

• Despite the multi-year approach, the link between expenditure and revenue may not be transparent

Recommendations• PPBE should only be used in highly structured

agencies with considerable capital and human resources such as DoD.

• Performance measurement should be integrated into the budgetary cycle

• The form of PPBE lends itself to performance measurement in each phase of the cycle

• As budget justification rests upon performance results, justification is necessary to receive public support

• The DoD could act more responsibly in their budgeting process

Questions?