Performance Based Budgeting (PBB) (Advantages (Emphasis on inclusion of a…
Performance Based Budgeting (PBB)
emphasizing the concept of value for money
monitoring output performance.
prioritizing goals and a systematic and rational approach in the decision making process.
reject the traditional budget view
without directives and interference, the government will abuse their position and tend to be wasteful.
forced to act based on cost minded, must be efficient, use funds economically, and are required to be able to achieve the goals set.
Only a few of the central and local governments have budget or accounting staff who have sufficient capacity to identify measurement units and carry out cost analysis
Many government services and activities cannot be measured directly in units of output or cost per unit that can be easily understood
Government accounts have been specifically created on a budget basis (cash basis). This makes collecting data for performance measurement purposes very difficult, sometimes even impossible
Direct activities are measured in detail and other measurements in detail without adequate consideration being given to the necessity of the activity itself. In other words, there is no consideration to determine whether the activity is the best tool to achieve organizational goals
Emphasis on inclusion of a narrative description of each activity in each proposed budget
Budgets are based on activities, with demand supported by estimated costs and achievements measured quantitatively
the emphasis is on the need to measure output and input
A performance budget that requires performance data allows the legislature to increase or decrease the amount requested in certain functions and activities. This cannot be done if the available data is only expenditure data (object of expenditure). After being decided by the legislature, the executive must obey and revise the budget
Provide chief executive control over his subordinates. The chief executive not only looks at how much his subordinates spend, but also evaluates the performance of activities using standard currency units or activity units
Performance budget emphasizes activities that use the budget rather than how much budget is used