Performance-Based Budgeting: Programme Structures, Indicators and Spending Reviews Course

Programme Summary

Performance-based budgeting is a five-day training course for senior finance and planning leaders at strategic level, culminating in a performance budget design for one programme of their own organisation. Many budgets are still prepared by line item, so decision makers see what is spent but not what it achieves. The approach restructures the budget around programmes and outcomes, attaches indicators and costs to each programme, and builds the routines that bring performance information into allocation, negotiation and review. Mars Training Centre UK delivers this programme in performance-based budgeting.

The Business Case

When funding follows last year's baseline, low-value activities persist and priority services compete for what is left. Linking money to results lets leaders see which programmes deliver, defend reallocations with evidence and explain spending to boards, legislatures and citizens. Shared programme data also shortens negotiations between finance teams and departments.

• Share of Spending Linked to Measured Outcomes: Rises as budgets are organised by programme with agreed indicators.
• Reallocation From Low-Value Activity: Becomes possible when spending reviews compare cost with results.
• Transparency of Budget Documents: Improves when performance reports accompany financial statements.

Principles and Evidence Base

• OECD Good Practices for Performance Budgeting: Guide the programme budget structure, indicator selection and use of performance information in Sessions 1 and 4.
• Logic Model (Inputs, Activities, Outputs, Outcomes): Connects resources to intended results when programmes are designed in Session 2.
• PEFA 2016 Framework, PI-8 Performance Information for Service Delivery: Serves as a diagnostic for performance plans, results and evaluation in Sessions 1 and 5.
• Spending Review Practice: Structures the systematic appraisal of baseline expenditure and savings options in Session 4.

Intended Participants

• Leaders who prepare, negotiate or approve organisational and departmental budgets.
• Heads of planning who translate strategy into programmes, targets and resource requests.
• Senior officials accountable for reporting results against public or shareholder funds.
• Finance leaders introducing programme structures in place of line-item budgets.
• Executives who chair budget committees or spending reviews.

The programme serves ministries and government agencies, state-owned enterprises, health and education systems, and municipal services.

Learning Outcomes

1. Participants will be able to diagnose the maturity of their organisation's budgeting against performance budgeting good practice.
2. Participants will be able to construct a programme structure and logic model aligned with strategic objectives.
3. Participants will be able to design output and outcome indicators with baselines and realistic targets.
4. Participants will be able to cost programmes and link resources to expected results.
5. Participants will be able to evaluate spending options using performance information and spending review methods.
6. Participants will be able to justify allocation decisions through performance reports and accountability arrangements.

Programme Structure

Day 1: Foundations of Performance-Based Budgeting

Why do budgets need to show results as well as spending?

• Line-Item, Programme and Performance Budget Models
• OECD Good Practices for Performance Budgeting
• PEFA PI-8 Performance Information Diagnostic
• Roles of Finance, Planning and Line Departments
• Performance Budgeting Maturity Self-Assessment

Day 2: Programme Structures and Logic Models

How is a budget reorganised around programmes and intended outcomes?

• Programme Hierarchy: Programmes, Sub-Programmes and Activities
• Logic Model Design From Inputs to Outcomes
• Aligning Programmes With Strategic Objectives
• Programme Ownership and Accountability Mapping
• Chart of Accounts Mapping to Programmes

Day 3: Indicators, Targets and Programme Costing

How are results measured and what does each programme really cost?

• Output, Outcome and Efficiency Indicator Selection
• Baselines, Targets and Indicator Specification Sheets
• Data Sources, Quality and Verification
• Programme Costing and Overhead Attribution
• Unit Cost and Cost-per-Result Analysis

Day 4: Allocation, Negotiation and Spending Reviews

How does performance information change who gets funded and why?

• Performance-Informed Budget Submissions
• Evidence-Based Budget Negotiation Techniques
• Spending Review Scoping and Baseline Analysis
• Prioritisation and Reallocation Options
• Medium-Term Expenditure Planning Links

Day 5: Applying Performance-Based Budgeting

How are the elements combined into a programme budget ready for approval?

• Applying the Logic Model to a Participant Programme
• Testing Indicators and Targets Through Peer Challenge
• Costing the Programme and Presenting Funding Options
• Performance Report and Accountability Dashboard Design
• Programme Performance Budget Presentation

Methodology

The programme uses structured exercises built on realistic budget files from health, education and utility services. Participants restructure line-item budgets into programmes, draft indicators and test them against peers acting as budget committee members, so each design is challenged as it would be in a real negotiation.

• Suggested activity: Converting a hospital department's line-item budget into a programme budget.
• Suggested activity: Rating draft outcome indicators for a school improvement programme.
• Suggested activity: Running a mock spending review of a municipal transport subsidy.

Capstone Output

Each participant completes a performance budget design for one programme in their organisation. It contains the programme structure, a logic model, indicator sheets with baselines and targets, a programme costing, funding options and a performance report template, ready to propose in the next budget cycle.

Frequently Asked Questions

Is performance-based budgeting suitable for leaders new to programme budgets?

Yes. It is designed for senior finance, planning and departmental leaders who know their organisation's budget process. It assumes budgeting experience but no prior work with programme or performance budgets.

Which frameworks does performance-based budgeting in this course rest on?

It rests on the OECD Good Practices for Performance Budgeting, the logic model, spending review practice and PI-8 of the PEFA 2016 Framework on performance information for service delivery.

How is the performance-based budgeting design used at work?

You submit it as a pilot programme budget in your next budget round, and use its indicator sheets and report template to monitor and explain results during the year.

How does performance-based budgeting differ from corporate budgeting and forecasting programmes?

It links funding to programme outputs and outcomes for public and mission-driven entities, while corporate budgeting programmes focus on profit plans, rolling forecasts and financial drivers.