The Quantity Surveyor s Role in the Budgeting Process in Nigeria- Best Practice

Transcription

1 The Quantity Surveyor s Role in the Budgeting Process in Nigeria- Best Practice By: Barth T. Feese, B.Sc.(QS), MBA, FNIQS, RQS Director, Budget Monitoring & Evaluation, Budget Office of the Federation, Ministry of Budget and National Planning, Abuja. Presentation at: NIQS Workshop, Theme: Budgeting and Capital Project Monitoring and Evaluation, Held in Makurdi, 27 th 28 th July, 2016

2 Outline Introduction: Concepts of Planning and Budgeting Public Financial Management Reforms and Evolution of Budgeting Processes Challenges of Budget Implementation Methodology Summary of Key Findings The Quantity Surveyor s Role in Planning and Budgeting Conclusions and Policy Implications.

3 Introduction/Background Concepts of Development Planning: Capitalist (markets), Socialist (Planned), Mixed Econ. Budgets are an aggregation of a nation s or community s strategic priorities and the government s articulation of policy initiatives towards meeting such needs (or development objectives). Budgets provide financial and service information to decision makers Thus the annual budget is an instrument for achieving the medium term plan And the medium term plan a tool for realising the developmental aspirations in long term development plan.

4 Introduction/Background (Cont d) If budgets are so important for improving lives Why has capital budget implementation remained unimpressive (at 50% on average) in Nigeria since 1999, with poor outcomes? Thus the paper traces: i) The evolution of budgeting systems in Nigeria, Within the context of the numerous Public Financial Management Reforms (FRA 2007, PPA 2007, etc.)

5 Introduction/Background (Cont d) ii) Highlighting major challenges: e.g., None inclusion, bureaucracy, political interference, institutional capacity constraints, poor collaboration, weak plan-budget link, iii) With analysis and summary of findings from a survey based on some best practices iv) An examination of the question: What role can the QS play in helping to overcome the challenges of capital budgeting implementation in Nigeria?.

6 Public Financial Management Reforms and the Evolution of Budgeting Processes Traditional Line Item Budgeting Approach Incremental, Budget Ceilings (Expenditure Limits or Envelops ). MDGs Needs Assessment/Costing Approach Goal/Outcome-based, Links Plans & Budgets Performance Based Budgeting (PBB) Outcome-based, Incentives-Rewards/Sanctions. Zero Based Budgeting (ZBB) Cost Justifications, Prioritised expenditures.

7 Comparative Analysis of Budget Systems The Table 1 below shows that: The line item method, while focusing on cost control as an objective (Sectoral Envelops, Budget Ceilings, or Expenditure Limits), It is wasteful, accounts for inputs only And resource allocation is not contingent upon any rigorous analysis (Based on needs, expected outcomes, or impacts and costs)

8 Comparative Analysis of Budget Systems (Cont d) As it is in the case of all the other budgeting approaches, which are all improvements on the line item budget, including NA, PBB and ZBB Thus NA, PBB and ZBB have features of justification of expenditures by costs compared to needs/benefits/impact A good budgeting system must have performance indicators for tracking implementation progress and benchmarking against milestones Only the line item method lacks this feature.

9 Table 1: Evolution of Budgeting Systems & ZBB: Line Item Budgeting MDG Needs Assessment/ Costing Techniques Performance Based Budgeting (PBB) Zero Base Budgeting (ZBB) Difference Accounting/ Number oriented Outcome Based Function oriented (Objectives) Function and priority based Features Input Budgeting Input/outputs Budgeting Input/ Output budgeting Dynamic Input/ Output budgeting Dealing with Ongoing Schemes Ongoing schemes taken for granted On going schemes taken for granted Ongoing schemes taken for Granted Every year old and new schemes evaluated together Objective Control cost Resource Allocation based on Needs and outcomes Resource allocation, with reference to results Resource allocation, in context of Prioritization Justification of Expenses Budget ceiling, approval, Appropriation Cost-benefit, Impacts, performance indicators Cost-benefit, performance Indicators Achievements in prioritized activity Areas

10 Budget Cycle Monitoring / Evaluation MTFF: MTEF/FSP Implementation Budget Budget Préparation Presidential Assent NASS Appropriation 10

11 Budget Implementation Challenges and Lessons Learnt Poor project preparation by MDAs Reflecting Executive Capacity gaps in the MDAs Bureaucratic bottlenecks:- imposed by procurement guidelines (e.g. advert timelines) None alignment of national plans and budgets Institutional weaknesses:- poor policy coordination, poor collaboration between tiers of Government Lack of Incentive based M&E Governance Framework:- Reward Vs. Sanctions for performance or non-performance by MDAs

12 Methodology Survey Instruments Focus group discussions, personal interviews, online questionnaires. Target Population Budget implementers, development practitioners, independent experts, civil society organisations, chosen among 130 participants. Data Collection and Analysis Qualitative (interviews, focus group discussions) and quantitative (online questionnaires) analysis, Collaborative (CGS) and stand alone projects.

13 Summary of Key Findings Collaboration & Coordination: Between Federal & State Governments (CGS) Bottom-up planning and budgeting - Achieved 98%, while stand alone ones performed at 50% Conditions imposed: For leveraging public financial management reforms (e.g. Local Development Plan anchored on Needs Assessment/Costing, FRA, PPA)-(98%vs50%) Monitoring and Evaluation System: Feedback Governance framework Incentive based, reward and sanctions Capacity Building: Professionals/CSOs in trainings & independent M&E 98% vs. 50%

14 Role of the QS: Tackling Budget Implementation Challenges QS Experience and tackling Budget Implementation: Traditional QS role: Construction Economist, Project Cost Planning and Control, Project Manager On Social and Infrastructure Projects How can the QS assist Government in relaxing some of the budget implementation challenges? i.e., average 50% (funds released, funds utilised and actual project execution on site). How can we help resolve the institutional, systemic and capacity issues underlying the poor budget performance? Can the QS bring his construction industry experience, his strong technical, financial and managerial skills to bear on solving problems in the wider economy?.

15 Role of the QS: Background Training QS Basic Training (Technical, financial and managerial): Technology, Measurement, Economics, Law, Management Versatility and Adaptability: QSs are well equipped to play a leading role in economic planning and development management Like the Accountants did: Breaking into Management Consulting and IT.

16 Role of the QS: Expand Practice Areas Capacity Building/Training and Consultancy Opportunities in: Development of policy planning and budgeting reforms, Public financial management reforms Public Procurement, Fiscal Responsibility Needs Assessment/Costing Sustainable Development Goals (Target year 2030) Costing Nigeria s New Vision/LTDP (Target Year 2030) Zero Based Budgeting Performance based management Public Private Partnerships Project management Monitoring and Evaluation Public Sector Reforms

17 Role of the QS: Expand Practice Areas (Cont d) Present Economic Decline Vs. Need for Huge Investments in Social and Economic Development Social: Human Capacity-Health, Education Economic-Infrastructure (Roads, Power, Transport, Water etc.), Agriculture, Housing, Environment, ICT, etc. Massive Resource Mobilisation, Allocation and Utilisation: Requires public financial management reforms Planning and Budgeting Techniques: NA, ZBB, PBB, CBA,Project feasibility studies, Others Public Sector Management (Service Delivery):. QS can key into the process-federal, State & LG.

18 Role of the QS: Skills Update Learning by Doing-Get Involved Organise a series of compulsory seminars/training workshops on public financial management reforms for practicing QSs. Cascade training workshops to state and local chapters Modify and Enrich the curriculums of QS University Departments: To include development policy planning and budgeting techniques and new financial modeling tools Domestic resource mobilisation and financing strategies Fiscal Policy, Revenue Forecasting

19 Role of the QS: Marketing New Skills and Services Local Private Network: Involve wider group of economic and financial management stakeholders in QS activities and programmes (e.g., NESG, NES) International Networks: Engage more with International Development Partners (IDPs) involved in supporting Nigeria s development efforts (UNDP, DFID, USAID, EU, etc.). Government Networks: Organise planning and budgeting training programmes for Government Departments at Federal, State and Local Government levels, in collaboration with the IDPs and the organised private sector Legislative Networks: Get involved in the formation and registration of a legal M&E professional organisation at the NASS

20 Summary, Conclusion and Implications for Public Policy Reviewed history, evolution of budget processes in Nigeria Highlighted Challenges of policy planning and budget implementation Examined Role of the QS in emerging government reforms and financial architecture in Nigeria Concludes QS can play a prominent role in economic planning and budget reforms in Nigeria Recommends skill and knowledge update with new market positioning among stakeholders Take advantage of Government s call for QS collaboration in helping obtain value for money through M&E

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