The Limits of Performance Budgeting

In "NOAA's Resurrection of Program Budgeting" West, Lindquist, and Mosher-Howe explain the limits of performance assessment as a means of reallocating resources and responsibilities across organization boundaries.

Before rationalizing performance, it is necessary to rationalize structure. The steps to do so are i) creating new norms and routines ii) ensuring adequate resources iii) carry out a comprehensive rational analysis to assess whether costs outweigh benefits in terms of better decisions.

Other problems with Planning, Programming, and Budgeting System (PPBS) are i) organizational commitmment ii) conflicting incentives iii) control of cross-cutting lines iv) accountability v) its complexity which end up reinforcing bureacratic inertia and vi) lack of political support.

Cross-cutting lines of accountability was a type of matrix management popular during 1970s and 1980s. Individuals who belonged to functional divisions were assigned to temporary teams in accordance with the needs of particular projects.

Although budgeting i) allows planning ii) hold officials accountable iii) identify redundancies iv) compare marginal utility of spending on different activities with similar goals, perfomance budgeting is not always the best solution to reinforce these positive aspects of budgeting.