EPAM3714 EPAM3714: Public Financial

Management
EXPLAIN THE CONCEPT: PRIORITIZING IN PRACTICE.
 1.PRIORITIZING FOR THE BUDGET

Prioritizing is deciding on which item should be attended to first- expenditures

that are dispensable and non-dispensable.

1. Dowith or do without priorities

• Programmes decided to be undertaken against those left out
• Distinguish on programmes that organization should spend on or not
• Bottom-up planning process

2. Do or die priorities
• No choice on expenditure- obligatory spending
• About the essence of the institution- cannot exist without it

3. Just do it priorities
• Programmes that are gaining in importance
• Take a large slice of the allocation towards the strategic goals
2.PRIORITIZING AS DECISION-MAKING
• Difficult to make objective decision-making when prioritizing
• Subjectivity always influence decision-making
• Costs may sometimes be above benefits
• Prioritization is systematic approach- provide reasons/ logic to the decisions made
• Prioritizing about matching the limited resources to the unlimited needs & wants
– Decide which need is more important compared to others
– About the degree of differences between the needs
3 PRIORITISING IN PRACTICE
3.1. The Usual procedure for compiling a budget.
Start from costing activities/ items to build a budget from the bottom up
Incrementally different from the current year
3.2 Correct procedure for compiling a budget
• Start with total allocation (top-down)
• Determine the various goals and objectives of the institution
• Give weights to the goals and objectives
• Choose potential programmes
• Identify output and outcomes
• Do preliminary costing
• Do-cost benefit analysis of programmes
• Find best programme balance
3.3 Finding the best programme balance
• The satisficing model i.e using brainware
• Satisficing means pursuing behaviour until some minimum requirement is met
• The search is still on for the best software for optimal allocations
3.4 Prioritising in terms of cost- effectiveness at the level of activities.
• Agreement on output to produce
• Competing outputs: chose the one with highest cost-benefit. (risk)
• Costs =monetary as well as opportunity costs and costs for the community.

• Activities determine the monetary costs

• Alternative activities and ways could be considered and determined.
• Total costs to be compared to total benefits, activity feasible.