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How can Enterprise Software enable Public Investment Management?

 

May 9, 2017

There is rising interest in improving public investment planning and public investment management. The management of long-term capital public expenditures is seen as a critical contribution to sustainable growth. This rising interest in public investment management includes finding better automation and management through the use of Government Resource Planning (GRP) enterprise software. This is the second part of a series that explores:

  1. Why is public investment management crucial?
  2. How can software enable the public investment lifecycle?
  3. Why is integration among public investment software systems and subsystems important?
  4. What software solutions are available from FreeBalance to assist government in managing public investments?

The Intersection of Enterprise Software Categories

Enterprise software has become categorized with a bewildering number of Three Letter Acronyms (TLAs) like CPM, CRM, ERP, PPM, and SCM. The problem for governments has been to map public sector requirements against categories fundamentally created for private sector concerns. Public investment management falls at the intersection of three enterprise software subcategories. Commercial off-the-Shelf (COTS) software for any of these three categories represent only part of the solution needed for government public investment management. These subcategories are:

  • Budget Planning subcategory of Corporate Performance Management (CPM)
  • Monitoring and Evaluation subcategory of Government Resource Planning (GRP)
  • Procurement subcategory of Supply Chain Management (SCM)
  • Debt, Cash and Asset Management subcategories of Enterprise Resource Planning (ERP) or GRP
  • Non-IT subcategory of Project and Portfolio Management (PPM)

Why is software important for Public Investment Management?

Government organizations from local governments instituting smart government projects to national governments with wide-ranging infrastructure investments are seeking software tools to help automate aspects of public investment management. The benefits of public investment management software – or should we say: Public Investment Management (PIM)? – include:

  • Compliance, where software controls ensure that all elements of the PIM lifecycle follow budget law and government financial procedures and regulations
  • Consistency, where software structures PIM investments to be tied to government goals with consistent performance criteria
  • Collaboration, where software facilitates multiple government organizations planning and implementing projects
  • Comprehensiveness, where software is used to tie all PIM elements together to be understood by decision-makers
  • Communications, where software provides a picture of goals, investments and results to planners, decision-makers, and civil society

Navigating the complexities of enterprise software categories and solutions is challenging. And, much of the functionality needed in government is often missing in CPM and PPM software. Some governments seek to develop simple customized applications that provide superficial functionality. It is important for government leaders to realize how different software solutions can fit into the PIM lifecycle.

The Public Investment Management Lifecycle

There are numerous government PIM lifecycle models.  We use the following structure recognizing that the sequence of steps taken:

  1. Planning (public investment planning and budget planning)
    • Financial Planning
      • Strategic guidance
      • Macroeconomic analysis
      • Debt planning
      • Sector planning
      • Cost drivers
      • Forecasting
      • Short and long-term planning horizons
      • Regulation
    • Allocation
      • Pipeline management
      • Public participation
      • Pre-feasibility and feasibility analysis with business case analysis, cost benefit analysis
      • Risk analysis
      • Resource allocation and  “Level of Effort”
      • Monitoring indicators and data source identification
      • Project milestones, and planning
      • Project requests
      • Portfolio analysis
      • Sensitivity analysis
      • Project review
      • Project ranking
    • Budget Planning
      • Multiple year budgets information
      • Budget circular
      • Budget ceilings
      • Budget adjustments
      • Distributions 
      • Funding linkage
      • Scenario planning
      • Budget versions
      • Budget approvals
      • Allocations, budget controls
      • Synchronizing operating and capital budgeting
      • Extra budgetary financial management
  2. Acquisition (procurement)
    • Commitment Management
      • Commitments and obligations
      • Responsible organization
      • Budget transfers and virements
    • Tendering
      • Vendor management
      • Complex procurement cycles
      • Procurement documents
      • Purchasing
      • E-procurement
    • Contract Development
      • Terms and Conditions
      • Legal obligations
  3. Implementation (project management)
    • Project management
      • Project adjustment
      • Budget transfers and virements
      • Forecasting, including budget forecasting
      • Assignments
    • Contract Management
      • Milestone management
      • Progress analysis (financial & physical)
      • Cash management
      • Payment management
  4. Maintenance (assets, operations and maintenance)
    • Maintenance
      • Maintenance & repair
      • Restoration & modernization
      • Facility management (warranties, service issues, work orders)
    • Asset Management
      • Asset register
      • Asset assignments 
      • Asset inventory
      • Asset depreciations
      • Asset valuation
      • Asset disposal, replacement
    • Budget Management (reconnects with budget planning)
      • Operating budget support
      • Capital improvement budgets
  5. Results (monitoring and evaluation)
    • Analysis
      • Surveys and survey analysis
      • Variance analysis
      • Earned Value management
      • Scorecards, dashboards
      • Project risk management
      • Cost driver analysis
    • Audit
      • Compliance audit
      • Contract review
      • Performance review
  6. Governance
    • Set-up
      • Government goals
      • Policy articulation
      • Governance structures
      • Performance criteria and key performance indicators
      • Performance, program & Chart of Accounts (COA) in budget and financial system
      • Fiscal rules and budget calendar
      • Multiple year budget framework
      • Capital planning criteria
      • Risk management framework
      • Project selection criteria
      •  Monitoring & evaluation framework
      • Process, forms, templates, methods instruction
    • Program Management
      • Program management office
      • Project and program steering committees
    • Transparency
      • Budget planning transparency
      • Budget execution transparency
      • Procurement transparency
      • Results transparency
    • Strategic Reviews

Additional Comments

It is difficult to create strict definitions, particularly around governance functionality. Much of what is considered Monitoring and Evaluation (M&E) has been placed in the “governance” section in our lifecycle. This is because M&E, in my opinion, ought to be part of the budget planning, procurement and implementation process.

 

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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.
Doug Hadden

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