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UNIT 2.1.4 PLANNING AND BUDGETING

1. PLANNING
DEFINITION
A plan is a statement by an institution or an organization of where they would like to
be at the end of the planning period and the actions they will need to take in order
to get there. In other words, a plan is a specific, documented intention consisting of
an objective and an action statement. It is a process of coping with uncertainty by
formulating future course of action to achieve specified results by identifying what
activities need to be undertaken, when, by whom and at what cost.
Planning enables humans to achieve great things by envisioning a pathway from
concept to reality. The greater the mission, the longer and more challenging the
pathway. Planning is a never ending process because constant change, uncertainty,
new competition, unexpected problems, and emerging opportunities.

NECESSARY THINGS TO CONSIDER IN PLANNING
i. A clear vision of the desired end state
ii. Clear understand of the present undesired state
iii. Clear understanding of the means available for, and constraints
relating to achieving the desired end result.
IMPORTANCE OF PLANNING
a. Planning helps the councils to evaluate their current (undesired) status and
visualize their planned(desirable) status at the end of the planning period
b. Planning helps councils to priotise their objectives and articulate different
strategies for going from the current status to the desired status.
c. Planning also helps to evaluate the strategies and choose their preferred
strategies, develop action plans and cost them.
ESSENTIALS OF PLANNING
Despite the wide variety of formal planning systems, some essentials(common
denominators) of sound planning are organizational mission, types of planning,
objectives, priorities, and planning/control cycle
The Organizational Mission
The mission is the reason for existing. A clear, formally written and published
statement of an organizations mission is the corner stone of any type of planning
system that will effectively guide the organization through uncertain times.

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A well written mission statement does the following things :
i. Defines your organization for key stakeholders.
ii. Creates an inspiring vision of what the organization can be and can do
iii. Outlines how the vision is to be accomplished
iv. Establishes key priorities
v. Creates a philosophical anchor for all organizational activities
vi. Empowers present and future organization members to believe that
every individual is key to success.
2. Forms of Plans
After the mission statement is in place, successive rounds of strategic,
intermediate and operational planning can occur.
Strategic planning is the process of determining how to pursue the
organizations long-term goals with the resources expected to be available.
This is done by top management, councilors e.t.c

Intermediate planning is the process of determining the contributions
subunits can make with allocated resources. This is done by middle
management, departmental heads e.t.c. It takes 6 months to 2 years.

Operational planning is the process of determining how specific tasks can
best be accomplished on time with available resources. This is carried out by
lower level staff. The planning horizon is 1 week to 1 year.

3. Objectives
Objectives are targets to aim at. They may be defined as a specific
commitment to archive a measurable result within a given time frame.
Carefully prepared objectives serve as targets, foster commitment and
enhance motivation.

4. Priorities
Priorities are defined as ranking of goals, objectives or activities in order of
importance. This helps in allocating limited resources proportionately. There
are basically three priotizing methods:
i. Must do, these are critical to successful performance
ii. Should do, these are necessary for improved performance but they
can be postponed if necessary
iii. Nice to do, these are desirable for improved performance but not
critical to the survival or improved performance. They can be
eliminated or postponed to achieve objectives of higher priority.


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5. Planning Control Cycle
These are corrective actions that are undertaken when either preliminary or
final results deviate from plans. For planned activities still in progress, the
corrective action can get things back on track before it is too late. Deviations
between final results and plans, on the other hand are instructive feedback
for improvement of future plans.


PLANNING ROUND ABOUT
Planning is therefore a key component of management as it gives the manager the
means to check if they are headed in the right direction (monitoring) and to take
action if they are not (control). The figure below
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gives some key features of the
planning process.

TYPES OF PLANS

District Development Plan
The District Development Plan should set out the general developmental objectives
of the district. Some of the key issues this plan should be based on are projected
population growth, vehicular traffic patterns and anticipated economic activity



4 Lets Go
Implementation
1 Where do we want to be?
Mission, objectives, Key
Performance Indicators
2 Where are we likely to be?
If we continue as we are
3 How can we get where want to be?
Strategies
5 How are we doing?
Evaluation and Control


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growth. This helps to assess what services will be required, such as housing,
commercial centres, roads, schools, hospitals and play parks; and where these will be
located, zoning. It should also outline when these services should be available
relative to the growth projections. The financial implications of such plans are
normally based on broad-brush assumptions and are not very detailed.
In essence these plans form the basic foundation of all council activities. Their
demise in the recent past may have created some of the issues being faced currently
such as unplanned settlements for the urban areas and inappropriately sited
services.
Strategic Plan
A more detailed plan than the District Development Plan is a strategic plan. All
councils should have strategic plans. Currently only a few of the major councils have
strategic plans that give in some reasonable detail what direction they ought to be
headed. The strategic plan normally has the following components:
1 Mission statement
2 A SWOT Analysis
3 Sometimes a goal statement
4 Objectives
5 Strategies
6 Indicators
7 Specific activities and action plans to support the strategies and
8 Output indicators
The strategic planning process should be consultative and participative to ensure
that the priorities set in the strategic plans coincide with the stakeholders
aspirations
Vision and Mission
A vision or mission statement describes the ideal desired conditions that council will
strive to achieve by the end of the planning period. This should be arrived at after
due consultations with the key stakeholders who help in identifying the vision of
their town

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Strengths Weaknesses Opportunities and Threats (SWOT) Analysis

A SWOT analysis is an analysis of the Strengths, Weaknesses (internal) of the councils
and Opportunities and Threats (external) available to council. The figure below
outlines the components of a SWOT analysis.
Mission
To provide adequate social services for the enhancement of social
economic growth of the district
Objective 1
Broaden the revenue base and
increase collection efficiency in order
to improve service delivery.
Objective 3
Promote private sector participation in
service delivery to enhance
effectiveness
Objective 3
Improve the security situation to
encourage investment
Strategies 1
1.1 Identify new sources.
1.2 Enforce collection
protocols
1.3 Update customers
databases
1.4 Establish more revenue
collection points
Strategies 2
2.1 Establish permanent
stakeholder forum
2.2 Identify institutions to
network and link with
2.3 Establish Private Public
Partnerships
Strategies 3
3.1 Provide street lights
3.2 Create plots for
community police
stations
3.3 Establish a local
investment centre

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Figure : SWOT Framework

Goal Statement
In order to create goals for the council to aim at during the plan period clearly stated
goals to be achieved must be articulated. For example the following goal statement
was articulated
To provide adequate and accessible social services to improve the communitys
standard of living
Adequacy, access, standard of living are all issues that can be measured in some
manner. So this makes a good goal statement. To complete it two other instruments
are required to be developed to create the appropriate framework for evaluation:
a) a baseline study should be undertaken to determine the prevailing,
undesirable, situation at the start of the plan period relating to articulated
goals are deemed to be important and
b) a statement of the desired end of planning period situation relating to
the articulated goals which would indicate the achievement of the desired
vision or mission.
Residents
Forces for change:
Social
Economic
Political
Technological
Council
Service
Delivery
Mission
Vision
Objectives
Stakeholders
Strategies
Structures
Skills
Systems
Staff
Shared Values
Service
External Analysis
Internal Analysis
Opportunities and Threats
Strengths and Weaknesses

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Objectives, Strategies and Indicators
Since council functions relate to a whole range of services, several objectives need to
be set and achieved in order to achieve the stated vision. For example

1. To establish and maintain a consultative and collaborative system in order
improve service delivery
3. To broaden the revenue base and increase collection levels of KMC in order to
improve service delivery
5. To promote the participation of women in decision making process in council
affairs in order to improve service delivery.

Related to the objectives should be strategies, how the objective is going to be
achieved, and indicators, how the achievement is going to be measured.

Objective 3. To broaden the revenue base and increase collection levels of KMC in
order to improve service delivery
Strategies
Identify non traditional sources of revenue
Enforce by-laws
Develop measures to ensure consumers pay bills
Establish more revenue collection points
Output Indicators
Increase in revenue annually
Number of non traditional sources of revenue identified
Enabling legislation in place by June 2001
Reduction of unsettled monthly bills
Improve council liquidity



Action Plans
For the desired results to be achieved, actions plans are necessary. These will
indicate for each strategy, who will do what and when.



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For example
Strategy Action By Whom When
Identify non
traditional sources
of revenue
List current sources
Compare with other
councils
Survey activities being
undertaken in the district
Propose new Sources
Revenue
Accountant
Treasurer
Council Secretary

Council Secretary
March
00
March
00
April 00

June 00

Capital Improvement Plans
In order to implement strategic plans, there is almost always a need for improved
capital formation, whether it is the acquisition of refuse trucks, computers or the
building of new public conveniences. These capital improvements are usually a key
element in the successful implementation of strategic plans.
It is now standard management practice to extract these items and create a
procurement plan for the capital items as capital improvement plans.
A proposed format is shown in the figure overleaf which gives:
a) The Department acquiring the capital item
b) The item to be acquired
c) The linkage to the action plan in the strategic plan, AWPB.
d) The cost
e) The proposed timing for the purchase
f) The total for each month and each department
g) The gross totals


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Capital Improvement Plan Format
Departmental Strategic Plan
Each department should have a strategic plan that feeds into the councils strategic plan. The
format of these strategic plans should be exactly the same as the councils own strategic plan.
ANNUAL WORKPLANS AND BUDGETS
Councils are obliged by law
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to prepare their annual estimates of revenue and expenditure at
least 60 days before the commencement of the year to which they relate. The budgets of
councils must therefore always be accompanied with annual work plans to describe what
physical work done or what services will be provided and by whom and at what cost. This is the
essence of activity based budgeting that each activity must be costed based on what it will
deliver to the total work output of the council as a whole for the benefit of the residents.
The Annual Work Plans and Budgets AWPBs must consist of:
An introduction covering a review of the previous years activities and the current
status of the council relative to the baseline position on the key issues.
Vision of the desired status of the council at the end of the annual work plan period.



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Activities to be undertaken, which should link into the overall strategic plan, to enable
the achievement of the stated vision by the end of the work plan period. These should
be broken down by section and department.
A programme, probably represented by bar charts illustrating the timing and duration
of the activities, to create a visual road map of what should be done and when.
The budget will then be a product of the foregoing.
A Cash flow Projection, for internal management purposes to show the expected cash
flow position during the year as the budget itself is done on an accrual basis.
The figures in the budget form only a small part of the departmental AWPBs shown. For
purposes of administration the departments will have detailed breakdown of the proposed
budgeted income and expenditure.
Strategic Plans and AWPBs
Strategic Plans link into the Annual Work Plans and Budgets through the incorporation of the
action plans that relate to the year being planned for.
EXAMPLE OF ANNUAL WORK PLAN
To ensure receipts and disbursements of councils moneys are properly accounted for.
2. To collect punctually all revenue and broaden tax base
3. Strengthen financial management
4. Effective planning and allocation of resources
For the first objective it then has the following details:
Table 1: Annual Work Plan Finance Dept.
Activities Input Means of Verification Output Assumptions
Prepare
cash
books
Prepare
financial
statemen
ts
Stationery
Office
equipment
Accountable
documents
Printer
toner
Diskettes
Cash books
Reports
Receipt books
Payment vouchers
Expenditure
returns
Revenue returns
Register of
accountable
documents
16 update
cash books
Management
and
councilors
updated
Financial
position of
council
established
Funds will
be
available