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The Planning, Programming and Budgeting System (PPBS), used for managing defence resources in several countries, faced throughout its existence both support and fierce criticism. Over time, the initial system has been adapted and transformed in the US in the form of the Planning, Programming, Budgeting and Execution System (PPBES), while in Romania it is known as the Planning, Programming, Budgeting and Evaluation System. PPBES can be approached from a restricted perspective as a tool for budget development and management and from an expanded perspective as a decision support system. The intention of this paper is to provide an analysis of the challenges in using PPBES as a tool for managing defence resources, with emphasis on the interactions between strategic planning at the military-political level and resource planning.
Keywords: system, decision making, integrated framework, defence, planning, and resources.
Throughout its existence, the Planning Programming Budgeting System - PPBS, as it was originally named, has been praised and criticized in equal measure. On the plus side, it was considered as an effective way of defence resources allocation, while on the minus side was criticized as the biggest bureaucratic nightmare and the most convoluted way of developing a budget. The intent of this paper is to provide an analysis of the challenges generated by the use of the PPB system as a tool for defence resources management, with focus on the interactions between the strategic planning at political military level and the resource planning level. The PPBS has evolved in time into PPBES, keeping most of the original ideas behind the process, while trying to adapt to the current challenges.
2. PPBES: budgeting tool vs a management tool
PPBES has been defined an annual cyclical process of determining the financing requirements and allocation of defence resources1, or according to a different definition, as a comprehensive decision making instrument. that requires the articulation of explicit goals, purposes and objectives from which strategic programs are identified . that generates output budget information from which effective resource allocations can be made2. In Romania, PPBES "consists of the integration of efforts of the Ministry of National Defence structures for the efficient use of the available resources in order to achieve the planned military capabilities. PPBES ensures the management needs at department level, as well as the development of the planning documents requested at NATO/EU level"3.
In its original meaning, PPBS was developed, under Secretary of Defence Robert McNamara, by Charles Hitch, as a system designed at improving the resources management within the United States Department of Defence. In this sense, PPBS was defined as "an integrated management system that places emphasis on the use of analysis for program decision making. with the purpose of . putting program decisions into operation through integration of planning, programming and budgeting functions4".
In effect, the PPBS phases were designed after the main functions of management, and the novelty of the system was not in the phases themselves, but in the way they were related to each other and in the emphasis placed on linking goals with budgets. The primary focus was to develop a system in which the achievement of goals set in a strategy was closely linked with the level of the budget and the way the resources were allocated.
One of the purposes of introducing PPBS was to strengthen the role of the minister of defence in resource allocation and to provide a more rational resource allocation basis, following a more centralized top-down approach. Within PPBS, decisions in the field of strategy and defence resources allocations are to be made on the grounds of clearly formulated national security and defence goals and objectives, in opposition to previous manner of making decisions as a result of the interactions between various interests from services, or other structures within the department/ministry of defence. Also, PPBS is supposed to provide the link with the military requirements, derived from the main strategic planning documents and ranked according to priorities.
In time, PPBS has evolved, and from 2003 the System of Planning Programming Budgeting and Execution was implemented in the United States Department of Defence, with the intent of emphasizing the planning phase, involving more heavily the Combatant Commanders in the process, by requesting and using their inputs, focusing on capabilities and facilitating the review of the execution of past decisions and the consequent actions. Its intent was to provide the most effective mix of forces, people, equipment and logistical support, within the boundaries of financial ceilings, by making the link between strategies at political military level, prioritized capabilities and available resources.
PPBES placed a greater importance on getting feedback, on assessing and reviewing the performance of the programs, in order to measure the progress towards the achievement of the established goals and objectives. The inputs gained from the feedback phase were designed to be used for further decisions regarding resource allocations in the next cycle, together with inputs from the other relevant processes, namely the requirements generation process and the acquisition process.5
In Romania, PPBES was introduced under the name of Planning Programming Budgeting and Evaluation System, keeping the original PPBS framework but adapting it to the specifics of the national military and financial system.
The planning phase is aimed at defining the framework for the resource allocations, in terms of ways ahead for the main defence programs and establishing financial allocation ceilings for the next 10 years, through the main defence planning documents, together with studies, analyses and long term plans.
The programming phase is aimed at developing the main defence programs, within the established financial limits, in order to provide a view regarding the resources allocations needed for the achievement of the established objectives.
The budgeting phase focuses on the development of a financial plan, used to provide the necessary resources for the development and maintenance of the military capabilities in the first year of the program, while the evaluation phase is aimed at providing feedback on the implementation and achievement of the objectives established for the first year of the programs, within the financial limits set in the budgeting phase, in order to make the necessary corrections6.
Generally speaking, PPBES emerged in order to provide a way of reconciling two opposed approaches to defence planning:
- the requirements based approach, which postulated that the threats to national security are the determinants of military strategies and requirements, while the aim of the budget is to provide the necessary resources for the achievement of the strategies' objectives. The issue generated by this approach is linked to the scarcity of the defence resources, as planning for defence just on military considerations, without taking into account the financial limitations, leads to difficulties in the implementation of the plans.
- the budget based approach starts from the available budgetary resources, on which bases a force structure shall be build, while the military strategy has to accommodate the resource limitations, regardless of the threat environment. This approach, although very useful from an economic and financial point of view on short term, is not viable on medium and long term from a military point of view, as it may compromise the achievement of the main defence goals and objectives. Budgets should be used as tools for the achievement of objectives, and not become objectives in themselves.
The rationale behind PPBES was to build a system that should consider the military needs and costs at the same time, as decisions regarding the force levels can not be dissociated from the available resources. Making decisions regarding forces and technological sophistication levels, without considering the available budgets, can only result in a planning process totally disconnected from the reality. At the same time, making these decisions on short term, solely on the basis of available budgets, does not allow for building an efficient military and the achievement of the long term strategic objectives. Also, the budget-based approach creates the premises of inefficient financial decisions, as medium term and life cycle costs considerations are not analyzed, leading to short term savings that sometimes generate medium term economic losses.
This is one of the areas where the original PPBS approach, as it was designed for the defence area, differs from the more widely known approach to it as a budgeting tool. As a budgeting system, PPBES is mainly used as a tool within the ministry of defence, with military requirements - as output of the military planning, being tailored after the budget limits.
An interesting definition of PPBS from an accounting dictionary outlines very well this point of view: PPBES is described as a "planning-oriented approach to developing a program budget. meaning a budget in which expenditures are based primarily on programs of work and secondarily on character and object"7. Thus, the primary goal of PPBES seems to be the development of a budget (specifically a program budget) and not the rational decision making process of allocating resources for the achievement of objectives, as initially designed. The definition acknowledges that "the major contribution of PPBES lies in the planning process", but then considers that the PPBES planning process is "the process of making program policy decisions that lead to a specific budget and specific multi-year plans". In other words, the goal of planning is to produce more plans, keeping in mind that programs are actually medium term resource allocation plans, while the budget is in itself a short term plan, an estimate of revenues and expenditures for a specific future period of time.
3. PPBES as a decision support system
PPBES strength actually lies in its use as a management and decision making tool, employed at the level of the ministry of defence to allocate resources for the achievement of national defence goals, but also as a way of providing the political military decision makers (which are the ones that establish the defence objectives and strategies) with a transparent tool to estimate the resource implications of their decisions for medium term, not just for the near future. In McNamara's words, although national security is impossible to price, "policy decisions must, sooner or later, be expressed in the form of budget decisions on where to spend and how much"8.
When dealing with long term, strategic defence decisions, whose specific results will only become apparent after a number of years, it is often tempting for the political decision makers to ignore the costs and the affordability of reaching a certain objective and fall into the trap of wishful thinking. On the other hand, without a clear vision and strategy, accompanied by precise accountability, many political decisions tend to be made on short term considerations, such as the annual budget restrictions, while the costs and consequences of those decisions will only become visible and will have to be dealt with some years on the future, when they will become the responsibility of different decision makers.
The system of PPBE can be used as a tool that would allow the modification of defence objectives, should they largely exceed the resources available, or the allocation of additional resources for the achievement of crucial objectives. Without this framework underlying the security and defence strategy, goals and objectives would continue to be set independently by senior political decision makers, while the task of putting them into practice (sometimes with inadequate resources) would continue to be seen exclusively as the job of specialists and decision makers within the ministry of defence. The consequences of such an approach are a continuous imbalance between goals, capabilities/forces and the available resources, propagated from one year to the next, in a kind of application of the "ostrich policy", leading to defence risks due to inadequate forces, but also to the inefficient use of the existing funds. In this respect, if used properly, one of the system's goals was to provide top-down accountability for the decisions made, not only at service level or within the ministry of defence, but at all levels of decision.
The planning phase of PPBES is the first focus point and can be viewed as the crucial point of all the process. From the point of view of the functions of management, planning is viewed as "deciding in advance what to do, how to do it, when to do it and who is to do it. it bridges the gap from where we are to where we want to go"9. Planning is the first step in any managerial enterprise, as it is geared towards identifying the future course of actions in order to achieve the established goals and objectives.
Within PPBES, programming (that can be viewed from the management point of view as medium term planning) plays the crucial role of providing the link between goals, strategy and resources. Often in the public sector, budgeting becomes the main focus of decision makers, as it is closely related to the present, with its problems and challenges. Still, without a clear image about the desired future state, budgeting can only ensure that an amount of money has been spend and not that the amount of money spent has also generated results.
Although the need for planning was often emphasized by military strategists and management experts alike, planning is not an easy process, as it involves dealing with uncertainty, trying to anticipate future goals, conditions and courses of action. Done properly, planning is the foundation of any activity, while if done improperly, it becomes disconnected from reality, a mere bureaucratic nuisance, papers to be filled with words and numbers that, once produced, nobody take a second look at.
In the area of defence, the planning phase of PPBES was designed to overcome the problems generated by a lack of a commonly agreed course of action and strategy. Without a common, integrating framework, planning in the defence area is often done independently, at the level of the services or various structures within the ministry of defence. Even when planning is centralized at a level of a single structure, the situation in which several unaligned planning documents, strategies and doctrines are in force at the same time may arise, generating a lack of correlation and overlaps.
In the theory of PPBES, the planning phase had a few crucial planning documents designed to provide the framework for the future: the National Security Strategy (accompanied/replaced in some countries by the National Defence Strategy), the National Military Strategy and various directives (the Strategic Planning Guidance or the Defence Planning Guidance used in Romania). Most of the states which have adopted PPBES use similar documents to underline the planning phase. Still, in reality, various other planning documents were in time adopted outside the PPBES framework, such various strategies for the transformation of the armed forces, strategic plans or strategic level defence review documents. While each of these strategic planning documents serves a specific need and purpose, having multiple strategic planning documents is not facilitating the efficient use of the PPBES.
The classical principle of unity of command, used from Sun Tzu to modern times, in civilian and military organizations alike, should be kept in mind in the context of defence planning and management. The principle was defined by Sun Tzu as follows: "if a general who heeds my strategy is employed he is certain to win. Retain him! When one who refuses to listen to my strategy is employed, he is certain to be defeated. Dismiss him"10. The modern military view the principle of unity of comand as "having all forces operate under a single commander with the required authority to direct all forces employed in pursuit of a common purpose"11. The principle is at the same time a cornerstone of modern management, forbidding the duality regarding the hierarchical positions and objectives. In this context, the underlying condition for an effective planning phase is the development of correlated, clear, financially realistic, future focused planning documents that provide clear guidelines, establish the objectives to be achieved and provide feedback regarding the progress made.
Political level documents usually are, by definition, more general and generic, but this does not mean they should not provide clear guidelines for the future. The more we shiftfrom the political/military level to the military and resource planning, the more focused, detailed and realistic the strategic planning documents should be, with the service-level planning based on a commonly agreed course of action and priorities, especially regarding defence wide missions and capabilities and not just on service specific requirements.
There is no golden template to be followed; each country should find the most suitable way of develop its strategic planning framework. Still, the number of strategic planning documents should be kept to the minimum, as a few clear and comprehensive reference planning documents, agreed upon by all the stakeholders in the ministry of defence, are preferable to a host of parallel, sometimes overlapping and sometimes disconnected strategic planning documents, developed by different structures or following different planning approaches.
One of the challenges faced by decision makers is how to reduce the time allocated for the decision making process, without compromising the quality of the decisions or disregarding relevant information. This is especially true for the programming phase of the system. In this respect, the defence program can be viewed as the "official record of the major resources allocations decisions. supposed to capture all important decisions affecting current and future defence budgets. including documentation and data bases that are supposed to capture all formal decisions"12.
A decision making tool needs to provide effective ways of dealing with different types of decisions:
- structured decisions (routine decisions, that can be anticipated or that have been taken before, often related to specific policies, procedures, or actions that can be identified to help make the decision);
- unstructured decisions (referring to new, unique problems, for which there are few or no programmatic or routine procedures);
- a combination of the two types above (decision scenarios that have some structured components and some unstructured components).
In the case of structures decisions, PPBES can offer the advantage of the availability of information and decisions already recorded in the previous years' programs, as the main defence programs are not developed completely from scratch each year - they roll from one year to another, based partly on previous data already analyzed and calculated. Programs for the future years are build on a combination of previous and new assumptions, analysis and decisions, offering a framework for easier decision making. In regard to unstructured decisions, the system offers the advantage of the use of alternatives analysis, based on both cost and effectiveness considerations, drawing upon previous cost estimation experience, methodology and catalogues. Still, the process is labor, resource and time intensive and the advantage can be capitalized only if the system works properly and there are enough experts, information, time, software tools, manuals and databases to support it in providing a reliable and useful recommendation on the course of action to be followed.
One of the purposes of PPBES was to provide decision makers with a rational and objective way of making unstructured decisions, based on detailed analysis of historical data, estimations and simulations of the future and a clear outline of facts and assumptions accompanying a specific situation. This may be one of the system's advantage and at the same time a great weakness. Sometimes the analysis process becomes a goal in itself and analysts are overwhelmed with the amount of work to be done in a limited time, while decision makers are overwhelmed by the sheer size of the information that is presented to them in order to make a decision. In this case, processes may gain precedence over results and decision makers' challenges are shifted from too little information and insight into the future to overwhelming amount of information, sometimes difficult to understand if the experts are less skilled in translating the results into "plain language", accessible to the non-specialist.
In effect, one of the challenges on the road of making PPBES effective as a decisions support system is moving from its original role of supporting data driven decisions to a more effective one, in supporting data informed decisions. Data and information is an invaluable tool in supporting decision making, but too much information can be as bad as no information, in regard to decision making, as it may lead to information overload and decisional paralysis. The complex PPBES structure in regard to the flow of information was designed to assist the decision making process, with analyses performed at lower levels and decision based on the filtered recommendations from the experts. In reality, when the purpose of the process is not properly understood and is not adapted to the specifics of a particular country, it may lead to an overflow of information towards the higher levels of the hierarchy. Good decision makers, at any level, need access to reliable data, but they also need to have a birds-eye view on the overall process, so the right balance has to be struck between reliance on data and analysis and decision maker's knowledge, experience, expertise and abilities. Statistical analysis, cost effectiveness analysis, cost estimating etc are just tools, to be used for better decision making, not as drivers of the process. In effect, good decisions are not produced just as a result of calculations or computer simulations; they are taken by people, based on relevant information resulting from the use of analytic tools.
Although the PPBES concept is half a century old, it has proved unusually resilient in the area of defence resources management, perhaps because it's numerous changes and updates.
There are two main approaches regarding the PPBE process: it can be viewed in a narrower sense, as a budgeting tool, with the advantage of attempting to link budgets with objectives. Still, as a mere budgeting tool, PPBES proved to be a rather ineffective, convoluted and bureaucratic way of producing a budget. If the goal is just developing a budget, then all the planning and identification of objectives, multi-year programming based on laborious cost estimates, alternatives analysis and cost effectiveness analysis, the complex process of evaluation etc, become redundant and useless.
A second approach to PPBES is as a management tool, in the area of defence resources management. As such, the strength of PPBES lies in its use as a decision making system, linking political security and defence goals, military requirements and available resources into an integrated framework, continuously updated based on the feedback provided by the evaluation phase. The underlying condition for this approach to PPBES to be effective is the understanding of the complex interactions that take place within it, not just within the Ministry of Defence, but also at political military level, that provides the starting guidelines for the entire process.
Footnote1 Acquipedia, https://dap.dau.mil/acquipedia/Pages/ArticleDetails.aspx?aid=10fdf6c0-30ca-43ee-81a8-717156088826, accesed on 15.05.2016.
2 Jerome McKinney, Effective Financial Management in Public and Nonprofit Agencies, Praeger Publishers, June 2004, p. 330.
3 MoD website, http://dpap.mapn.ro/pages/view/112, accessed on 12.05.2016.
4 P. DonVito, The Essentials of a Planning-Programming-Budgeting System, RAND Corporation, 1969, p. 1.
5 Steven Grimes, PPBS to PPBE: a process or principles?, U.S. Army War College, 15 March 2008, www.dtic.mil/get-tr-doc/pdf?AD=ADA479670, accessed on 12.05.2016.
6 MoD website, http://dpap.mapn.ro/pages/view/112, accessed on 10 May 2016.
7 AllBusiness, Program-Planning-Budgeting System (PPBS), Dictionary of Accounting Terms for: Program-Planning-Budgeting System (PPBS), http://www.allbusiness.com/barrons_dictionary/dictionary-program-planning-budgeting-system-ppbs-4945821-1.html, accessed on 10.05.2016.
8 Robert McNamara, Remarks before the American Society of NewsPaper Editors, Washington, D.C., April 20, 1963.
9 Harold Koontz, Cyril O'Donnel, Principles of management: an analysis of managerial function, 5th ed, New York, McGraw Hill, 1972, p. 113.
10 Samuel Griffith, Sun Tzu: the Art of War, Oxford, NY: Oxford University Press. Inc., 1963, p. 66.
11 Chairman, Joint Chiefs of Staff(11 August 2011). "Joint Operations (Joint Publication 3-0)" (PDF), Washington, DC. p. A-2.
12 Leslie Lewis, Robert Roll, Strategy-to-Tasks: A Methodology for Resource Allocation and Management, Rand papers, 1993.
References1. Chairman, Joint Chiefs of Staff, Joint Operations (Joint Publication 3-0), (PDF), Washington, D.C., 11 August 2011, p. A-2.
2. DONVITO, P. A., The Essentials of a Planning-Programming-Budgeting System, RAND Corporation, 1969.
3. GRIFFITH, Samuel, Sun Tzu: The Art of War, Oxford, NY: Oxford University Press. Inc., 1963, p. 66.
4. GRIMES, Steven, PPBS to PPBE: a process or principles?, U.S. Army War College Research Project, Pennsylvania, 15 march 2008.
5. KOONTZ, Harold; O'DONNEL, Cyril, Principles of management: an analysis of managerial function, 5th ed, New York, McGraw Hill, 1972.
6. LEWIS, Leslie; ROLL, C.Robert, Strategy-to-Tasks: A Methodology for Resource Allocation and Management, Rand papers, 1993.
7. McKINNEY, Jerome, Effective Financial Management in Public and Nonprofit Agencies, Praeger Publishers, June 2004, p. 330.
8. McNAMARA, Robert, Remarks before the American Society of NewsPaper Editors, Washington, D.C., 20 April 1963.
AuthorAffiliationMaria CONSTANTINESCU, PhD*
* Maria CONSTANTINESCU, PhD in International Economic Relations, is Associate Professor with the Regional Departamen for Defence Resources Management Studies, Brasov, România. E-mail: [email protected]
