Planning and Budgeting

Background

The Planning & Budgeting (P&B) workstream of AIMS had as its objectives:

• To optimise people, systems and infrastructural resources in the planning and budgeting process
• To arrive at coherent plans and budgets
• To enable the achievement of UCT's strategic objectives
• To develop a planning and budgeting toolkit to improve the financial management of UCT and give maximum support to core teaching and research activities.

The stream began its work in November 1999, with a high-level workplan as illustrated in Figure 5-1A.

Fig. 5-1A

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Data Gathering

The data-gathering phase of the stream assessed the opinions of members of the UCT community involved in the planning and budgeting process, with a particular focus on the process that had been followed during 1999. A user survey questionnaire was sent to 160 members of staff, including Deans and Assistant Deans, Directors and heads of support departments, academic Heads of Department, Faculty Finance & Operations Managers, Management Accountants and Faculty Officers: Academic. Sixty-three responses (40%) were received, with the following findings:

• There was a skewing towards dissatisfaction with the 1999 process
• Over 60% of respondents tended towards dissatisfaction with the duration of the process, with many commenting that it had been too long and drawn out
• The consolidation of the Planning Department had not been recognised by users, and many felt that support and communication of guidelines had been poor
• 68% of respondents tended towards dissatisfaction with the Finance Department's Practical Guidelines Document, finding it too technical and full of jargon
• Poor internal communications within support departments and Faculties had also caused many problems.

The data gathered from the user survey was supplemented by a series of 19 focus interviews with members of the Extended Executive Management Meeting (EEMM). These interviews aimed to gauge the impressions of senior leadership with regard to the As-Is (1999) planning and budgeting process, and obtain their opinions as to how the process could be improved. The interview responses were assessed in association with material gathered during an interview carried out at the University of Natal, and with research data derived from the various universities in the United Kingdom.

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As-Is Process Analysis

The Brown Paper process mapping technique was used to depict the As-Is planning and budgeting process that had taken place during 1999, in planning for the 2000 budget year. The brown paper was constructed from a set of meeting minutes and other documents detailing the sequence of events that had taken place during 1999. It was verified by a number of key players in the 1999 process.

A Brown Paper Review was subsequently held, during which 54 members of the UCT community involved in planning and budgeting viewed the process map, and attached their comments as to perceived strengths and weaknesses of the process. The brown paper was then displayed at a UCT Brown Paper Fair, at which a further 42 individuals viewed and commented on it.

The data gathering and process analysis phases of the P&B stream's work highlighted key strengths and weaknesses of the As-Is planning and budgeting process. Strengths identified included:

• Ongoing refinement of the planning and budgeting process had increasingly allowed for meaningful user participation in the process
• A shortened planning and budgeting timetable, with advance warning of dates, had been an improvement (although the process still seemed too long and drawn out)
• The concept of Faculty contribution analysis had been a valuable first step towards defining the Faculty "bottom line" (although further improvements were needed).

Weaknesses identified were:

• Insufficient external environment scanning feeding into the process
• Absence of formal review process (performance against plans)
• Budgetary constraints not set early enough
• Poor integration of support departments in Faculty planning
• Lack of transparency around resource envelope determination, leading to mistrust of resource envelopes
• Dissatisfaction and some distrust around Faculty contribution analysis
• Lack of feedback on strategic and operational plans
• Absence of a mechanism for dealing with possible failure to achieve Faculty revenue targets
• Decisions or changes made within the Budget Review Group were not documented
• Too many iterations of UCT strategic plan and too extensive Extended Executive Management Meeting involvement in this process
• Absence of a capital budget programme
• Research income not included in the planning and budgeting process.

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Could-Be Design

The third phase of the stream's work involved building a new planning and budgeting process, which would retain and improve on the key strengths, while addressing and removing the perceived weaknesses in the As-Is process. Two day-long sessions were held in order to develop the framework for a revised process.

The proposed new process (or "Could-Be" process) was presented to the AIMS Steering Structure in April 2000 and incorporated the following elements:

• Structures and processes allowing meaningful user participation at all levels
• Open institutional decision making with respect to resource allocation and cross-subsidisation issues
• Compatibility with the UCT culture, allowing for debate on issues, as well as constraints imposed by the academic calendar
• Comprehensive environmental scanning and rigorous analysis of issues
• Introduction of University-wide financial modelling of strategies and operations
• Embedded integration of planning between Faculties and support areas
• Flexibility in terms of response to new opportunities and concerns identified outside the formal planning period
• Incorporation of structured communication and feedback processes down to the level of the academic department or support section
• Reduction in the number of iterations involved in the formulation of the institutional strategic plan
• A formal and structured review process.

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Note on the University Strategy Committee

The P&B stream introduced as a key element of the Could-Be planning and budgeting process, the notion of a University Strategy Committee (USC), which would be configured to replace the old Strategic Planning Committee. This committee would drive the planning and budgeting process and would include the Deans in Faculties as members. While this was an important concept in the work of both the P&B and Organisational Design & Governance (ODG) streams going forward, it is important to note that Council did not give final approval to the composition and terms of reference of the USC until March 2001.

The P&B stream envisaged the USC (joint committee of Senate and Council) as signing off the institutional strategy and budget for Council approval. This proposal was incorporated into the recommendations of the ODG stream. However, Council did not ultimately accept this idea. Instead Council agreed in March 2001 that the USC should determine institutional strategy through a cooperative (and iterative, if necessary) relationship with the University Finance Committee (UFC). The UFC would determine the affordability of any proposed strategy before its presentation to Council, and would propose the institutional budget to Council.

In mid-2000, it was agreed that an interim University Strategy Committee (iUSC) should meet until such time as the terms of reference of the USC were finalised. This interim committee played a role in the development of the To-Be planning and budgeting process design. The iUSC was chaired by the Vice-Chancellor and included in its membership all Deputy Vice-Chancellors, all Deans, the (Executive) Director of Finance, the Director of Planning, two Council and three Senate nominees.

(In March 2001, the composition of the USC was agreed with additional members, namely: the Executive Director of Human Resources, the Executive Director of Information & Communication Technology, the Executive Director of University Libraries, and two students nominated by the Students' Representative Council. It was agreed that two non-Executive Senate members, elected by Senate, be USC members, and that two Council alternates be appointed.)

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To-Be Design

The P&B stream designed two To-Be processes for implementation in the University:

• Three-year planning and budgeting process, to be followed in preparation for the beginning of a new three-year planning period
• Annual planning and budgeting process, to be followed prior to years two and three of the three-year process.

These were approved by the AIMS Steering Structure in July and August 2000 respectively. The most important concepts underlying the To-Be processes are described below.

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Three Levels of Planning

Planning was envisaged as taking place at three levels: the centre, the Faculty and the academic department levels. While the centre would play a strong guiding and "shaping " role, it would be important to enable a bottom-up approach whereby academic departments could initiate strategic thrusts to be consolidated first at Faculty, and then at institutional level. Cross-Faculty and University-wide initiatives would originate from both the centre and the Faculties, with support departments working closely at all three levels to support strategic initiatives and planning.

The three levels and their respective roles in the planning and budgeting process are illustrated in Figure 5-1B.

Fig. 5-1B

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Decision-making

Deans in Faculties, with their Advisory Committees, would decide on a consolidated strategic approach for their respective Faculty. These proposals would be discussed with the Budget Working Group - a working group established to review budget proposals from Faculties, departments and University-level committes such as the University Research Committee, in an open and flexible process of budget development. (UCT members interested in the terms of reference of the Budget Working Group are referred to the open governance intranet - please note that this is accessible to authorised UCT users only and you will be prompted for your user name and password).

Faculty plans would then be taken to the USC, where they would be aligned with plans at the centre and in other Faculties. Coming out of this process would be a UCT-wide plan broken down into Faculty plans which the Deans would take back to their Faculties for implementation.

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Planning Phases

Initiatives in the planning and budgeting process would go through three sequential, but not necessarily discrete phases: the strategic planning phase, the operational planning phase, and the budgeting phase. The overall process would begin with a renewed understanding at the centre of UCT vision, mission, goals and would end with a specific set of institutional investment plans including realistic financing strategies and measurable performance indicators. Through the process, the University would produce strategies ensuring that:

• Academic and non-academic activities are consistent with UCT mission and goals
• UCT is responding in the right manner to the challenges and opportunities in the environment (requiring building on strengths and acquiring capacity as needed)
• Academic and support activities are aligned to support academic programmes and research activities efficiently and effectively
• Financial resources are deployed for maximum financial, academic programme and research impact.

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Strategy Formulation

The strategic planning process would involve three main areas of activity: formulation of University-level strategic options, prioritisation of these in the light of financial constraints, and the establishment of Faculty and academic department strategic plans.

Strategic planning would begin with an environmental scanning exercise spearheaded by the Planning Department, seeking to determine major trends in the higher education environment and UCT's positioning against these. Analysis and insights from the environmental scan would provide a high-level strategic planning framework developed at the centre.

This framework would then be shared with the Faculties so that they might focus their own planning efforts. Specifically, the Vice-Chancellor's Open Planning Forum on Monday mornings could be used as a platform for debate on strategies.

The P&B stream envisaged that the Planning Department would coordinate the strategic and operational planning phases from the centre, while the Finance Department would coordinate the budget phase, and assist in the drawing up of high-level budget guidelines within the operational phase. Both departments would provide support to the Faculties.

The critical steps and interrelationships in the Faculty-level strategic planning process, as well as activities underlying that process, are illustrated in Figures 5-1C, 5-1D and 5-1E below.

Fig. 5-1C

Fig. 5-1D

Fig. 5-1E

The processes illustrated above were designed bearing in mind a highly participative and interactive process. An environment of ongoing Faculty and department self-analysis was also assumed, with attention given by the Faculties and departments to such issues as student and corporate research sponsor needs, programme desirability, technological developments and changes in the competitive environment.

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Timing of Activities

The P&B stream proposed key dates in both the three-year and annual planning and budgeting processes:

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Monitoring & Review

Both three-year and annual processes would be linked to the following year's process by a formalised control-monitor-review system, underscoring the cyclical nature of institutional planning and budgeting. The review process should yield vital information to be fed into the following planning cycle. (The P&B stream initially envisaged that the review process would be driven by the Planning Department, but in fact review is to be driven by the Budget Working Group which includes the (Executive) Directors of both Finance and Planning Departments.)

Operational areas would be required to report on essential indicators of the successful implementation of their plans for the current year, as well as on measures probing student enrolment and equity targets, and staff equity targets.

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To-Be Processes

Three-year Planning & Budgeting Process

The To-Be three-year planning and budgeting process was designed to be followed at the beginning of a new three-year planning process, recognising that in-depth environmental scanning and overall strategic direction-setting are three-yearly rather than annual events.

The high-level three-year process flow is illustrated in Figure 5-1F and 5-1G below. Those who would like a more detailed understanding of the process are referred to the Three-Year Process Narrative. The concepts and principles as described in the To-Be Design section of this page, apply.

Fig. 5-1F

Fig. 5-1G

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Annual Planning & Budgeting Process

The To-Be annual planning and budgeting process was designed to be followed in the year before the second and third years of the three-year process. In February 2001, the National Plan for Higher Education (NPHE) was announced and included a requirement that all universities submit annually to the Department of Education a three-year rolling plan. This requirement meant that the annual planning and budgeting process had to be revised to reflect new deliverables.

The high-level annual process flow is illustrated in Figure 5-1H below. Those who would like a more detailed understanding of the process are referred to the Annual Process Narrative. The concepts and principles as described in the To-Be Design section of this page, apply.

Fig. 5-1H

Revisions made to the annual process in 2001 (as part of the Functional Strategic Overview of the Planning function) are illustrated in Figures 5-1I and 5-1J below.

Fig. 5-1I

Fig. 5-1J

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Additional Elements in Support of the Planning & Budgeting Process

In addition to delivering the To-Be three-year and annual planning and budgeting processes, the P&B stream supported the process with additional tools and processes:

• A point of view on the South African higher education landscape was produced in the second half of 2000, as a first step to support the Planning Department's environmental scanning efforts. This highlighted UCT's relative position in the HE environment.
• The interim University Strategy Committee (iUSC) was supported by the P&B stream in building consensus around the future of the University's Strategy Committee. A process for effective strategic decision-making was developed in order to assist members in understanding their roles and responsibilities within the committee. In addition, a range of tools were illustrated for possible future application in the planning and budgeting process. These included suggested methodologies for customer analysis, for capability analysis, for evaluating and prioritising strategic options, and for developing a capital portfolio strategy. (For further information regarding capital works projects, readers are referred to subsequent AIMS work on Project Realisation.) Templates outlining minimum information requirements for strategic plans put forward to the USC by the centre and the Faculties were also modelled.
• A financial model was developed to aid the iUSC (and ultimately USC) in evaluating the University's financial position. The financial model allows for the development of scenarios to inform decision-making around strategic trade-offs and issues. Although the financial model was originally created for the iUSC (institutional level), the model was then broken into individual faculty financial models to assist the Faculties to make more informed decisions. Those interested in more detailed information about the financial model are referred to the Financial Model Guidelines.

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Implementation

During the last quarter of 2000, the P&B stream continued to communicate the To-Be design to the UCT community, and to fine-tune the process. Team members were also supporting continuous integration and communication between the Planning and Finance Departments. The financial model was being further refined with the collaboration of the Finance Department.

It was agreed to begin a new phase of work in January 2001, namely a Functional Strategic Overview of the Planning function. This overview was intended to support the implementation of the new planning and budgeting process, as well as implementing structural recommendations made by the Organisational Design and Governance stream.

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Team

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Links to Additional Material

• File of Printable Figures on this page (pdf 82 kb)
• Three-Year Planning & Budgeting Process Narrative (pdf 115 kb)
• Annual Planning & Budgeting Process Narrative (pdf 79 kb)
• Financial Model Guidelines as at October 2000 (pdf 193 kb)

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Last updated: 2001-09-27