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The application of planning-programming-budgeting-systems (PPBS) to project expenditure classification… Royce, Paul Joseph 1973

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THE APPLICATION OF PLANNING-PRDGRAMMING-SUDGETINGSYSTEMS (PPBS) TO PROJECT EXPENDITURE CLASSIFICATION IN THE CANADIAN FEDERAL GOVERNMENT  by PAUL JOSEPH ROYCE B.Sc.  (Hons.) U n i v e r s i t y o f Newcastle Upon Tyne 1969 C h a r t e r e d C i v i l E n g i n e e r 1972 C h a r t e r e d M u n i c i p a l E n g i n e e r 1970  A THESIS SUBMITTED IN PARTIAL FULFILMENT DF THE REQUIREMENTS FOR THE DEGREE DF MASTER OF BUSINESS ADMINISTRATION  i n the Faculty of Commerce and B u s i n e s s  Lite  Administration  accept t h i s t h e s i s as conforming t o t h e  required standard  The U n i v e r s i t y o f B r i t i s h Columbia May 1973  ii  In p r e s e n t i n g requirements Columbia,  far  this  thesis in p a r t i a l  an advanced degree at  I agree t h a t  able f o r r e f e r e n c e  f u l f i l m e n t of  the U n i v e r s i t y of B r i t i s h  the L i b r a r y s h a l l make i t  and s t u d y .  f o r e x t e n s i v e copying o f t h i s  I further  freely  agree that  thesis for scholarly  It  is  understood that  avail-  permission purposes  may be granted by the Head of my Department or by h i s entatives.  repres-  copying or p u b l i c a t i o n o f  t h e s i s f o r f i n a n c i a l gain s h a l l not be a l l o u e d without my written  permission.  Department o f Commerce and Business A d m i n i s t r a t i o n The U n i v e r s i t y of B r i t i s h Columbia Vancouver 8, Canada,  Date  SQrA <UA^ 'gp?  the  this  iii  ABSTRACT  The objective of this study i s to investigate planningprogramming-budgeting systems (PPBS) as a method for r a t i o n a l ising public expenditure decisions, and the evaluation of subsequent performance  within the framework of the Canadian Federal  Government. Based on a research of the l i t e r a t u r e , the rationale for such a system i s presented, together with a detailed desc r i p t i o n of i t s operational mechanics, impact and areas which might cause d i f f i c u l t y i n i t s p r a c t i c a l implementation  throughout  the Federal Government. An operational casting study from a small f i e l d organi s a t i o n i s presented to i l l u s t r a t e the data requirements and the problem of obtaining the relevant information with a t r a d i t i o n a l budgeting  system.  The thesis concludes that despite the commitment to PPBS at the Cabinet and Senior Executive l e v e l within the Canadian Federal Government, this has not yet penetrated to the operational managers i n the f i e l d departments who w i l l be increasingly r e quired to think i n these terms i f the approach i s to be successf u l l y implemented throughout the sphere of government operations. Several recommendations are made to enable the approach to be i n s t a l l e d at the operational l e v e l , not the least of which i s a management education programme to outline the concepts,  iv  aims and requirements of P P B S as i t affects managers at t h i s level.  The measurement cf benefits and the problem of j o i n t  costs are mentioned as two v i t a l areas uhich have as yet not been f u l l y considered u i t h i n the government and are overdue far detailed study. In conclusion i t i s hoped that t h i s dissertation  outlines  the disparity between the allocation process as i t i s outlined by senior government o f f i c i a l s ,  and the process as i t actually  occurs u i t h i n the f i e l d , making suggestions to enable the PPBS approach to be both accepted and workable at the f i e l d organisation l e v e l .  V  ACKNOWLEDGEMENTS  During the p r a c t i c a l phase of t h i s study I received much help and advice from the s t a f f of Marine Sciences Directorate ( P a c i f i c Region).  Whilst not wishing to single out individuals,  I must express my appreciation to the Deputy Director Dr. W.  N.  English for his guidance throughout my stay with the Region. 1 was  p a r t i c u l a r l y fortunate to have such an able thesis  committee, whose chairman Professor C. L. M i t c h e l l has been a friend and mentor throughout, making many invaluable suggestions to improve the quality of the completed work.  Special thanks are  due to the other members of the committee, Professor W. T. Stanbury for his guidance in the area of government expenditures  and  policy making, and Dr. J . B. Stephenson for his thoughtful comments on the written study. The f i n a l product of the research and p r a c t i c a l study as represented i n t h i s thesis i s entirely my own, remain solely responsible for any errors or  and I therefore omissions.  I should l i k e to extend thanks to my t y p i s t Mrs. Mildred Brown, who  has responded uomanfully when faced with the heroic  task of deciphering the hyroglyphics I laughingly c a l l w r i t i n g . F i n a l l y t h i s dissertation i s r e s p e c t f u l l y dedicated to two very s p e c i a l people in my l i f e , my late father Syd Royce, and my mother Mrs. Constance Royce.  vi  TABLE DF CONTENTS  Chapter 1  Page  #  INTRODUCTION  2  1  A.  J u s t i f i c a t i o n s f o r the Study  1  B.  O b j e c t i v e s o f the Study  6  C.  G e n e r a l Approach o f the Study  6  D.  Definition  8  E.  References  o f hey Terms  9  THE THEORETICAL BACKGROUND - A REVIEW DF THE LITERATURE  IQ  A.  Introduction  10  B.  Why F e d e r a l Government E x p e n d i t u r e s ? i. ii. iii.  C.  ii. D.  H  Some Aspects o f Welfare Economics Government v P r i v a t e E x p e n d i t u r e s F e d e r a l v P r o v i n c i a l Government Expenditures  H 14 19  The Achievement o f Government O b j e c t i v e s i.  T r a d i t i o n a l Budgeting and C o n t r o l Systems, and Weaknesses C o s t - U t i l i t y Analysis  Planning-Programming-Budgeting-Systems i. ii. iii. iv. v.  3  .  23 23 3*»  (PPBS)  H i s t o r i c a l Background What i s a PPBS and what i s i t designed to a c h i e v e ? The Mechanics o f a PPBS Impact o f PPBS P o s s i b l e Problem Areas o f PPBS  t*6 ^6 52 56 61 66  E.  Summary  70  F.  References  72  THE FEDERAL GOVERNMENT CONTEXT, HIGHLIGHTING THE DEPARTMENT OF ENVIRONMENT, WITH PARTICULAR REFERENCE TO MARINE SCIENCES DIRECTORATE  79  A.  Introduction  79  B.  The Canadian F e d e r a l Government and the Role of the Treasury Board  80  vii  Chapter  k  Page  C.  The Federal Department of the Environment  93  D.  Marine Sciences Directorate  103  E.  References  109  A FIELD STUDY AT THE OPERATIONAL LEVEL DF THE FEDERAL GOVERNMENT-MARINE SCIENCES DIRECTORATE (PACIFIC REGION)  111  A.  Introduction  111  B.  Marine Sciences Directorate  (Pacific  Region)  111  C.  The Project Costing Exercise  121  D.  Recommendations f o r PPBS at the Regional l e v e l  5  131  E. References SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS  162  WITH SUGGESTIONS FOR FURTHER RESEARCH  163  A.  Summary  163  B.  Conclusions  C.  Suggestions f o r Further Research  167  D.  Closing Comment  168  and Recommendations  16^  LITERATURE CITED  169  APPENDIX  177  viii  LIST OF TABLES  Table  Text  Page  3-1  Target Area Codes Related to Directorate Goals  106  k-I  Cost Centred Budget R e s p o n s i b i l i t i e s  118  Schedule of Cost Categories U t i l i s e d by Marine Sciences Directorate  119  Appendix Administration Department II-I  Salary Cost Apportionment  181  II-2  Functional Cost Apportionment  182  II-3  Apportionment Proxies  Il-k  Primary Cost Apportionment  185  II-5  Secondary Cost Apportionment  186  II-6  Simplified Cost Apportionment  187  18*f  II-7  Library Costs - Professional Staff by Collator  190  II-8  Library Costs - Apportionment  192  II-9  Telephone Cost Apportionment Schedule  195  11-10  Ship Division Costs - Ledger Totals and Adjustments  198  11-11  Ship Division Costs - Total Allocation to Vessels  199  Ship Usage Summary Sheet 11-12  CSS "Parizeau"  200  11-13  CSS "Urn. J . Stewart"  201  Il-lk  CSS "Vector"  202  11-15  CSS "Richardson"  203  11-16  CSS "Revisor"  20k  11-17  Mackenzie Charter  205  11-18  CFAV "Laymore"  206  11-19  CFAV "Endeavour"  207  11-20  Ship Division - Cost Summary Per User  208  III-I  F i e l d Hydrography - Staff L i s t  212  III-2  F i e l d Hydrography - Supervisory and Other Assignments  213  ix  Table 111-3  Appendix  Page  Cost Summary - Hydrography F i e l d Party 'A'  214  III-4  Party 'B'  215  III-5  Party 'C»  216  III-6  Party  217  III-7  F i e l d Hydrography R e g i o n a l Costs  III-8  Cost Summary - Hydrography F i e l d  in-g  F i e l d Hydrography - F i n a l Cost  111-10  T i d e s and C u r r e n t s - Personnel Costs  'D'  219 Parties  224  Apportionment  227 230  in-ii  - Ship Usage Charges  232  111-12  - S u b s e c t i o n Cost  233  Apportionment  111-13  T i d e s and Currents - F i n a l Cost  Apportionment  111-14  Chart C o n s t r u c t i o n - P e r s o n n e l Costs  234 237  111-15  - Apportionment  Proxies  111-16  - S u b s e c t i o n Cost  111-17  - Chart R e v i s i o n Costs  Apportionment  238 239 240  111-18  Chart C o n s t r u c t i o n - Chart C o m p i l a t i o n Costs  241  IV-1  O f f s h o r e Oceanography - P e r s o n n e l Costs  247  IV-2  - Personnel Cost  IV-3  O f f s h o r e Oceanography - F i n a l Cost  IV-4  Oceanographic  Apportionment  248  Apportionment  250  S e c t i o n (Ltl.Van.) - Personnel Costs  256  IV-5  - Personnel Cost Apportionment  257  IV-6  - Ledger Category Apportionment  258  IV-7  - Ship Usage Charges  258  iv-a iv-g  Oceanographic  S e c t i o n (Id.Van)- F i n a l Cost A p p o r t i o n ment  Ocean Chemistry  - Personnel Costs  IV-IO  - Ledger Category  IV-ll  - R e g i o n a l Cost  IV-12  - Personnel Cost  IV-13  Ocean Chemistry  - F i n a l Cost  259 262  Apportionment Apportionment Apportionment  Apportionment  262 263 263 264  X  LIST OF  ILLUSTRATIONS  Figure  Page  2-1  P r o d u c t i o n P o s s i b i l i t y Curve  11  2- II  PPBS i s a C o n t i n u i n g Process  5g  3- 1  The  Government of Canada - O r g a n i s a t i o n Chart  81  3-II  The  Department o f the Environment - O r g a n i s a t i o n Chart  98  3-III  U-I  Water Management S e r v i c e - P a r t i a l O r g a n i s a t i o n Chart Marine S c i e n c e s D i r e c t o r a t e ( P a c i f i c  100  Region)  - O r g a n i s a t i o n Chart  1H+  k-II  F l o u Chart of Cost A l l o c a t i o n  Procedure  k-III  Schematic f o r Numerical Model of V i c t o r i a Harbour, Gorge Waterway and Portage I n l e t H i e r a r c h i a l O r g a n i s a t i o n Chart, L i n k i n g M i n i s t e r of the Environment to Marine S c i e n c e s D i r e c t o r a t e R e g i o n a l Managers  123  152  159  CHAPTER  I  INTRODUCTION  A.  J u s t i f i c a t i o n s f o r the  The  Study  growth i n the s i z e and  i n both developed and  underdeveloped c o u n t r i e s  of the most important o f r e c e n t I t i s a phenomenon t h a t has omic systems, and  complexity of the p u b l i c s e c t o r  p o l i t i c a l and  slowly  i s undoubtedly  one  economic changes.  a l t e r e d the s t r u c t u r e s o f econ-  of course, the d i s t r i b u t i o n of economic power  w i t h i n these systems. In i t s r e p o r t on Management o f the P u b l i c S e r v i c e , Royal Commission on Government O r g a n i s a t i o n  the  gives recognition  to  t h i s growing c o m p l e x i t y : "... from the r e l a t i v e l y simple beginnings i n the n i n e teenth century, the government has become p r o g r e s s i v e l y more i n v o l v e d i n an i n c r e a s i n g l y complex economy — promoting, s u p p o r t i n g , p r o t e c t i n g , r e g u l a t i n g , and c o n t r o l l i n g by a growing v a r i e t y of means, d i r e c t and i n d i r e c t , g e n e r a l and s p e c i f i c . More and more i t has had to inform i t s e l f i n d e t a i l o f the c o n d i t i o n and p r o s p e c t s of a l l segments o f the economy to assess the impact o f government programmes and plans on each segment, and to measure and a d j u s t the i n c r e a s i n g l y complex i n t e r p l a y of i t s p o l i c i e s and pro. grammes. The l i s t i s now v i r t u a l l y endless ..... n  There are no s i g n s of abatement. p r i v a t e entrepreneurship  In the underdeveloped  i s o f t e n l a c k i n g , and  countries,  nationalised  p r i s e expands to take i t s p l a c e , whereas i n the developed the p u b l i c s e c t o r continues  enter-  countries,  to i n c r e a s e both r e l a t i v e l y and  absol-  -2-  u t e l y , i n response  to the f o r c e s o f u r b a n i s a t i o n , with i t s i n -  creased s p e c i a l i s a t i o n and economic and p h y s i c a l  interdependences.  In Canada, the a b s o l u t e l e v e l o f p u b l i c expenditure has r i s e n from $795 m i l l i o n (32% o f GNP) by 1962,  2  (15.*t% o f GIMP) i n 1926 to $12,938 m i l l i o n and i n the USA the n a t i o n a l government  alone d i s b u r s e s more than.$70,000 m i l l i o n per year  (approximately  17% o f GNP), with an i n t e r e s t i n g comparison being made t h a t i n the two years 1953-^, the expenditure e q u a l l e d t h a t o f the IkO year p e r i o d 1789-1929."'  B i r d , however, makes the p o i n t t h a t a b s o l u t e  f i g u r e s alone g i v e a m i s l e a d i n g i m p r e s s i o n o f the s i g n i f i c a n c e o f these i n c r e a s e s i n government spending, which are due a t l e a s t i n p a r t t o f a c t o r s such as i n f l a t i o n , p a p u l a t i o n i n c r e a s e , and the r i s e i n l e v e l o f r e a l per c a p i t a income. He goes on to say t h a t the r a t i o o f t o t a l government exp e n d i t u r e t o GNP i s m i s l e a d i n g , because s u b s t a n t i a l t r a n s f e r expenditures  ( e g . the c o l l e c t i o n o f taxes t o pay w e l f a r e r e c i p i e n t s ) a r e  i n c l u d e d i n t h i s e x p e n d i t u r e , whereas a c c o r d i n g t o accepted  national  income a c c o u n t i n g conventions these t r a n s f e r items are not i n c l u d e d i n GNP c a l c u l a t i o n s .  The r e l e v a n t measure o f the goods and s e r v i c e s  consumed by the government i n the course o f i t s own a c t i v i t i e s i s the S D c a l l e d  "exhaustive e x p e n d i t u r e " which comprised  20% o f GNP  i n 1967, and i f m i l i t a r y and c a p i t a l account e x p e n d i t u r e s a r e deducted, t h e t o t a l  f e d e r a l government c u r r e n t c i v i l i a n  was approximately  10% o f GNP.  expenditure  B i r d suggests t h a t i t i s only these e x h a u s t i v e e x p e n d i t u r e s t h a t d i v e r t r e s o u r c e s from the p r i v a t e s e c t o r , although both exh a u s t i v e and non-exhaustive  e x p e n d i t u r e s r e q u i r e f i n a n c i n g and thus  -3-  a f f e c t the a l l o c a t i o n to some e x t e n t . Notwithstanding  the f o r e g o i n g r e d u c t i o n to the a b s o l u t e  government sector/GNP r a t i o , the importance  of these  exhaustive  expenditures w i t h i n the economy of the n a t i o n i s s e l f e v i d e n t , and impose a c o r r e s p o n d i n g l y high duty t o ensure  t h a t the monies are  d i s b u r s e d both e f f i c i e n t l y and e f f e c t i v e l y , s i n c e wastage i n the p u b l i c s e c t o r n e e d l e s s l y d i v e r t s funds elsewhere  from more u s e f u l p r o j e c t s  i n the economy, p r e v e n t i n g the g e n e r a l w e l f a r e from  i n g i t s p o t e n t i a l l e v e l v i a a maximised GNP.  reach-  The t r a d i t i o n a l means  of m o n i t o r i n g government expenditure has been by the budget, comp r i s i n g a s e r i e s of " l i n e o b j e c t s " or v a r i o u s items of such as t r a v e l , f r e i g h t charges, e t c .  expenditure  W h i l s t t h i s type of budget  i s u s e f u l as a p o l i c i n g d e v i c e to prevent f l a g r a n t misuse of it  funds,  does not c o n s i d e r the r e l a t i v e u s e f u l n e s s or otherwise o f the  programmes b e i n g pursued,  and as such does not p r o v i d e any measure o f  e f f e c t i v e n e s s o f the v a r i o u s e x p e n d i t u r e s , e.g. purpose s e r v e d . What i s r e q u i r e d t h e r e f o r e i s a r e v i s e d budget s t r u c t u r e to s t i m u l a t e an examination  o f the p o s s i b i l i t i e s and  feasibilities  o f t r a n s l a t i n g i n t o performance the g e n e r a l p h i l o s o p h i c a l i b i l i t i e s o f a democratic people need but cannot  respons-  government, v i z "to do those t h i n g s t h a t  supply or do e f f e c t i v e l y f a r  w h i l s t e n s u r i n g t h a t the programmes pursued  themselves",  complement one  to the e x t e n t t h a t p u b l i c and p r i v a t e e x p e n d i t u r e s taken  another  jointly,  enable the economy o f the n a t i o n to a t t a i n i t s h i g h e s t p o t e n t i a l The  f o r m u l a t i o n o f g e n e r a l p o l i c i e s i s p a r t of the  p o l i t i c a l process. meaningful  These p o l i c i e s must then be t r a n s l a t e d  level.  democratic into  programmes intended t o achieve the s p e c i f i e d g o a l s , by  -tithe s e n i o r management o f the a p p r o p r i a t e department (which may  be  only t h a t e x i s t i n g department with a c a p a b i l i t y most c l o s e l y a l i g n e d to t h a t r e q u i r e d by the s p e c i f i c  task).  H i s t o r i c a l l y each government department or agency has been given r e s p o n s i b i l i t y as an outcome of the p o l i t i c a l p r o c e s s , and i n g e n e r a l t h e r e has been no s y s t e m a t i c attempt  to c o - o r d i n a t e  these agencies towards the common g o a l s or p o l i c i e s of the  govern-  ment other than by use of the t r a d i t i o n a l budget checks as a s a f e guard to prevent m i s a p p r o p r i a t i o n of f u n d s .  Goals have not been  o u t l i n e d except i n very broad terms of r e f e r e n c e , and t h i s hampers s u p e r v i s i o n because of the l a c k o f o b s e r v a t i o n and measurement criteria.  T h i s i n t u r n h e l p s to prevent o v e r a l l performance  from  being e v a l u a t e d except i n terms o f money spent ( i n p u t o r i e n t e d ) r a t h e r than value of goods and s e r v i c e s produced therefore v i r t u a l l y to  (output o r i e n t e d ) .  i m p o s s i b l e with the t r a d i t i o n a l budget s t r u c t u r e  assess the economic impact  o f i n d i v i d u a l p u b l i c e x p e n d i t u r e s on  the economy, and to thus make d e c i s i o n s based on We  rational information.  should t h e r e f o r e seek b e t t e r measurement techniques and  cedures, although t h e i r overuse may these parameters  It i s  result  pro-  i n increased interest of  t o the detriment of the i n t a n g i b l e s , e s p e c i a l l y i f  government employee e v a l u a t i o n s are based on such v a l u e s . s y s t e m a t i c work has been done to determine  Little  the work environment  most  conducive to forward p l a n n i n g e t c . , although i t i s known t h a t the one to  favoured by s e n i o r management enables and encourages experiment  and apply t h e i r own  freedom  i d e a s without unnecessary  con-  7  straints.  T h i s may  and i t i s suggested  best be d e s c r i b e d as p a r t i c i p a t o r y management, t h a t w i t h a b l e and understanding  l e a d e r s h i p , the  -5different motivational may  be c o a l e s c e d  f o r c e s i n each member of the  i n t o a strong  organisation  f o r c e aimed at accomplishing  the  Q mutually e s t a b l i s h e d o b j e c t i v e s o f the o r g a n i s a t i o n  ( g o a l con-  gruence). One  of the techniques employed i s management by  objective,  where at a minimum, s t a f f are asked to propose what can be g l i s h e d w i t h given  accomp-  resources.  However there  i s the danger t h a t p a r t i c i p a t o r y management  w i l l l e a d to piecemeal a n a l y s i s v i a over d e c e n t r a l i s a t i o n , i n t h a t the c r i t e r i a adopted i n the may  be u n r e l a t e d  lower l e v e l problems ( f i e l d  to the higher  operations)  l e v e l c r i t e r i a of government  Planning-Programming-Budgeting-System  policies.  (PPBS) which i s des-  c r i b e d at l e n g t h i n Chapter 2 i s an attempt to r e c o n c i l e the  econ-  omic requirements of measuring the outputs o f p u b l i c e x p e n d i t u r e s i n order  to determine t h e i r impact and  hence optimum l e v e l s ,  r e t a i n i n g the c o n t r o l a s p e c t s of o p e r a t i o n a l b u d g e t i n g . briefly,  i t represents  to d e c i s i o n s r e g a r d i n g  the a p p l i c a t i o n o f p r i c e and  Stated  a l l o c a t i o n theory  p u b l i c e x p e n d i t u r e s (goods and  services).  i t s nature i t w i l l f o r c e a d e t a i l e d examination of s p e c i f i c j e c t i v e s and motivation  whilst  By  ob-  programmes, w h i l s t h o p e f u l l y at the same time r e i n f o r c i n g  v i a p a r t i c i p a t i o n , and  with j u d i c i o u s c o n t r o l may  align  the o b j e c t i v e s of management to those of governmental p o l i c y makers. The  i n t e n t i o n i s t h a t PPBS w i l l e v e n t u a l l y  enable the  use-  f u l n e s s o f p u b l i c e x p e n d i t u r e s to be o b j e c t i v e l y assessed, and,  when  a l i g n e d to a p p l i e d economic t h e o r i e s , determine the optimum mix  of  p u b l i c to p r i v a t e e x p e n d i t u r e s as w e l l as r a t i o n a l i s e the choice the most e f f i c i e n t o f the competing o p p o r t u n i t i e s w i t h i n the ment s e c t o r .  of  govern-  -6-  B.  Objectives  o f the  Stated "To  briefly,  the o b j e c t i v e s of t h i s study  are:  i n v e s t i g a t e PPBS as a method f o r r a t i o n a l i s i n g  expenditure d e c i s i o n s u i t h i n the  Study  and  the e v a l u a t i o n  framework o f the  o f subsequent performance  Canadian F e d e r a l  Government,"  In a d d i t i o n , the system w i l l be t e s t e d at an l e v e l to determine the problems of expenditure data i t s implementation w i t h i n  public  classification  required  by  ever the  i n v e s t i g a t i o n of b e n e f i t data i s s p e c i f i c a l l y excluded  being o u t s i d e  C.  the scope o f the  General Approach o f the  a field  operational  empirical  organisation.  Howas  study.  Study  Chapter 2 p r o v i d e s the h i s t o r i c a l and  t h e o r e t i c a l background  of government budgeting, w i t h a b r i e f look at s o c i a l w e l f a r e theory and  the p u b l i c vs p r i v a t e expenditure dichotomy i n s e c t i o n B,  attempt to answer the q u e s t i o n why  not  leave  enterprise?"  the f i e l d Section  "why  have p u b l i c e x p e n d i t u r e s at a l l ,  c l e a r f o r the market system of p r i v a t e  C comprises an examination o f the  budget process a l l u d e d to above, with a d i s c u s s i o n of i t s weaknesses i n the  traditional  i n more d e t a i l  achievement o f government o b j e c t i v e s .  f o l l o w s an examination o f b e n e f i t - c o s t a n a l y s i s , which has cluded its  There  been i n -  as p a r t of the t r a d i t i o n a l system because o f the time s i n c e  inception  ( b e n e f i t - c o s t a n a l y s i s was  required  watershed treatment programmes under the USA  for certain  Flood C o n t r o l Act  1 9 3 6 ) ^ , although i n i t s more s o p h i s t i c a t e d u t i l i t y a vital  i n an  of  c o s t form i t i s  component of PPBS. F i n a l l y i n s e c t i o n D PPBS i s s t u d i e d  in detail,  providing  -7-  i t s h i s t o r i c a l development, aims and mechanics,.the a n t i c i p a t e d impact on government o p e r a t i o n s , culties  i n c l u d i n g the problems and d i f f i -  forseen. Chapter 3 i s an attempt to narrow the focus  ment o p e r a t i o n s  i n general  first  from govern-  to a s p e c i f i c department  (Canadian  F e d e r a l Department o f the Environment), and then i n v e s t i g a t e i n greater Sciences  d e t a i l a s m a l l subset o f t h a t department, namely the Marine D i r e c t o r a t e which forms p a r t o f the Water Management  S e r v i c e s branch o f the Department o f Environment (DOE). d i s c u s s i o n o f the aims, o r g a n i s a t i o n department together one  and programmes e t c . o f the  with a b r i e f look at Water S e r v i c e s  o f the f i v e o p e r a t i o n a l u n i t s o f the DOE.  Sciences  There i s a  Management,  F i n a l l y the Marine  D i r e c t o r a t e i s examined, with p a r t i c u l a r r e f e r e n c e to  P a c i f i c Region i n V i c t o r i a , Chapter U c o n s i d e r s  B.C. the c o s t i n g study w i t h i n P a c i f i c Region  o f the D i r e c t o r a t e forming the appendix to t h i s paper, and i s p r o v i d e d i n an attempt to i l l u s t r a t e some o f the p r a c t i c a l of obtaining  the a p p r o p r i a t e  economic a n a l y s e s  f i n a n c i a l information  difficulties  as i n p u t to the  r e q u i r e d both by PPBS and o p e r a t i o n a l  decision  making as an a i d to improved e f f i c i e n c y w i t h i n the p u b l i c s e c t o r , with s e v e r a l recommendations g i v e n  f o r guidance o f the o p e r a t i o n a l  staff. Chapter 5 p r o v i d e s  a summary o f the t h e s i s and recommend-  a t i o n s g i v i n g some s u g g e s t i o n s f o r f u t u r e r e s e a r c h the e f f e c t s o f government e x p e n d i t u r e .  i n the area o f  -8D.  D e f i n i t i o n o f Hey Terms  Planning-Programming-Budgeting-System  (PPBS) - An i n t e g r a t e d  fin-  a n c i a l programme l i n k e d to p r e s p e c i f i e d o b j e c t i v e s . R e s p o n s i b i l i t y Centre - An o r g a n i s a t i o n u n i t headed by a person r e q u i r e d to perform some f u n c t i o n (as o u t p u t ) making e f f i c i e n t use o f given r e s o u r c e s Programme - An o r g a n i s e d problems.  (input).  response t o reduce o r e l i m i n a t e one o r more  T h i s response i n c l u d e s a) s p e c i f i c a t i o n o f one  or more o b j e c t i v e s , b) s e l e c t i o n and performance o f one or more a c t i v i t i e s , Objective  c ) a c q u i s i t i o n and use o f r e s o u r c e s .  - A s i t u a t i o n or c o n d i t i o n o f people o r environment which the r e s p o n s i b l e person c o n s i d e r s  The  d e f i n i t i o n s o f other  are given with  d e s i r a b l e to a t t a i n .  terms used w i t h i n the body o f the t h e s i s  their f i r s t  usage.  0  -9-  E.  References  1.  Report o f the Royal Commission on Government O r g a n i s a t i o n 1962 V o l . I P r o c e e d i n g s . Ottawa 1962, pp. 38-39.  2.  H. R. B a l l s , " E f f i c i e n t P u b l i c A d m i n i s t r a t i o n " i n Management Information Systems and the P u b l i c S e r v i c e , ed. by H. W i l l (New York: Simon and S c h i s t e r 1970) 3294-1.  3.  R. N. McKean, E f f i c i e n c y i n Government Through Systems A n a l y s i s (New York: Wiley & Sons, 1958) p. 13.  4.  R. M. B i r d , The Growth of Government Spending i n Canada Canadian Tax Foundation, 1970) p. 13.  5.  I b i d . , pp.  6.  M. Anshen, "The F e d e r a l Budget as an Instrument f o r Management and A n a l y s i s " i n Programme A n a l y s i s and the F e d e r a l Budget ed. by D. Novick (Cambridge: Harvard U n i v e r s i t y P r e s s , 1965) p. 15.  7.  E. P. Learned et a l . Inc. 1969) p. 638.  8.  R. L i k e r t "An overview of New P a t t e r n s o f Management" i n Current P e r s p e c t i v e s i n S o c i a l Psychology ed by E. P. H o l l a n d e r and R. G. Hunt (New York: Oxford U n i v e r s i t y Press 1971) p. 613.  9.  G. B l a c k , The A p p l i c a t i o n of Systems A n a l y s i s to ^Government Operations (Washington D.C.: N a t i o n a l I n s t i t u t e of P u b l i c A f f a i r s , 1966) p. 32.  10.  R. J . Hammond "Convention and L i m i t a t i o n i n B e n e f i t - C o s t A n a l y s i s , " N a t i o n a l Resources J o u r n a l 6, 1966, p. 197.  (Toronto:  18-20.  Business P o l i c y - Text and  Cases  (Irwin  - I D -  CHAPTER  THE  A.  2  THEORETICAL BACKGROUND - A REVIEW OF THE  LITERATURE  Introduction  T h i s chapter  provides  both the c o n c e p t u a l  and t h e o r e t i c a l  background f o r PPBS i n the p u b l i c s e c t o r . I t i s suggested t h a t any  i n v e s t i g a t i o n o f a method  intended  to improve the a l l o c a t i o n of funds u i t h i n the F e d e r a l Government should be preceded by a b r i e f look at the very s e c t o r , and  the reasons f o r i t s e x i s t e n c e  concept of a p u b l i c  i n the f i r s t  place.  S e c t i o n B t h e r e f o r e addresses the problem by attempting answer the q u e s t i o n  "Why  F e d e r a l Government E x p e n d i t u r e s ? " ,  b r i e f l y at u e l f a r e economics, the reasons behind the o f a p u b l i c s e c t o r , and  development  P r o v i n c i a l governments.  S e c t i o n C examines the t r a d i t i o n a l expenditure method o f " l i n e o b j e c t " budgeting with upon c o s t - u t i l i t y  f o r many years  looking  the l e g a l a u t h o r i t y f o r the d i v i s i o n o f r e -  s p o n s i b i l i t y between.Federal and  focusses  to  control  i t s weaknesses, and  a n a l y s i s , which although has  also  been used  i n both p u b l i c and p r i v a t e s e c t o r s i n i t s C o s t - B e n e f i t  form, i s o n l y now  beginning  to be u t i l i s e d  able C o s t - U t i l i t y  format with  i n i t s more widely a p p l i c -  c o n s i d e r a t i o n of n o n - q u a n t i f i a b l e  items.  S e c t i o n D comprises a review o f the l i t e r a t u r e on PPBS i t s e l f , c o n s i d e r i n g i t s h i s t o r i c a l background and aims, mechanics, b e f o r e problem  areas.  development, i t s  l o o k i n g at i t s expected impact and  possible  -11-  8.  Why F e d e r a l Government  i.  Expenditures?  Some Aspects o f Welfare  Economists  Economics  have long been i n t e r e s t e d i n i d e n t i f y i n g  pol-  i c i e s t h a t would promote economic w e l f a r e , s p e c i f i c a l l y by improving the e f f i c i e n c y with which a s o c i e t y uses i t s r e s o u r c e s . The  i n t e l l e c t u a l source o f the "new" w e l f a r e economics  i s Pareto, who i n t r o d u c e d h i s t h e o r e t i c a l system l a t e i n the n i n e teenth c e n t u r y , although i t i s o n l y i n the l a s t t h i r t y years t h a t it  has been e x t e n s i v e l y developed.*  A b r i e f o u t l i n e o f the theory  -  i s presented below. The  Q-A  curve shown i n F i g . 2.1 r e p r e s -  ents the maximum p r o d u c t i o n p o s s i bilities — of  various  combinations  t h e two commodities A and B t h a t  can be produced sources.  with the g i v e n r e -  I f one such  combination  on t h i s curve o f maximum e f f i c i e n c y (say P) was produced ( i . e . Fig.  2.1  Production Possibi l i t y Curve  A  P  o f A and B o f B) and d i s t r i b P  uted among a group o f i n d i v i d u a l s , these people would no doubt do some t r a d i n g t h a t would be mutually advantageous.  That i s by f r e e exchange the s a t i s f a c t i o n o f same  c o u l d be i n c r e a s e d without  decreasing that of o t h e r s .  When no  f u r t h e r exchanges would be mutually advantageous, the group would have made the most o f the p o s s i b i l i t i e s , g i v e n the combination the i n i t i a l d i s t r i b u t i o n w i t h i n the group.  P and  -12u  However s i n c e the p r o d u c t i o n p o s s i b i l i t y the i n i t i a l combination  of A  and B P  curve i s a continum,  at p o i n t P need not be a g i v e n , P  as an i n f i n i t e number of p o i n t s of maximum e f f i c i e n c y may (for  example p  1  with A p  1  D f A and B^"  s i b i l i t y of c o n v e r t i n g one  product  of B being produced).  i n t o another  r e s o u r c e s which produce them opens the way mutually  be  advantageous, u n t i l the only way  determined T h i s pos-  by r e a l l o c a t i n g  to f u r t h e r trade t h a t i s to i n c r e a s e f u r t h e r the  s a t i s f a c t i o n of some i s to reduce the s a t i s f a c t i o n o f o t h e r s . p o i n t of e q u i l i b r i u m i s c a l l e d an o p t i m a l p o i n t . of  the o p t i m a l p o i n t may  the  Pareto's  Such a  definition  be t r a n s f e r r e d i n t o the r u l e which s t a t e s  t h a t any s o c i a l change i s d e s i r a b l e which r e s u l t s i n (1) everyone having increased u t i l i t y  or ( 2 ) someone having i n c r e a s e d u t i l i t y ,  and no  one  2  s u f f e r i n g a decrease  of u t i l i t y .  T h i s Pareto r u l e i s i n i t s e l f  e t h i c a l p r o p o s i t i o n or value statement, spread a p p r o v a l . solution  but i s thought  an  to command  wide-  However, s i n c e the theory does not o f f e r a unique  (an i n f i n i t e number o f optimum p r o d u c t i o n p o s s i b i l i t i e s each  y i e l d an i n f i n i t e number of optimum u t i l i t i e s )  i t does not r e a l l y  offer  0  other than a c o n c e p t u a l s o l u t i o n to the problem. The  theory has been extended by Kaldor and Hicks to i n c l u d e a  compensation p r i n c i p l e , i n which a change i s c o n s i d e r e d d e s i r a b l e i f it  l e a d s to a s i t u a t i o n whereby the i n d i v i d u a l s g a i n i n g from the  change c o u l d compensate those l o s i n g from i t and s t i l l  retain a surplus.  T h i s extended d e f i n i t i o n i s more p r a c t i c a l f o r p u b l i c works than Pareto's s i n c e i n g e n e r a l any  change r e s u l t s i n some i n d i v i d u a l s  being  worse o f f and some b e t t e r o f f , r a t h e r than some people being b e t t e r off  and o t h e r s being i n d i f f e r e n t to the change ( i . e . undergoing  change i n u t i l i t y ) . However u t i l i t y  itself  i s measurable o n l y by  individual  no  -13-  d e c i s i o n makers, being a s u b j e c t i v e l y q u a n t i f i a b l e amount.  While an  economist may be able to make c e r t a i n presumptions about u t i l i t y on the b a s i s o f b e h a v i o u r a l o b s e r v a t i o n s , he i s n e v e r t h e l e s s i g n o r a n t o f the a c t u a l r a n k i n g o f a l t e r n a t i v e s u n l e s s and u n t i l t h a t r a n k i n g i s r e v e a l e d by o v e r t c h o i c e , g e n e r a l l y to be seen i n the market p l a c e . I t must be acknowledged t h a t by reason o f market i m p e r f e c t i o n s and  d i s t o r t i o n o f m a r g i n a l c o n d i t i o n s owing t o government  (both e x p l i c i t r e d i s t r i b u t i o n and the f i n a n c i n g o f p u b l i c  activities expenditures)  the Pareto optimum c o n d i t i o n s are at best o n l y approximated i n p r a c t i c e , and may be u n i v e r s a l l y breached."  5  Even the very p o s s i b i l i t y o f a g e n e r a l w e l f a r e f u n c t i o n f o r s o c i e t y as a whole i s debatable,  and i f i t does not r e a l l y e x i s t how  can s o c i e t y decide on that product mix which w i l l maximise i t ?  Given  a s e t o f i n d i v i d u a l i n d i f f e r e n c e curves and the s o c i a l w e l f a r e f u n c t i o n r e l a t i n g then, one c o u l d d e f i n e a t h e o r e t i c a l maximum (although i n p r a c t i c e the s o l u t i o n would be extremely  tedious).  In the absence o f any g e n e r a l i s e d s o c i e t y w e l f a r e f u n c t i o n d i s c u s s i o n s o f " i d e a l output" and "maximisation  o f r e a l income" become  v i r t u a l l y meaningless i f the economic process i n c l u d e s e f f i c i e n c y c r i t e r i a only through scales.  Rather  the d e c i s i o n maker's estimate o f o t h e r s  than a b s o l u t e , the term presumptive e f f i c i e n c y  the a p p r o p r i a t e concept  f o r p o l i t i c a l economists.  Given t h i s  value 5 i s really assumption  of ignorance, P a r e t i a n e f f i c i e n c y cannot be employed i n a i d i n g a group choosing  from a s e t o f p o s s i b l e s o c i a l p o l i c y changes.  In d i a g n o s i n g a  s p e c i f i c p r o p o s a l , the economist makes a judgement as to i t s e f f i c i e n c y based on HIS estimate o f i n d i v i d u a l p r e f e r e n c e s as he t h i n k s they  exist,  but does not e v a l u a t e s o c i a l a l t e r n a t i v e s on the b a s i s o f i n d i v i d u a l p r e f e r e n c e s as he t h i n k s they SHOULD be.  Buchanan s t a t e s :  "The p o l i t i c a l economist i s o f t e n c o n c e i v e d as being a b l e to recommend p o l i c y A aver p o l i c y B. I f no o b j e c t i v e s o c i a l c r i t e r i o n e x i s t s , the economic s c i e n t i s t i s unable t o recommend. T h e r e f o r e any p o l i c y d i s c u s s i o n on h i s p a r t appears t o take on normative i m p l i c a t i o n s . But there does e x i s t a p o s i t i v e r o l e f o r the economist i n the f o r m a t i o n o f policy. H i s task i s t h a t o f d i a g n o s i n g s o c i a l s i t u a t i o n s and p r e s e n t i n g to the choosing i n d i v i d u a l s a s e t o f POSSIBLE changes. He does n o t recommend p o l i c y A over p o l i c y B, but p r e s e n t s them as hypotheses f o r t e s t i n g i . e . the h y p o t h e s i s i s t h a t p o l i c y A w i l l prove to be Pareto o p t i m a l . L i t t l e however abandons i n t e r e s t i n a w e l f a r e maximum, r e g a r d i n g such an a s p i r a t i o n as U t o p i a n .  C o n s i d e r i n g an e x i s t i n g  distribution  as non o p t i m a l , he f o c u s s e s on c o n d i t i o n s s u f f i c i e n t f o r an improvement i n w e l f a r e , r a t h e r than on the s p e c i f i c c o n d i t i o n s necessary  7 f o r a maximum. Although  a g e n e r a l o u t l i n e o f w e l f a r e economics has been  presented above, the scope o f the t h e s i s somewhat l i m i t s the space devoted t o the t o p i c .  However i t can be seen t h a t the theory i s g  not g e n e r a l t o the extent t h a t a programmed d e c i s i o n taken from a v a i l a b l e d a t a .  The r o l e o f the p o l i t i c a l  can be undereconomist  i s l i m i t e d t o t h a t o f an a d v i s e r i n g e n e r a l terms r a t h e r than an a n a l y t i c a l t o o l t o be "plugged i n " t o the d e c i s i o n making p r o c e s s . i i . Government v P r i v a t e Expenditures An i n t e r e s t i n g s t a r t i n g p o i n t f o r the c o n s i d e r a t i o n o f p u b l i c versus p r i v a t e expenditures  i s Adam Smith's 1776 d i s c u s s i o n  o f t h e i r optimum mix where he suggests  three d u t i e s o f government:  'V-irotection a g a i n s t e x t e r n a l a g g r e s s o r s , maintenance o f o r d e r a t home and e r e c t i o n o f those p u b l i c i n s t i t u t i o n s and works which though they may be i n the h i g h e s t degree advantageous t o a g r e a t s o c i e t y ,  -15-  c o u l d never repay the expense to any i n d i v i d u a l , Mattley  proposes that the g e n e r a l l y  i s that i t i s unsuitable i f private enterprise  accepted  guideline  f o r the government to engage i n an a c t i v i t y  could  do i t b e t t e r and i s w i l l i n g to do so.*"  0  Dorfman suggests t h a t i f a good o r a s e r v i c e i s d e s i r a b l e , i t w i l l a l s o be p r o f i t a b l e and thus w i l l be p r o v i d e d prise."^  However there  l a t i n g to conditions  of production,  of s c a l e .  leading  conditions  discussed  above.  Production  t o government i n i t i a t i v e r e l a t e t o economies (e.g.  telephone  e t c . ) can be performed e c o n o m i c a l l y only as such  l a r g e u n i t s t h a t there opolies  o f consumption and  C e r t a i n a c t i v i t i e s such as u t i l i t i e s  services, railways,  enter-  are important e x c e p t i o n s to t h i s r u l e ^ r e -  also to external welfare considerations considerations  by p r i v a t e  i s a tendency towards the f o r m a t i o n o f mon-  (the so c a l l e d n a t u r a l m o n o p o l i e s ) .  Based on the e l i m i n a t i o n  o f the monopoly p r o f i t s t h a t would n a t u r a l l y accrue i f p r i c e s  within  these i n d u s t r i e s were l e f t s o l e l y t o the market system o f the p r i v a t e s e c t o r , t h e government may e l e c t to r e t a i n these i n d u s t r i e s w i t h i n the p u b l i c s e c t o r as an a l t e r n a t i v e to r e g u l a t i n g p r i c e s i n the market  >  although o f course e i t h e r method i s a c c e p t a b l e . The  consumption c o n d i t i o n s  favouring  p r o v i s i o n by p u b l i c  expenditure a r e l a r g e l y l i n k e d to the concept o f u n c a l l e c t i b i l i t y of a charge f o r usage.  In the u s u a l economic t r a n s a c t i o n the user  faces a charge f o r the goods o r s e r v i c e s consumed, and the amount c o l l e c t e d i s a measure o f the v a l u e o f the commodity to him. However t h i s a n a l y s i s i s not s t r i c t l y  v a l i d f o r any t r a n s a c t i o n (be-  cause o f s i d e e f f e c t s ) , and with so c a l l e d c o l l e c t i v e goods which are made f r e e l y a v a i l a b l e to a l l users without i n d i v i d u a l charges  -16-  being l e v i e d ( e i t h e r because o f i m p r a c t i c a b i l i t y o f charging o r involuntary  use o f the f a c i l i t y ) a user charge i s not a v a i l a b l e *  For such p u b l i c goods, non market i n s t i t u t i o n s , u s u a l l y but not e x c l u s i v e l y governmental, are used f o r determining how much s h o u l d be p r o v i d e d  }  s i n c e such c o l l e c t i v e goods do not induce a flout  o f income t o the p r o v i d e r .  Important examples o f such goods are 12  n a t i o n a l defence, c r i m i n a l j u s t i c e and p a r k s . The  dichotomy between p u b l i c and p r i v a t e goods i s w e l l  i l l u s t r a t e d by F o l e y , ^ of the spectrum.  who c o n s i d e r s  them to be the two extremes  He suggests that p r i v a t e goods are a s p e c i a l  subset o f the l a r g e r c l a s s o f p u b l i c goods, as i n any s o c i e t y are  l i a b l e t o be l o c a l p u b l i c goods.  population  Only a s m a l l  there  part of a l o c a l  makes use o f a l o c a l sewerage scheme o r b e n e f i t s from the  d r a i n i n g o f a swamp.  Thus goods may be p u b l i c over s o c i e t y as a  whole (e.g. defence) o r aver a subset ( e . g . urban p o l i c e o r , i n the l i m i t t o one i n d i v i d u a l ( e . g . a farm r o a d ) . l a t t e r case o f a good which i s p u b l i c only the good i s termed a p r i v a t e good.  Foley  protection) In t h i s  f o r a single individual f u r t h e r argues that  whilst  people a c t i n g i n d i v i d u a l l y i n markets cannot purchase p u b l i c goads, by  a c t i n g c o l l e c t i v e l y as a government they can e n f o r c e payment by  everyone through taxes, and t h i s i s one o f the most obvious reasons f o r the e x i s t e n c e  o f governments.  A further class of a l l o c a t i v e decisions entrusted  completely to the c o m p e t i t i v e market p e r t a i n s  c o s t s and b e n e f i t s  to e x t e r n a l  ( e x t e r n a l i t i e s ) . The c l a s s i c case o f an e x t e r n a l  c o s t i s the d i s c h a r g e o f p o l l u t a n t s  i n t o the atmosphere with r e s u l t i n g  s o c i a l c o s t s o f i l l n e s s e t c . , w h i l s t an e x t e r n a l conferred  which cannot be  b e n e f i t may be  by ones p r o p e r t y v a l u e being enhanced by the t e a r i n g down  -17of o l d b u i l d i n g s and the c o n s t r u c t i o n  o f a p a r k l a n d i n the n e i g h -  bourhood. A private organisation  u i l l be i n t e r e s t e d p r i n c i p a l l y i n  the c o s t s i n c u r r e d by t h a t o r g a n i s a t i o n . a cost s h i f t e d to some other party  From i t s p o i n t o f view  i s a cost r e d u c t i o n .  However  from the n a t i o n a l w e l f a r e viewpoint, c o s t s that are merely s h i f t e d are not avoided, and t h i s simple d i f f e r e n c e i s fundamental t o the a n a l y s i s o f c o s t i n g between the two areas o f e n t e r p r i s e . The short  supposition  t h a t p r i v a t e i n v e s t o r s may take an unduly  view o f the consequences o f t h e i r investments ( Pigou's  d e f e c t i v e myopic f a c u l t y )  i s an important j u s t i f i c a t i o n f o r a l l  investments d e a l i n g with non renewable r e s o u r c e s , t r a c t i o n , o r i f the b e n e f i t s from  e.g. m i n e r a l ex-  the a c t i v i t y are too long run  to enable the b e n e f i t s t o be r e a l i s e d by those who i n v e s t e d scheme i . e . a long  i n the  l e a d time between investment and subsequent  return. C e r t a i n government undertakings are s t i m u l a t e d  by a d e s i r e  to i n f l u e n c e the d i s t r i b u t i o n o f income, (socioeconomic r e d i s t r i b u t i o n p l a y s a major r o l e i n urban renewal programmes), and y e t o t h e r s d e s i r e to achieve very broad s o c i a l b e n e f i t s , such as improving the q u a l i t y o f the a i r we breathe, f o r which no s i n g l e company can, o r i s w i l l i n g t o , assume the r e s p o n s i b i l i t y .  Lie thus have  investigated  a s e c t i o n o f economic goods o r s e r v i c e s t h a t cannot be e f f i c i e n t l y provided  by the p r i v a t e s e c t o r f o r reasons given  above.  It i s left  to the p u b l i c s e c t o r , with the government having an overview, t o supply these items v i a some form o f p u b l i c e n t e r p r i s e . run,  governments must s t i l l  crudest  r e a c t to consumer choice  form due t o a g e n e r a l  lack o f competitive  In the long  albeit i n i t s  pricing structure.  -laMusgrave  suggests t h a t there  are no  a r b i t r a r y l i m i t s to  s i z e of the p u b l i c s e c t o r with r e s p e c t have a l r e a d y  the  to the t o t a l economy (uie  seen i n Chapter 1 t h a t t h i s s e c t o r i s i n c r e a s i n g ) .  consumers p r e f e r more p u b l i c goods and  If  feuer p r i v a t e ones, an  e f f i c i e n t s o l u t i o n r e q u i r e s t h a t t h e i r demands be s a t i s f i e d .  There  i s no economic reason f o r r e s t r i c t i n g the p u b l i c s e c t o r to 20  per-  cent,  25 percent  or any  other  arbitrary  proportion  P u b l i c i n t e r v e n t i o n to r e d i r e c t the use necessarily involve costs.  of the  of r e s o u r c e s  Assuming t h a t the gross b e n e f i t  exceeds a s s o c i a t e d o p p o r t u n i t y  c o s t s , and  total. will achieved  i n a d d i t i o n these oppor-  t u n i t y c o s t s are borne by b e n e f i c i a r i e s i n such a manner as to r e t a i n the i n i t i a l income d i s t r i b u t i o n i f t h a t d i s t r i b u t i o n i s deemed to be  i n some sense the  i s j u s t i f i a b l e s i n c e welfare  " c o r r e c t " one,  w i l l be  then the  intervention  improved.  Pigou's a n a l y s i s given below g i v e s a g e n e r a l i s e d o f the d o c t r i n e o f m a r g i n a l u t i l i t y d i s t r i b u t i o n of p u b l i c  as a p p l i e d to the  concept  specific  expenditures.  "... As regards the d i s t r i b u t i o n as d i s t i n c t from the aggregate c o s t of o p t i o n a l government e x p e n d i t u r e , i t i s c l e a r t h a t , j u s t as an i n d i v i d u a l w i l l get more s a t i s f a c t i o n out of h i s income by m a i n t a i n i n g a c e r t a i n balance between d i f f e r e n t s o r t s o f e x p e n d i t u r e , so a l s o w i l l a community through i t s government. The p r i n c i p l e of balance i n both cases i s p r o v i d e d by the p o s t u l a t e t h a t r e s o u r c e s should be so d i s t r i b u t e d among d i f f e r e n t uses t h a t the m a r g i n a l r e t u r n or s a t i s f a c t i o n i s the same f o r a l l of them. Expenditure should be d i s t r i b u t e d between b a t t l e s h i p s and poor r e l i e f i n such ways t h a t the l a s t s h i l l i n g devoted t o each of them y i e l d s the same r e t u r n . We have here, so f a r as theory goes, a t e s t by means of which the d i s t r i b u t i o n of expenditure along d i f f e r e n t l i n e s can be s e t t l e d . " 1 6 T h i s i n e f f e c t i s the concept of m a r g i n a l u t i l i t y , t h a t the a v a i l a b l e r e s o u r c e s  which  are d i v i d e d i n t o increments,  requires and  -19-  conaidBration  given t o which o f the a l t e r n a t i v e uses o f each  increment y i e l d s the g r e a t e s t r e t u r n .  The l a s t increment o f resource  added to each o f the many competing uses should y i e l d the same i n crease  in utility  incremental  per u n i t o f resource  utility  lems are c o n s i d e r e d  and resource  The d e r i v a t i o n o f  c o s t with a l l the i n h e r e n t  i n s e c t i o n C o f t h i s chapter,  e f f i c i e n t use o f the r e s o u r c e s to  cost.  prob-  but i t i s o n l y by  t h a t r e a l i s t i c c o s t s can be s u p p l i e d  government d e c i s i o n makers f o r a p p l i c a t i o n to the t e s t o f long  run consumer iii.  preferences.  F e d e r a l v P r o v i n c i a l Government  Expenditures  A d m i n i s t r a t i o n theory suggests t h a t r e s p o n s i b i l i t y and commensurate a u t h o r i t y should be d e l e g a t e d competence.  to the lowest  level of  A s i m i l a r argument may be a p p l i e d i n the sphere o f  government a u t h o r i t y , with the l e v e l o f competence d e f i n i t i o n expanded t o "the lowest operations low  l e v e l competent t o see the t o t a l sphere o f  i n p e r s p e c t i v e " , i . e . piecemeal d e c i s i o n making at too  a l e v e l o f the o r g a n i s a t i o n may w e l l l e a d to c o n f l i c t i n g  between those The  being  goals  a t the o p e r a t i o n a l l e v e l and the s e n i o r p o l i c y makers.  u s e f u l n e s s o f d e l e g a t i o n and p a r t i c i p a t o r y management as an a i d  to m o t i v a t i o n  was d i s c u s s e d i n chapter  1 above, and thus we have a  c o n f l i c t between d e l e g a t i o n o r d e c e n t r a l i z a t i o n to the "man on the s p o t " as an a i d t o p a r t i c i p a t o r y management with p o s s i b l e d i f f i c u l t y i n a c h i e v i n g g o a l congruence, and c e n t r a l i s a t i o n t o ensure t h a t a l l expenditures  are seen i n proper  p e r s p e c t i v e and a l i g n e d t o the  achievement o f the c e n t r a l l y chosen o b j e c t i v e s . The  B r i t i s h North America A c t 1867 p r o v i d e s the powers  a t t r i b u t a b l e t o both F e d e r a l and P r o v i n c i a l governments, and p a r t s  -20-  of  s e c t i o n s 91  ( r e f e r r i n g t o F e d e r a l ) and 92  i n c i a l ) powers are g i v e n i n the schedule S91  ( r e f e r r i n g to  below.  " L e g i s l a t i v e A u t h o r i t y of the Parliament of Canada to  Prov-  extends  a l l matters h e r e i n a f t e r enumerated.  IA.  The  P u b l i c Debt and  Property.  2.  The R e g u l a t i o n o f Trade and  2A.  Unemployment  3.  The r a i s i n g o f Money by any Mode or System of T a x a t i o n .  k.  The  5.  Postal Service.  6.  The  7.  Militia,  S.  The f i x i n g o f and p r o v i d i n g f o r the S a l a r i e s and Allowances of C i v i l and o t h e r O f f i c e r s o f the Government of Canada.  9.  Beacons, Buoys, L i g h t h o u s e s , and Sable I s l a n d .  10.  N a v i g a t i o n and  11.  Quarantine and the E s t a b l i s h m e n t and Maintenance o f Marine Hospitals.  12.  Sea Coast and  13.  F e r r i e s between a P r o v i n c e and any B r i t i s h or F o r e i g n Country or between Two P r o v i n c e s .  Ik.  Currency  and  15.  Banking, Money.  I n c o r p o r a t i o n o f Banks, and the Issue o f Paper  16.  Savings  17.  Weights and  18.  B i l l s of Exchange and Promissory  19.  Interest.  20.  L e g a l Tender..  21.  Bankruptcy  22.  Patents o f I n v e n t i o n and  23.  Copyrights.  2k.  Indians and Lands r e s e r v e d f o r the  25.  N a t u r a l i z a t i o n and  26.  Marriage  27.  The C r i m i n a l Law, except the C o n s t i t u t i o n of Courts of C r i m i n a l J u r i s d i c t i o n , but i n c l u d i n g the Procedure i n Criminal Matters.  Commerce.  Insurance.  borrowing  o f Money on the P u b l i c  Census and  Credit.  Statistics.  M i l i t a r y and Naval S e r v i c e , and  Defence.  Shipping.  Inland F i s h e r i e s .  Coinage.  Banks. Measures.  and  and  Notes.  Insolvency. Discovery.  Indians.  Aliens.  Divorce.  -21-  28.  The Establishment,Maintenance, tentiaries.  29.  Such C l a s s e s o f S u b j e c t s as are e x p r e s s l y excepted i n the Enumeration o f the C l a s s e s o f S u b j e c t s by t h i s Act a s s i g n e d e x c l u s i v e l y to the L e g i s l a t u r e s o f the Provinces.  S92  and Management of Peni-  "In each Province the l e g i s l a t u r e may  e x c l u s i v e l y make laws  i n r e l a t i o n to Matters coming w i t h i n the C l a s s e s Of S u b j e c t s next h e r e i n a f t e r enumerated; t h a t i s to say,1.  The Amendment from time to time, n o t w i t h s t a n d i n g anything i n t h i s A c t , of the C o n s t i t u t i o n of the P r o v i n c e , except as regards the O f f i c e of L i e u t e n a n t - G o v e r n o r .  2.  D i r e c t T a x a t i o n w i t h i n the P r o v i n c e i n order to the R a i s i n g o f a Revenue f o r P r o v i n c i a l Purposes.  3.  The  4.  The E s t a b l i s h m e n t and Tenure o f P r o v i n c i a l O f f i c e s and the Appointment and Payment o f P r o v i n c i a l O f f i c e r s .  5.  The Management and S a l e o f the P u b l i c Lands b e l o n g i n g to the P r o v i n c e and o f the Timber and wood t h e r e o n .  6.  The E s t a b l i s h m e n t , Maintenance, and Management of P u b l i c and Reformatory P r i s o n s i n and f o r the P r o v i n c e .  7.  The E s t a b l i s h m e n t , Maintenance, and Management of H o s p i t a l s , Asylums, C h a r i t i e s , and Eleemosynary I n s t i t u t i o n s i n and f o r the P r o v i n c e , other than Marine H o s p i t a l s .  8.  M u n i c i p a l I n s t i t u t i o n s i n the P r o v i n c e .  9.  Shop, Saloon, Tavern, A u c t i o n e e r , and o t h e r L i c e n c e s i n o r d e r t o the r a i s i n g of a Revenue f o r P r o v i n c i a l , L o c a l , or M u n i c i p a l Purposes.  10.  L o c a l Works and Undertakings following Classes:-  borrowing  o f Money on the s o l e C r e d i t o f the P r o v i n c e .  o t h e r than such as are o f the  (a)  L i n e s of Steam and o t h e r S h i p s , Railways, Canals, Telegraphs, and o t h e r Works and Undertakings c o n n e c t i n g the P r o v i n c e with any o t h e r or o t h e r s o f the P r o v i n c e s , or extending beyond the L i m i t s of the P r o v i n c e :  (b)  L i n e s of Steam Ships between the P r o v i n c e and B r i t i s h or F o r e i g n Country:  (c)  Such Works as, although wholly s i t u a t e w i t h i n the P r o v i n c e , are before or a f t e r t h e i r E x e c u t i o n d e c l a r e d by the Parliament of Canada to be f o r the g e n e r a l Advantage of Canada or f o r the Advantage of Two or more o f the P r o v i n c e s .  any  -22-  11.  The  I n c o r p o r a t i o n o f Companies with P r o v i n c i a l  12.  The  S o l e m n i z a t i o n of Marriage  13.  Property and C i v i l Rights i n the  14.  The A d m i n i s t r a t i o n of J u s t i c e i n the P r o v i n c e , i n c l u d i n g the C o n s t i t u t i o n , Maintenance, and O r g a n i z a t i o n o f P r o v i n c i a l C o u r t s , both of C i v i l and of C r i m i n a l J u r i s d i c t i o n , and i n c l u d i n g Procedure i n C i v i l Matters i n those Courts.  15.  The Imposition of Punishment by F i n e , P e n a l t y , or Imprisonment f o r e n f o r c i n g any Law of the P r o v i n c e made i n r e l a t i o n to any Matter coming u i t h i n any of the C l a s s e s of S u b j e c t s enumerated i n t h i s S e c t i o n .  16.  G e n e r a l l y a l l Matters of a merely l o c a l or p r i v a t e Nature i n the P r o v i n c e .  Although  the s t a t u t e uas enacted over one  i n the  Objects.  Province.  Province.  hundred years ago,  i t ad-  heres to the g e n e r a l management p r i n c i p l e s o u t l i n e d above, c e n t r a l i s i n g under F e d e r a l Government j u r i s d i c t i o n those c e r n i n g the n a t i o n as a uhole e.g. defence matters  f u n c t i o n s con-  (S91 para.7) u h i l s t  those  o f p u r e l y p r o v i n c i a l i n t e r e s t e.g. a l l Matters o f a merely  l o c a l or p r i v a t e Nature i n the Province P r o v i n c i a l Matters  are d e l e g a t e d to t h a t  (592,  para.16) i . e . i n t r a  level.  However, t h i s tendency towards d e l e g a t i o n i s , o f f s e t somewhat by c l . 2 9 o f S91, excepted  where " a l l c l a s s e s o f s u b j e c t s as are e x p r e s s l y  i n the Enumeration of the C l a s s e s of S u b j e c t s by t h i s Act  a s s i g n e d e x c l u s i v e l y to the l e g i s l a t i v e s o f the P r o v i n c e s " are i n cluded w i t h i n F e d e r a l j u r i s d i c t i o n , i . e . the r e s i d u a l powers are v e s t e d i n the F e d e r a l government. understand  the reasoning behind  p u b l i c concern  i t is difficult  i n major new  (or unforseen)  s h o u l d be i n v e s t i g a t e d , at l e a s t i n the  first  i n s t a n c e , by the F e d e r a l Government with t h e i r wider sphere influence.  to  t h i s c e n t r a l i s a t i o n , i t could per-  haps be argued t h a t p o l i c y matters of  Although  of  areas  -23-  From these two  important s e c t i o n s of the Act,  d i c t i o n f o r v a r i o u s p u b l i c expenditure c a t e g o r i e s may and  the be  thus the r e l e v a n t o r g a n i s a t i o n designed w i t h i n the  juris-  ascertained,  adminis-  t r a t i v e framework.  C.  The  Achievement of Government  Objectives  A f t e r our n e c e s s a r i l y b r i e f look at the reasons f o r the existence  o f and  d i v i s i o n o f j u r i s d i c t i o n w i t h i n the  government  s e c t o r , t h i s s e c t i o n examines the t r a d i t i o n a l t o o l s used to manage the f i n a n c e s  i n t h i s area to a i d p r o g r e s s towards the  of o v e r a l l p o l i c y t a r g e t s s e t by i.  T r a d i t i o n a l Budgeting and Peter  management. uniquely  Parliament. C o n t r o l Systems and  Drucker, i n h i s book "The  suggests t h a t there  achievement  Weaknesses  P r a c t i c e of Management"  are f i v e b a s i c t a s k s which are performed  by  These f i v e t a s k s , which are common to a l l managers, yet  managerial "i) ii)  are:  the s e t t i n g o f o b j e c t i v e s organisation  i i i ) motivation iv)  '  and  communication  measurement of performance  17 v)  development o f f u t u r e needs."  I t i s the author's c o n t e n t i o n should  perform the same f u n c t i o n i n the o v e r s e e i n g  i n the p u b l i c s e c t o r . administrative and  that i n t h i s respect  the  of e x p e n d i t u r e s  Robert Anthony i d e n t i f i e s three  processes,  s t r a t e g i c planning,  and  government  distinct  both management  operational control. " .... S t r a t e g i c planning i s the process of d e c i d i n g on o b j e c t i v e s o f the o r g a n i s a t i o n , or changes i n  -2k-  these o b j e c t i v e s , on the r e s o u r c e s used to a t t a i n these o b j e c t i v e s , and on p o l i c i e s t h a t are to govern the a c q u i s i t i o n , use, and d i s p o s i t i o n of these r e s o u r c e s . Management c o n t r o l i s the process by u h i c h managers assure t h a t r e s o u r c e s are obtained and used e f f e c t i v e l y and e f f i c i e n t l y i n the accomplishment of the o r g a n i s a t i o n ' s o b j e c t i v e s . O p e r a t i o n a l c o n t r o l i s the process of a s s u r i n g t h a t s p e c i f i c tasks are c a r r i e d out e f f e c t i v e l y and e f f i c i e n t l y . " I S The  requirements f o r p l a n n i n g , management and  ented v i a a budget, and  c o n t r o l are  implem-  even the most rudimentary budget system  comprises a l l three processes, f u n c t i o n s are i n d i v i s i b l e .  even i f i n o p e r a t i o n  the  three  H i s t o r i c a l l y , the major emphasis i n  the F e d e r a l budget i s on the c l a s s i f i c a t i o n or o b l i g a t i o n s (or commitment) and  expenditures  by  " o b j e c t c l a s s " i . e . such  class-  i f i c a t i o n s as t r a v e l , t r a n s p o r t a t i o n , f r e i g h t , p r i n t i n g of brochures e t c . and by  the time o f the 1913  a p p r o p r i a t i o n a c t s there were , 1  3992 d i s t i n c t  items of a p p r o p r i a t i o n i n the New  Observing r e l a t i o n s h i p s both l o n g i t u d i n a l l y and may  p o i n t out gross  tasks.  Parliament  York budget; i n cross section  i n e f f i c i e n c i e s i n the c a r r y i n g out o f  A Congressional  subcommittee ( i n the U S A ) or any  ( i n Canada) may  c l a s s to i n v e s t i g a t e any  wish to i n s p e c t expenditure  seeming i n e f f i c i e n c i e s , but  method of expenditure  r e c o r d i n g does not r e a l l y  s e l e c t i o n of a c t i v i t y  levels.  It contributes l i t t l e  to estimate  specific Member o f  by  the  object overall  a i d i n the major  the performance  u t a b l e to o u t l a y s f o r o b j e c t c l a s s e s , when we  q  attrib-  r e a l l y wish to  c e r t a i n the e f f e c t i v e n e s s o f v a r i o u s c o n b i n a t i o n s  o f these  as-  ex-  penditures. 20 Beard  wrote t h a t a budget system "bears the i m p r i n t  of  -25-  the age  i n which i t o r i g i n a t e d " , and  uhen personnel  and  c o n t r o l s mere u n r e l i a b l e , the f i r s t c o n s i d e r a t i o n was prevent  administrative impropriety.  The  underwent s i g n i f i c a n t change when i t was ment expenditures evil".  had  value, i t made sense to use inputs.  houi to  r o l e of the budget system recognised  t h a t govern-  a s o c i a l value r a t h e r than being  Because the outputs  were c o n s i d e r e d  a  "necessary  a f n e g l i g i b l e and  the budget as a c o n t r o l device  However as the works became t D be regarded  the task of budgeting was  purchasing  as  fixed  aver  beneficial,  r e d e f i n e d as the e f f e c t i v e m a r s h a l l i n g  of 21  f i s c a l and  o r g a n i s a t i o n a l resources  f o r the attainment  These f a c t o r s became i n c r e a s i n g l y r e c o g n i s e d New  Deal years under P r e s i d e n t F.D.  i t u r e s rose from $4.2 In 1949  billion  Roosevelt  i n 1932  the Hoover Commission  to $10.0 22  of b e n e f i t s .  i n the USA  during  the  when f e d e r a l expendbillion  by  1940.  called for alterations in  budget c l a s s i f i c a t i o n consonant with the management o r i e n t a t i o n . I t recommended "that the whole budgetary concept a f the Government should  be r e f a s h i o n e d by the adoption  upon f u n c t i o n s , a c t i v i t i e s and  projects".  of a,budget based  P o s s i b l y to c r e a t e a  sense of n o v e l t y , the term "performance budgeting" r e f e r to what had  Federal  was  coined  long been known as f u n c t i o n a l or a c t i v i t y 23  A second Hoover Commission i n 1955 examination on U.S.  to budgeting.  made a comprehensive  F e d e r a l F i n a n c i a l management, and  reported  that  o p e r a t i n g budgets s h o u l d c o i n c i d e with the o r g a n i s a t i o n a l p a t t e r n by which r e s p o n s i b i l i t y had  been e s t a b l i s h e d w i t h i n an agency.  Oper-  a t i n g budgets were to d i s c l o s e the p r o j e c t e d programmes and workl o a d s , be based on r e l i a b l e c o s t i n f o r m a t i o n , and  i n d i c a t e the  funds  r e q u i r e d to f i n a n c e o p e r a t i o n s . I t i s only s i n c e the advent o f PPBS d e s c r i b e d at l e n g t h i n  -26-  s e c t i a n D Df  t h i s chapter, t h a t the Keynsian  p u b l i c spending  r e l a t i o n s h i p between  and c o n d i t i o n o f the economy has been a l l i e d  to  budgeting to i n c o r p o r a t e the s u g g e s t i o n s made by the Second Hoover Commission. In  the Canadian  F e d e r a l Government there are a number of  b a s i c p r i n c i p l e s which u n d e r l i e the system t r a t i o n or management. of  of  financial  Fundamental to a l l these  adminis-  i s the supremacy  P a r l i a m e n t , with the House of Commons being dominant i n f i n a n c i a l  matters i n g e n e r a l , and having s o l e and e x c l u s i v e r e s p o n s i b i l i t y 2k for  initiating  a l l spending p r o p o s a l s .  The system  i s based on a budget concept, i n  which.the  budget i s regarded as a comprehensive and i n t e g r a t e d f i n a n c i a l p l a n for  r a i s i n g and spending  p u b l i c money.  25 Eaton  has d e s c r i b e d the f e d e r a l budget as a s e r i e s of  processes and documents whereby the government's f i n a n c i a l p r o p o s a l s for  both revenue and e x p e n d i t u r e s are formulated, c o n s i d e r e d and  u l t i m a t e l y l a i d before the House o f Commons. It  i s designed not only to f a c i l i t a t e  * the p l a n n i n g and  c o n t r o l of government a c t i v i t i e s , but a l s o the p l a n n i n g and of  control  the n a t i o n a l economy. The budget p r e s e n t s : " .... An accounting or f i n a n c i a l review of the government's own domestic economy, a statement of the government's expenditure programme f o r the next year with a f o r e c a s t of revenues a v a i l a b l e to f i n a n c e i t , and an a n a l y s i s of the government's o v e r a l l cash and borrowing requirements."26  A d m i n i s t r a t i v e management and c o n t r o l i s e x e r c i s e d both on a c e n t r a l i s e d and d e c e n t r a l i s e d b a s i s .  The  c e n t r a l agencies of  a n c i a l management and c o n t r o l are the Cabinet, and  fin-  i t s formal s t a t -  utory c o u n t e r p a r t the Governor General i n C o u n c i l , the Treasury  -27-  Board and other committees o f the Cabinet or the P r i v y C o u n c i l , 27  and the M i n i s t e r and Department o f F i n a n c e . C e n t r a l c o n t r o l over e x p e n d i t u r e s i s e x e r c i s e d by two powerful a g e n c i e s , the Treasury Board, and the C o m p t r o l l e r o f the Treasury with independent The departmental  checks being made by the A u d i t o r G e n e r a l .  Treasury Board's prime f u n c t i o n i s to ensure  expenditure programmes are a l i g n e d to the broad  i c i e s l a i d down by the C a b i n e t .  a p p r o v a l o f the Board.  pol-  T h i s i s achieved by v e t t i n g a l l  s i g n i f i c a n t v a r i a t i o n s i n departmental  program  that  a c t i v i t i e s having  A d e t a i l e d review o f departmental  prior budgets,  s t a f f s i s made, together with the p r e s c r i b i n g o f r e g u l a t i o n s  p e r t a i n i n g broad expenditure c l a s s e s and p e r i o d i c s c r u t i n y Df the l a r g e r c o n s t r u c t i o n and purchasing c o n t r a c t s , p r o p o s a l s f o r i n t r a departmental  fund t r a n s f e r s , number o f and s a l a r y s c a l e s o f em-  ployees e t c . In the U.S. when the a p p r o p r i a t i o n s b i l l  i s enacted, an  a p p r o p r i a t i o n warrant,  drawn by the Treasury and c o u n t e r s i g n e d by  the General Accounting  Office  The  (GAQ) i s sent to the r e l e v a n t agency.  agency i s s u b j e c t to three major types o f a u d i t s by the GAO.  The most important  i s the so c a l l e d comprehensive a u d i t , which  con-  c e n t r a t e s on the accounting and r e p o r t i n g system used by a p a r t i c u l a r agency and checks  transactions selectively.  The g e n e r a l a u d i t  examines t h e accounts o f agency disbursements l e g a l i t y o f each t r a n s a c t i o n . r e c e i p t s or e x p e n d i t u r e s  t o determine the  I f i l l e g a l o r improper  handling o f  i s d i s c o v e r e d , then r e c o v e r y procedures are  i n s t i t u t e d a g a i n s t the o f f e n d i n g o f f i c e r .  The t h i r d a u d i t , a  commercial a u d i t i s a p p l i e d t o government c o r p o r a t i o n s and e n t e r p r i s e s (the U.S. e q u i v a l e n t o f a Crown c o r p o r a t i o n ) .  IMo r e c o v e r y  -23-  i s p a s s i b l e i n t h i s case, but  Congress i s informed of any  question-  able or improper p r a c t i c e . ^ 2  Before examining the e x i s t i n g budgeting system with i t s inherent  f a u l t s i n greater  depth, i t should  be r e a l i s e d t h a t even  governments i n democratic s o c i e t i e s are s u b j e c t  to c o n s t r a i n t s .  29 Hinrichs " i .  has  categorised  these i n the  following  form:  P h y s i c a l c o n s t r a i n t s : given t e c h n o l o g i e s and p r o d u c t i o n p o s s i b i l i t i e s , there are l i m i t s as to what can be achieved.  ii.  L e g a l c o n s t r a i n t s : laws, property r i g h t s , i n t e r n a t i o n a l convention, agency r u l i n g s e t c . can reduce any l i s t of f e a s i b l e s o l u t i o n s .  iii.  Administrative Constraints: programmes to be implemented r e q u i r e people to be h i r e d , t r a i n e d and put to the task.  iv.  D i s t r i b u t i o n a l Constraints: development programmes may be l i m i t e d by the d i s t r i b u t i o n of income generated; by r e g i o n s , income c l a s s e s , g e n e r a t i o n s .  v.  P o l i t i c a l Constraints: The process of d e c i s i o n making i t s e l f i s c o s t l y , time consuming, and o f t e n f r u s t r a t i n g ; s o l u t i o n s i n theory may not be r e a l i s a b l e i n the p r a c t i c a l p o l i t i c s of the moment.  vi.  Financial Constraints: Resource s c a r c i t y i s t r a n s l a t e d i n t o monetary and budget s c a r c i t y . Most problems thus devolve i n t o s u b o p t i m i s a t i o n where budget l e v e l s get s e t f o r governments, departments and agencies, and one i s l i m i t e d to the l e s s than o p t i m a l task of maximising b e n e f i t s with a f i x e d budget.  vii.  T r a d i t i o n a l , S o c i a l and R e l i g i o u s C o n s t r a i n t s : Social customs, and values a l l tend to preclude c e r t a i n o p t i o n s and p o s s i b l e a c t i o n ..." Much o f the f o l l o w i n g c o n s i d e r a t i o n of the weaknesses o f  the t r a d i t i o n a l system i s adopted from the work of Anshen" ^, B a l l s ' ^ , 5  32  and  Currie  , and  presents  i n the author's view an e x c e l l e n t summary  of the t r a d i t i o n a l concept of governmental budgeting and p r a c t i c e with i t s i n h e r e n t  l a c k of u s e f u l n e s s  accountancy  for translating into  a t o o l f o r management d e c i s i o n making. The  f e d e r a l budget i s l a r g e l y the product o f a h i s t o r i c a l  sponse to the need to safeguard the against  i n t e g r i t y of  departments.  not  was  designed to a s s i s t a n a l y s i s , p l a n n i n g  and  i t does not work w e l l f o r t h a t purpose.  comptroller's c e i t f u l but The  or d e c i s i o n making,  It i s a  conventional  r a t h e r than a manager's budget, p r o t e c t i n g a g a i n s t  de-  not poor management.  fair  implementation of a p p r o p r i a t i o n s  e s s e n t i a l , as i t i s the f o u n d a t i o n i s not  i n the  I t i s an instrument f o r the c o n t r o l o f spending,  and  it  appropriations  c a r e l e s s , i l l - i n f o r m e d , or m a l e f f i c i e n t a d m i n i s t r a t o r s  executive  re-  without d e c e i t i s  o f p u b l i c confidence  and  t r u s t , but  enough, f a r without proper s t r a t e g i c and management c o n t r o l s ,  democracy cannot be e f f e c t i v e l y a d m i n i s t e r e d .  The  c o n t r o l l i n g i n some d e t a i l the i n p u t s or o b j e c t systematic  a t t e n t i o n to outputs can  present  system o f  c l a s s e s without paying  l e a d to u n d e s i r a b l e  t r a d i t i o n a l s t r u c t u r e does not provide  economic con-  sequences.  The  a balanced  viewpoint.  Even i f t i g h t c o n t r o l s on i n p u t s f o r c e s agencies to c a r r y  on t h e i r a c t i v i t i e s at minimum c o s t , a g e n c i e s are never f o r c e d to themselves whether, they are pursuing The portant  f u n c t i o n s o f accounting  respect  place with v a r y i n g little  the r i g h t a c t i v i t i e s . " ' ' 3  i n government d i f f e r i n one  from those a p p l i c a b l e i n the  commercial accounts r e c o g n i z e  private sector.  concern i f i n d i v i d u a l t r a n s a c t i o n s t u r n out a d v e r s e l y ,  as i f , i n aggregate, a s a t i s f a c t o r y p r o f i t  so t h a t any  i s achieved.  34 given to  Whilst taking relatively as  Parliament.  long  However, i n  each t r a n s a c t i o n must be c o n t r o l l e d and  i n d i v i d u a l item, r e g a r d l e s s of s i z e , may  the i n f o r m a t i o n  im-  t h a t while many t r a n s a c t i o n s are  degrees of p r o f i t a b i l i t y or l o s s , i t i s of  governmental accounting  ask  be defended  recorded and  -30The and  underlying  concept Is t h a t i n b u s i n e s s ,  there  i s the  profit  l o s s (income) statement as a guide f o r measuring r s s u l t s , with a  corresponding ease of b e n e f i t measurement v i a market p r i c e s or both income and not  r e l a t e d expenses, but  a similar yardstick i s generally  a v a i l a b l e f o r the government s e c t o r .  government i s to be encouraged and for stimulating efficiency the  l e a s t resource  s c r i b e d goals  Therefore  i f efficiency in  judged by r e s u l t s , some methods  ( i . e . providing  an a c c e p t a b l e  s e r v i c e with  c o s t ) and measuring i t i n terms of a t t a i n i n g pre-  i s necessary as there  i s no p r i c e mechanism i n  general  35 to p o i n t the way  to high  level efficiency.  government departments should  be e v a l u a t e d  r a t h e r than c o s t s of o p e r a t i o n ,  and  Currie  suggests t h a t  on the b a s i s o f s e r v i c e  t h a t i f a department does not  operate e f f i c i e n t l y , an adequate s e r v i c e w i l l not be provided cost.  The  at l e a s t  b a s i c purpose o f t r a d i t i o n a l governmental accounting  systems,  to c o n t r o l e x p e n d i t u r e s from government, i s t h e r e f o r e a weakness s i n c e they are not do not  designed to f u l f i l  provide  the  a management r o l e .  kind of information  making i n the p r i v a t e s e c t o r .  Neither  The  P u b l i c Accounts  that i s a v a i l a b l e for decision i n the U n i t e d  Kingdom nor  in  Canada are the s t a t u t o r y l e g i s l a t i v e a u d i t s s p e c i f i c attempts to measure or a s s e s s e f f i c i e n c y , although by drawing a t t e n t i o n to waste or weaknesses o f the  accounting  some s m a l l p a r t i n r e d u c i n g  systems they might i n d i r e c t l y  inefficiencies." ^  ment approach to p u b l i c e x p e n d i t u r e s may to c o s t accounting to problem  5  play  PPBS, by u s i n g a manage-  w e l l play a r o l e s i m i l a r  i n the p r i v a t e s e c t o r , drawing management's a t t e n t i o n  areas.  37 McKean notes "that the process of n a t u r a l s e l e c t i o n i s only weak when a p p l i e d to governments, s i n c e the F e d e r a l government competes only with the p o l i t i c a l p a r t i e s that are out of o f f i c e , and s u r v i v a l i n t h i s competition depends on many f a c t o r s other than e f f i c i e n c y i n the use o f r e s o u r c e s . "  -31-  To  i d e n t i f y the budget as one  in  the e x e c u t i v e  p r i m a r i l y designed to ensure honesty  departments i s to c i t e one  of a good budget s t r u c t u r e , but o f another —  equally  important c h a r a c t e r i s t i c  i t h i g h l i g h t s the  i t s c o n t r i b u t i o n to informed and  Rarely  can  amission  r a t i o n a l management.  the o b j e c t s o f expenditure be r e l a t e d i n any  s p e c i f i c administrative  programmes even i f (and  way  t h i s i s by no means  u n i v e r s a l ) they f a l l w i t h i n the scope of a s i n g l e department.  Even  i f the o b j e c t i v e s are not vague, i f they are pursued i n more than department i t i s o n l y with the g r e a t e s t d i f f i c u l t y can be  t h a t such  one  activities  compared. In the U.S.  the t r a d i t i o n a l budget was  i v e l y from the  "bottom up"  appropriations  f o r t h e i r s e c t i o n , and  the requests The  to  undisturbed  ( i . e . o p e r a t i o n a l managers  of t h e i r s u b o r d i n a t e s  r e s u l t was  t h a t each sub  w h i l e seeking  and  passing  too  little  requesting  to the next  level).  i t s traditional  to extend i t s o p e r a t i o n s The  exclus-  the next s e n i o r l e v e l combining  agency continued  o f t e n termed "Empire b u i l d i n g " . emphasis on d e t a i l and  prepared almost  —  activities  the phenomenon  budget tended to p l a c e too much  on any  coordination,  lacked  quant-  38  i t a t i v e goals, and'limited there was o f present  planning  to a one  an inadequate c o n s i d e r a t i o n of the decisions.  The  year p e r i o d future  implications  b a s i c l a c k of o b j e c t i v e such  " p r o f i t maximisation", or "to achieve an X% r e t u r n on is  a difficulty  n a t u r e , but  of prevention and  as  investment"  f a c i n g government d e c i s i o n makers, f o r not  are government goals in  , i.e.  only  g e n e r a l l y mare q u a l i t a t i v e than q u a n t i t a t i v e  the p u b l i c s e c t o r i s o f t e n concerned with measures r a t h e r than with a f f i r m a t i v e gains  demand c o n s i d e r a t i o n s  are r e l e v a n t only  to s o c i e t y .  in relation  s p e c i f i c price information,  and  because o f apportionment  c u l t i e s with both j o i n t and  f i x e d c o s t s , i t i s extremely  Supply  to diffi-  difficult  t o f i n d the r e a l p r i c e a f p u b l i c goads.  t h a t the t r a d i t i o n a l information  budget system does not provide  regarding  the dangerous i l l u s i o n The  The f a c t i s  s p e c i f i c goods.  reliable  cost  In many areas we chance  that we have good c o s t data when we do n o t .  problem o f choice o f q u a n t i t y or mix o f p u b l i c goods i s a l s o  unaided by the t r a d i t i o n a l  budget, s i n c e there  o b j e c t i v e s t o be a p p r a i s e d  and f i n a l l y  separation o f planning  are no f o r m a l i s e d  adopted because o f a t o t a l  from the budgeting f u n c t i o n .  Responsible  o f f i c i a l s t h e r e f o r e l a c k the b a s i c t o o l s to enable them t o : "1.  choose among a l t e r n a t i v e g o a l s when a v a i l a b l e r e sources are i n s u f f i c i e n t t o undertake the a c h i e v e ment o f a l l g o a l s c o n c u r r e n t l y ;  2.  measure the immediate c o s t o f a c t i v i t i e s ;  3.  c u r r e n t l y i d e n t i f y the i m p l i c i t current decisions;  4.  e v a l u a t e performance o f ongoing programmes by comparing c o s t s and achievements ... ^  future costs of  ,,tf  The traditional  foregoing  d i s c u s s i o n has o u t l i n e d the theory  o f the  government budget and i t s i n h e r e n t weaknesses, which  may be summarised as 1.  Vagueness o f o b j e c t i v e s .  2.  Limited analysis of a l t e r n a t i v e s .  3.  D i f f i c u l t y of costing s p e c i f i c  4.  Inadequate c o n s i d e r a t i o n o f f u t u r e i m p l i c a t i o n s o f current costs;  5.  Short  6.  Emphasis on expenditure formance ( o u t p u t s ) .  7.  Almost t o t a l l a c k o f p l a n n i n g  projects.  (generally 1 year) d e c i s i o n  horizon.  ( i n p u t s ) r a t h e r than concept.  per-  -33-  Anshen  suggests  t h a t a good budget s t r u c t u r e c o u l d con-  t r i b u t e s i g n i f i c a n t l y to the development of a d e c i s i o n environment i n u h i c h the government c o u l d m e a n i n g f u l l y  a p p r a i s e the o b j e c t i v e s  of s o c i e t y and the a b i l i t y  to a t t a i n them w i t h i n the most  i e n t l y balanced  of p u b l i c and p r i v a t e e n t e r p r i s e .  assortment  l i s t s the requirements  of such a budget s t r u c t u r e and  quoted below to h i g h l i g h t the shortcomings  o f the  effic-  these  He  are  traditional  budget, and a l s o to provide a u s e f u l frame o f r e f e r e n c e f o r the d i s c u s s i o n of  PPBS  in section  D  of t h i s  chapter.  The budget design s h o u l d f a c i l i t a t e meaningful measurement of the t o t a l money c o s t s of a c c o m p l i s h i n g d e f i n e d o b j e c t i v e s ... moreover a package o f c u r r e n t c o s t s would not s u f f i c e . The statement s h o u l d p r o j e c t the t o t a l c o s t stream through f o r e c a s t a b l e time ... .... The budget s t r u c t u r e should f a c i l i t a t e the comparison o f a l t e r n a t i v e ways to accomplish a given o b j e c t i v e ... .... The budget p r e s e n t a t i o n should c l e a r l y i d e n t i f y the f u t u r e c o s t i m p l i c a t i o n s i n h e r e n t i n near term f i n a n c i a l commitments. .... The budget design s h o u l d f a c i l i t a t e comparison of c o s t i n p u t s and achievement of outputs when r e l a t e d segments of a s i n g l e programme are a d m i n i s t e r e d by d i f f e r e n t management u n i t s ... .... The budget design should d e l i n e a t e the o b j e c t i v e s o f d i s c r e t e spending commitments i n such terms t h a t s i g n i f i c a n t c o s t - u t i l i t y a n a l y s i s can be c a r r i e d out, although i t i s r e c o g n i s e d t h a t t h e r e are obvious l i m i t a t i o n s on our a b i l i t y to d e f i n e measurable g o a l s o r even progress towards them i n c e r t a i n areas o f f e d e r a l expenditure ... .... The budget design should make i t p o s s i b l e to aggregate r e l a t e d expenditure whenever they occur i n the government's s p r a w l i n g a d m i n i s t r a t i v e s t r u c t u r e ... .... A budget t h a t achieves the f o r e g o i n g s h o u l d a l s o serve to generate economic data on f e d e r a l i n p u t s to the n a t i o n a l economy by meaningful a c t i v i t y segments. T h i s  -34-  mould help p r i v a t e a n a l y s t s to understand and i n t e r p r e t the d i r e c t i o n and i n f l u e n c e o f f e d e r a l spending and thereby improve the e f f i c i e n c y o f p r i v a t e i n v e s t ment through a more r a t i o n a l a d m i n i s t r a t i o n o f commitments i n r e l a t i o n to present and f u t u r e programmes.  11  F i n a l l y Anshen remarks t h a t a w e l l designed budget i s a n e u t r a l  tool,  which w i l l serve with equal e f f e c t i v e n e s s those who would decrease or expand the scope o f f e d e r a l a c t i o n .  ii.  Cost U t i l i t y  Analysis  C o s t - u t i l i t y a n a l y s i s i s an attempt t o sharpen the i n t u i t i o n and  judgement o f the d e c i s i o n maker.  s o c i a l accounting by  f o r evaluating  I t i s i n essence a system o f  p r o j e c t s t h a t are not undertaken  the p r i v a t e s e c t o r f o r reasons e x p l a i n e d  earlier i n this  chapter.  I t i s u n r e a l i s t i c t o assume t h a t the a n a l y s i s w i l l make the d e c i s i o n , s i n c e the problems f a c i n g d e c i s i o n makers i n c l u d e too many e f f e c t s of a p o l i t i c a l , p s y c h o l o g i c a l and s o c i o l o g i c a l n a t u r e , which cannot g e n e r a l l y be taken i n t o account i n a p u r e l y q u a n t i t a t i v e s e n s e . 42 The  author t h e r e f o r e suggests t h a t d e c i s i o n making, which Dale  describes  as "the f o c a l c r e a t i v e p s y c h i c  thought, f e e l i n g and i m a g i n a t i o n  event where knowledge,  are turned  i n t o a c t i o n " w i l l be  aided, but not r e s o l v e d by the a n a l y s i s because o f the l a c k o f 43 what Simon  terms the "programmed d e c i s i o n " i . e . the type o f de-  c i s i o n which has a s i n g l e c a l c u l a b l e s o l u t i o n .  Fisher  describes  the a n a l y s i s i n terms o f i t s c h a r a c t e r i s t i c s a s : "1. A s y s t e m a t i c examination o f a l t e r n a t i v e courses of a c t i o n , i n c l u d i n g the design o f a d d i t i o n a l ones i f those examined are found wanting ... 2. Assessment o f the c o s t ( i n the sense o f economic resource c o s t ) and u t i l i t y (the b e n e f i t s o r g a i n s ) p e r t a i n i n g t o each a l t e r n a t i v e ... 3.  Consideration  o f f u t u r e time  periods...  -35-  4.  Uncertainty i s a key factor  ...  5.  The context in uhich the analysis takes place i s broad, and therefore complex solutions are the rule rather than the exception.  kk 6. Qualitative work i s important . . . " Fisher goes on to describe the two p r i n c i p a l conceptual "1.  2.  approaches.  Fixed u t i l i t y approach: to determine the a l t e r n ative (or combination) l i k e l y to achieve the specified l e v e l of u t i l i t y at the lowest economic cost. Fixed budget approach: to determine the a l t e r n ative (or combination) l i k e l y to produce the highest u t i l i t y for the given budget l e v e l . . . "  Ward outlines a useful conceptual framework for such a study as being: "1.  Recognition of the point of view from which the study i s made. This d i s t i n c t i o n i s necessary because the incidence of benefits and costs do not necessarily coincide . . .  2.  Definition of the proposed scheme, i t not being s u f f i c i e n t to make a vague statement of p o l i c y .  3.  Consider a l l feasible a l t e r n a t i v e s , on the same b a s i s .  4.  A detailed economic evaluation, or appraisal, of the project, including a review of the i n t a n g i b l e s .  5.  Make a policy recommendation to the authority which has the ultimate r e s p o n s i b i l i t y for the decision."^5  each assessed  As discussed e a r l i e r , the aim of the analysis •decision makers in the a l l o c a t i o n of scarce resources programmes.  i s to aid to competing  Lewis suggests that:  "Public budgeting i s only necessary because desires exceed our means, and although the supply of resources has been greatly expanded in recent decades, i t i s s t i l l short i n r e l a t i o n to our demands. Hence s c a r c i t y of resources in r e l a t i o n to demands confronts us at every l e v e l .  -36-  McKean  writes  that we  would be n i c e to have.  should  do more than " l i s t  things that i t  E x p l i c i t l y or i m p l i c i t l y we  must adopt  48  c r i t e r i a or t e s t s of p r e f e r r e d n e s s " .  Krutilla  s u c c i n c t l y char-  a c t e r i s e s c o s t - u t i l i t y a n a l y s i s as: "the c o l l e c t i o n and o r g a n i s a t i o n of data r e l e v a n t by some c o n c e p t u a l l y meaningful c r i t e r i a f o r determining the r e l a t i v e p r e f e r r e d n e s s of a l t e r n atives". The  a p p l i c a b l e r u l e i s g e n e r a l l y to maximise p u b l i c b e n e f i t s or  general welfare  w i t h i n the area of r e s p o n s i b i l i t y .  have an i d e a o f what the a n a l y s i s i s seeking thought u s e f u l to d i s c u s s  Now  that  to a c h i e v e ,  i t s o r i g i n s , mechanics, and  we  i t is  some of  the  problem areas i n i t s a p p l i c a t i o n i n the p r a c t i c a l sphere. The  o r i g i n s of the formal  computation i n the U.S.  date  49 from the Reclamation Act o f 1902  , and  i t was 50  f o r under the R i v e r and  Harbour Act of 1920  u t i l i t y - c o s t r a t i o s was  intended  to serve  two  explicitly  .  The  provided  computation o f  purposes, f i r s t l y  e s t a b l i s h p u b l i c p r o j e c t s which y i e l d p o s i t i v e r e t u r n s , and  to  secondly  to act as a method f o r rationing,, by a l l o c a t i n g monies to those p r o j e c t s y i e l d i n g the h i g h e s t a n a l y s i s can perform the  returns.  In e f f e c t t h e r e f o r e  the  f u n c t i o n of a budget c l e a r i n g device  by  a l l o c a t i n g funds on a b a s i s of rank u n t i l the a v a i l a b l e funds are exhausted. A proviso  i n the F l o o d C o n t r o l Act of 1936  allowed  the  F e d e r a l Government to p a r t i c i p a t e i n schemes of f l o o d c o n t r o l " i f the b e n e f i t s to whomsoever they may estimated c o s t s " , which r e p r e s e n t s  accrue are i n excess of an a p p l i c a t i o n of the  Hicks p r i n c i p l e to the Pareto concept d i s c u s s e d this  chapter.  the  Kaldor-  i n s e c t i o n B of  -37-  E a r l y i n 1946,  the U.S.  Committee appointed a Sub  1950  has  d e t a i l rather  and  Costs,  Basin for  mutually a c c e p t a b l e p r i n c i p l e s and  T h e i r r e p o r t , known as the shaped o f f i c i a l  Inter Agency R i v e r  Committee on B e n e f i t s  the purpose of f o r m u l a t i n g cedures.  Federal  "Green Book" p u b l i s h e d  in  t h i n k i n g , with amendments touching  than p r i n c i p l e s .  D e s p i t e i t s avowed aim  pro-  only  -  "to develop a s y s t e m a t i c , c o n s i s t e n t , and t h e o r e t i c a l l y sound framework f o r the economic a n a l y s i s of r i v e r b a s i n p r o j e c t s and programmes, i r r e s p e c t i v e o f c u r r e n t p r a c t i c e s or l e g i s l a t i v e and administrative limitations"51 the authors d i d not  p e n e t r a t e very f a r beneath the  of the t h e o r e t i c a l p r o p o s i t i o n s ,  and  unfortunately  surface the  of  any  procedures  52 themselves are r a t h e r i m p r a c t i c a l . stated decision rule  The  t h i s f a l l a c y may  r a t h e r than a  best be shown by the  Project A  Cost $100  Returns  $105  Project B  Cost $1  Returns  $2  Green Book r u l e would accept p r o j e c t A (net u t i l i t y  the budget l i m i t a t i o n was would be $100)  preferable  $100,  and  $5)  follow-  in  $1),  but  i t i s obvious t h a t i f  there  are  100  project B ' s , i t  to undertake these ( g i v i n g a net u t i l i t y  r a t h e r than the s i n g l e p r o j e c t A.  "secondary b e n e f i t s " allowed by the  The  of  i n c l u s i o n of so c a l l e d  document,(for example the  rise  land v a l u e s as a r e s u l t o f e a s i e r access to a l a r g e urban a r e a )  i n a d d i t i o n to a c a l c u l a t i o n o f t r a n s p o r t a t i o n and  the  simple example, a p p l i c a b l e to the f i x e d budget c a s e .  p r e f e r e n c e to p r o j e c t B (net u t i l i t y  in  serious error i s that  i s to maximise net u t i l i t y  u t i l i t y - c o s t r a t i o , and ing  One  f u e l costs  i s i n c o r r e c t as i t leads  occurs because the subjective  increase  s a v i n g s i n both time  to "double c o u n t i n g " .  i n land p r i c e s a l r e a d y  c a p i t a l i s a t i o n of the net u t i l i t y  represents  This a  to be accrued over  -38the  l i f e o f the p r o j e c t .  A simple analogy which r e f u t e s the  method completely i s to pass a s i n g l e d o l l a r b i l l around people sitting  a t a c i r c u l a r t a b l e , and count i t as an a d d i t i o n a l d o l l a r  on each p a s s . one,  T h i s matter o f double counting  i s quite a serious  e s p e c i a l l y when i t i s r e a l i s e d t h a t the Bureau o f Reclamation  i n c l u d e s secondary b e n e f i t s , w h i l s t the Corps o f Engineers and the Department o f A g r i c u l t u r e do n o t . The  document, even i n i t s r e v i s e d form perpetuates over  e n t h u s i a s t i c notions  of v e r s a t i l i t y  and r e l i a b i l i t y  "that are  53 warranted n e i t h e r by l o g i c nor e x p e r i e n c e . "  Hammond f i n a l l y  argues  t h a t "one must never f o r g e t t h a t though pure economics i s a matter o f l o g i c , a p p l i e d economics i s a matter o f informed common sense". The  mechanics o f the a n a l y s i s are c e n t r e d on the premise t h a t " p u b l i c o f f i c i a l s ought to apply d e c i s i o n r u l e s which tend t o improve the g e n e r a l w e l f a r e r a t h e r than t h e i r ^ p e r s o n a l , or s p e c i a l l y i n t e r e s t e d c l i e n t e l e ' s w e l f a r e . "  This r e a l l y  i s the crux o f the problem, f o r we have a l r e a d y  above t h a t there welfare  i s some doubt r e g a r d i n g  we are t r y i n g t o improve.  the very  existence  We are t h e r e f o r e  o f the  l i m i t e d to  attempt t o improve the d e c i s i o n maker's concept o f g e n e r a l via  seen  welfare  government spending. For any p r o p o s a l  costs of achieving  i tis first  the o b j e c t i v e s .  e x e r c i s e based on known cost data, summary o f t o t a l resource o f Defence a c q u i r e s considerably reducing regard  costs.  necessary to c o n s i d e r the  T h i s i s not merely a c o s t i n g but should  be an o b j e c t i v e  For example the U.S. Department  and uses s e v e r a l major r e s o u r c e s  below t h e i r f u l l v a l u e .  The e x i s t e n c e  at prices o f a d r a f t , by  the e x p l i c i t manpower c o s t and s e l e c t i n g p e r s o n n e l without  f o r the i n d i v i d u a l ' s choice  o f a l t e r n a t i v e occupations  -39-  ( i . e . opportunity  " c o s t " concept) d i s t o r t s both the l e v e l and  composition o f m i l i t a r y manpower.  Landholdings t o t a l about 30  m i l l i o n a c r e s , over h a l f o f which has been t r a n s f e r r e d from  other  55 p u b l i c uses a t no c o s t .  Economists p r e f e r to use the term  "shadow p r i c e " when r e f e r r i n g to the o p p o r t u n i t y  cost  idea.  Sometimes i t i s suggested t h a t i f the a n a l y s t works hard enough, everything dollar). (and  can be put i n terms o f the common u n i t ( g e n e r a l l y the For i n s t a n c e  the saving o f a human l i f e  can be p r i c e d  indeed o f t e n i s with road s a f e t y f e a t u r e s such as curve  improvements, s t r e e t l i g h t i n g , e t c . ) by c o n s u l t i n g the i m p l i c a t i o n s of past  d e c i s i o n s on the average c o u r t  death.  Whilst  award f o r an a c c i d e n t a l  e i t h e r o f the above are u s e f u l p o i n t e r s , t h e i r  meaning, i n the absence o f an organised and  real  market t o which governments  i n d i v i d u a l s a d j u s t t h e i r a c t i o n s , i s hard t o u n r a v e l . 57 Dr. Mises  argues t h a t b u r e a u c r a t s have no means o f c a l -  c u l a t i n g c o s t s and u t i l i t i e s because the a c t i v i t i e s have no r e a l value  i n the market p l a c e , w h i l s t i n p r i v a t e b u s i n e s s the u l t i m a t e  b a s i s o f economic c a l c u l a t i o n i s the v a l u a t i o n o f a l l consumers* goods i n the market. without r e g a r d provides  I f a p u b l i c e n t e r p r i s e i s t o be operated  to p r o f i t s , the behaviour o f the p u b l i c no longer  a c r i t e r i o n of i t s usefulness,  and the problem o f bureau-  c r a t i c management i s p r e c i s e l y the absence o f such a method o f calculation. Even when c o s t s and b e n e f i t s are r e a d i l y measurable i n terms o f market p r i c e s , i t does not n e c e s s a r i l y f o l l o w that are the most a p p r o p r i a t e  values  to use.  For v a r i o u s reasons, market  p r i c e s may not r e f l e c t r e a l s o c i a l v a l u e s , to be made.  these  so t h a t adjustments have  For example, where i n p u t s are taxed, a f a c t o r c o s t  -40-  provides a better measure than market p r i c e , o f the s o c i a l cost of using such inputs, because the tax element in market price i s a transfer  payment from one sector of the economy to another.  Likewise studies comparing public and private investment should be placed on an equal footing by "charging" the benefit stream from each public project with the'tax structure that would be levied i f there were no exceptions. externalities  We must also consider the  i . e . those effects which do not d i r e c t l y affect the  particular proposal being studied, but w i l l have implications e l s e where in the economy. "1.  These effects are outlined by Hinrichs  as:  Production to production: an a c t i v i t y by one producer affecting the output of another e . g . water pumped from one mine has an effect on other nearby mines.  2.  Production to consumption: an a c t i v i t y by one producer affects other consumers e . g . noise and pollution.  3.  Consumption to consumption: an a c t i v i t y by one consumer affects other consumers e . g . radio noise in a public park.  4.  Consumption to production: an a c t i v i t y by one consumer affects producers e.g. trampling down crops whilst hunting."-'fl'  In the private sector i t i s customary to think that the proportions of external to i n t e r n a l costs/benefits i s r e l a t i v e l y small, and that external benefits commodities.  do not affect preferences  for  specific  However, in the public sector the s i t u a t i o n would  appear to be reversed.  A c t i v i t i e s come to be "affected  i n t e r e s t " as the proportion of external benefits  with public  i s large in re-  l a t i o n to the i n t e r n a l benefits. The analyst should at least attempt to evaluate these values, or include a q u a l i t a t i v e assessment of these a f f e c t s .  This  -41-  i s known as  " i n t e r n a l i s i n g the e x t e r n a l i t i e s " and  most d i f f i c u l t  technique to achieve w i t h i n  Questions o f s c e n i c beauty, a r t i s t i c s o c i a l l y d e s i r a b l e yet are not It  the  design,  i s arguably  current  framework.  are c o n s i d e r e d  readily susceptible  whether the  leave  the  The  without  stream o f c o s t s and  utilities  "worth" the  over the a n t i c i p a t e d u s e f u l working l i f e of the  making due  allowance f o r r e s i d u a l or scrap  riate.  general  purpose o f the  utilities  has  over t h i s a n t i c i p a t e d p e r i o d , the net worth of the p r o j e c t s must be a s c e r t a i n e d .  for  the e v a l u a t i o n  of any  The  discount  arbitrarily.  alternative  rate i s a c r i t i c a l  datum  streams do not  T h i s r e s u l t s from the f a v o u r i n g  benefits  (or l a t e r c o s t s ) by h i g h e r d i s c o u n t the  may  or r e j e c t i n g the a l t e r n a t i v e  patterns.  yet d e s p i t e  the  present value  proposed government p r o j e c t , as i t  cost-utility  with lower v a l u e s ,  the  T h i s i s achieved by d i s c o u n t i n g  make the d i f f e r e n c e between a c c e p t i n g when the v a r i o u s  asset,  been assessed  f u t u r e stream o f c o s t s / u t i l i t i e s to a s c e r t a i n the net (worth) o f the p r o j e c t .  from  s p e c i f y t h i s p e r i o d except  When the stream o f c o s t s and  be  value i f thought approp-  convention or r u l e of thumb, apart  a n a l y s i s can  cost  ( b e n e f i t s ) should  considered  No  be  d e c i s i o n maker to s u b j e c t i v e l y a s s e s s  d e s i r a b l e yet i n t a n g i b l e items are  difference.  to  to q u a n t i f i c a t i o n .  i s p o s s i b l e however to compare a l t e r n a t i v e s with and  these f a c t o r s , and  the  critical  have i d e n t i c a l time  of p r o j e c t s with e a r l y r a t e s and  vice-versa  nature of t h i s parameter,  i n some c a l c u l a t i o n s i t i s a s s i g n e d a v a l u e with almost " c a v a l i e r "  59 fashion.  The  appropriate  discount  r a t e becomes that value which  i n d i c a t e s when r e s o u r c e s should be t r a n s f e r r e d from one another, and p u b l i c and  becomes of even g r e a t e r  p r i v a t e uses.  Baumol^  0  use  importance i n d e c i s i o n s  s t a t e s that i f the  to between  resources  -42-  produce a r a t e o f r e t u r n i n the p r i v a t e s e c t o r which s o c i e t y evaluates  at r percent,  then the r e s o u r c e s  should  be  transferred  to the p u b l i c s e c t o r i f t h a t p r o j e c t y i e l d s a r e t u r n than r p e r c e n t .  P r e c i s e l y what t h i s discount  highly contentious  i s s u e , and  greater  r a t e should.be i s a  s e v e r a l " r a t e s " have been proposed.  Some w r i t e r s b e l i e v e that s o c i a l time p r e f e r e n c e  attaches  weight to the f u t u r e than a p r i v a t e time p r e f e r e n c e ,  and  more i t i s the  former t h a t i s r e l e v a n t f o r determining the a l l o c a t i o n of s o c i e t y ' s current resources  between consumption and  investment.  T h i s i s the  " d e f e c t i v e t e l e s c o p i c f a c u l t y " r e f e r r e d to by Pigou and and  suggests t h a t one  others,  o f the r e s p o n s i b i l i t i e s of government i s to  intervene  and  give an adequate weighting to f u t u r e  Marglin^  suggests t h a t such a r a t e may  a growth r a t e f o r the economy, and  operations.  be determined by  choosing  c a l c u l a t i n g the r a t e of investment  r e q u i r e d by c o n s i d e r i n g  the m a r g i n a l c a p i t a l / o u t p u t r a t i o .  s o c i a l r a t e of discount  i s then equated with the m a r g i n a l p r o d u c t -  i v i t y of t h i s The  The  investment. government bond r a t e i s h e l d to r e p r e s e n t  f r e e r a t e " f o r money by o t h e r s ,  but  the  although t h i s f i g u r e  "risk represents  the f i n a n c i a l cost of government investments, i t i s not p o s s i b l e to s t a t e t h a t the m a r g i n a l e f f i c i e n c y of the investment i s equal to t h i s r a t e , or indeed t h a t p u b l i c investments are i n f a c t r i s k f r e e ,  62 a  p o i n t to be c o n s i d e r e d  later.  63 Ward  accuracy of the bond r a t e i s q u e s t i o n a b l e , m a n i p u l a t i o n by governments pursuing Stockfish^** has should  project a discount  suggests t h a t even  the  since i t i s l i a b l e  to  s h o r t term monetory  policies.  argued t h a t d e c i s i o n makers i n government r a t e t h a t equals the o p p o r t u n i t y  investment i n the p r i v a t e s e c t o r of the economy BEFORE  return  corporate  on  -43-  taxes, but the author  although agreeing i n p r i n c i p l e to the con-  c e p t u a l base, a f f i r m s the viewpoint responsibility to  taken e a r l i e r t h a t government  i s to ensure t h a t p r o j e c t s which a r e not a t t r a c t i v e  p r i v a t e e n t e r p r i s e because o f the c o l l e c t i v e good  criterion  are undertaken i f they can be shown t o y i e l d a high s o c i a l r a t e of  return.  There i s the p r a c t i c a l d i f f i c u l t y ,  however, o f quant-  i f y i n g many o f the d e s i r a b l e outcomes which may w e l l preclude the S t o c k f i s h p r i n c i p l e being achieved on an o b j e c t i v e b a s i s . 65 Staats General Accounting It  r e f e r s to a survey office  undertaken i n the U.S. by the  i n 1967, o f twenty-three  federal  agencies..  was found t h a t , f a r from there being a standard r a t e , the d i s -  count r a t e used v a r i e d from zero ( i . e . the c o s t s / b e n e f i t s were c o n s i d e r e d o f equal value i r r e s p e c t i v e o f when o c c u r r i n g ) to twelve  per c e n t . An  i m p l i c i t r a t e was sometimes u t i l i s e d by a r b i t r a r i l y  s h o r t e n i n g the expected  l i f e o f the a s s e t , f o r example the Veterans'  A d m i n i s t r a t i o n e v a l u a t e s programmes on the b a s i s o f a f i v e p e r i o d , w h i l s t the most probable f i v e years.  life  o f a h o s p i t a l i s say twenty  The e f f e c t i v e d i s c o u n t r a t e i s thus approximately  percent even though no e x p l i c i t r a t e i s u t i l i s e d . the doubly  year  20  Thus we have  c o n f u s i n g p i c t u r e o f not r e a l l y knowing what the d i s c o u n t  r a t e SHOULD be, and v a r i o u s agencies u s i n g t h e i r own estimate t o promote t h e i r schemes which i n v a l i d a t e s much o f the a l l o c a t i o n cedure based on r a t i o The  treatment  pro-  analysis. o f u n c e r t a i n t y i s a l s o a source o f d i f f i c u l t y .  The e s t i m a t e s o f c o s t s and u t i l i t i e s r e p r e s e n t the a n a l y s t ' s best judgment, but there i s always u n c e r t a i n t y r e g a r d i n g the outcome o f  -44-  future events.  The  v a l u e s , and  p r o j e c t s A and B w h i l s t o f f e r i n g i d e n t i c a l average  two  outcomes may  e s t i m a t e s thus became average or  expected  d i f f e r g r e a t l y with r e s p e c t to o t h e r p o s s i b l e outcomes.  T h i s might be of some importance i f A's r e s u l t s are n e a r l y always the same as average, disaster.  but B's  range from fabulous success to u t t e r  I f p r a c t i c a l i t might be u s e f u l to c o n s i d e r a range o f  p o s s i b l e outcomes f o r which the same degree of confidence may attached.  Other s o l u t i o n s may  be  be to l o a d the r a t e of d i s c o u n t  ( i . e . a h i g h e r d i s c o u n t r a t e f a v o u r s p r o j e c t s with s h o r t e r payback p e r i o d s ) although  t h i s i s not recommended by the author  as i t may  be m i s l e a d i n g to e x t e r n a l a n a l y s t s , or to use c o n s e r v a t i v e  estimates  of b e n e f i t s . One  u s e f u l method i s to use s e n s i t i v i t y a n a l y s i s , whereby  v a r i o u s a l t e r n a t i v e s are s u b j e c t e d to d i f f e r i n g values of d i s c o u n t r a t e , expected  life  and monetary data r e g a r d i n g input and  outputs  to assess the i m p l i c a t i o n s of these r e s u l t s on any r a n k i n g of the alternatives. Although,  as mentioned p r e v i o u s l y t h i s choice of d i s c o u n t  r a t e i s a h i g h l y c o n t e n t i o u s i s s u e , the e x i s t i n g use of v a r i o u s r a t e s as d i s c u s s e d above does not commend i t s e l f to the author being sound, and criticism  i s one  of the u n d e r l y i n g reasons  as  f a r much of the  l e v e l l e d a g a i n s t the a n a l y s i s by W i l l i a m s ( i n J o u r n a l of  P u b l i c Economics V o l I, August 1972)  and o t h e r s .  The  author  recog-  n i s e s the v a l i d i t y of the s e v e r a l approaches mentioned above, but favours the use o f a c o n c e p t u a l approach u t i l i s i n g  shadow p r i c e s  ( f o r example i n areas o f high unemployment, the e x i s t i n g payments should be deducted  welfare  from a c t u a l wages p a i d to give the  -45-  shadow labour preference.  r a t e ) and  discount  r a t e s uhich  represent  social  I t i s r e a l i s e d that such a r a t e i s i m p r a c t i c a l  to  determine with e x i s t i n g knowledge ( l a c k of p r a c t i c a l data of utility  f u n c t i o n s ) , although i t i s handled i m p l i c i t l y  "loaded" u s e f u l economic l i f e r a t e s to favour s h o r t  f o r p r o j e c t s , and  term r e t u r n s  by the use  higher  discount  i n more r i s k y ventures ( i n  f a c t a c y n i c would suggest that to f u r t h e r p o l i t i c a l ends with s h o r t  and  of a s i n g l e r a t e with allowance made f o r the  unknowns by v a r y i n g  the  cost and  s e n s i t i v i t y a n a l y s i s would o b v i a t e of t h i s form o f a n a l y s i s .  and  The  above has  with i t s p r o c e d u r a l and  the  and  enable the c o s t s ,  a i d the  further  benefits  variable  issue. concept,  method being reviewed both as to i t s p r a c t i c a l i t y i t s o b j e c t i v e of ranking  on the o b j e c t i v e c r i t e r i a t h a t can the  the  i t would a t  been a summary of the c o s t - u t i l i t y  problems i n a c h i e v i n g  Whilst  confusion  a crude a n a l y s i s to  p r a c t i c a l t o o l , but  source of c o n f u s i o n  rate clouding  utilising  suggested, however, that t h i s  time streams to be i n v e s t i g a t e d without the  of d i s c o u n t  intangibles  much o f the e x i s t i n g  I t i s not  l e v e l o f a sound t h e o r e t i c a l and  assessment,  b e n e f i t streams and  i n i t s e l f would e l e v a t e what i s at best  l e a s t remove one  be  representatives).  D e s p i t e the p r a c t i c a l d i f f i c u l t i e s of such an the use  projects  term b e n e f i t s , being more " v i s i b l e " would g e n e r a l l y  favoured by the e l e c t e d  of  be  p r o j e c t s at l e a s t  a p p l i e d to a l l a l t e r n a t i v e s .  technique i s by no means p e r f e c t e d ,  i t at l e a s t s e r v e s to  d e c i s i o n maker, although care should be taken not  o v e r r i d i n g r e l i a n c e on  i t to the e x c l u s i o n  e s p e c i a l l y where there  are many u n q u a n t i f i a b l e  to  place  of good sound judgement, factors present.  T h i s farm a f a n a l y s i s w i l l be used e x t e n s i v e l y w i t h i n the framework of  Planning-Pragramming-Budgeting-System, but as mentioned i n  chapter 1 has been i n c l u d e d w i t h i n s e c t i o n C o f t h i s chapter because o f the time s i n c e i t s i n c e p t i o n as an a i d to management decision  D.  making.  Planninq-Programming-Budgeting-Systems  (PPBS)  F a l l o w i n g our i n v e s t i g a t i o n o f the framework  o f Government  involvement i n the economy, and a d i s c u s s i o n o f the c o n t r o l of  the t r a d i t i o n a l budget with i t s i n h e r e n t weaknesses  B and C o f t h i s chapter we now examine  functions  i n sections  PPBS which i s c u r r e n t l y  being i n s t i g a t e d w i t h i n Canadian F e d e r a l Government Departments, and i s seen by i t s proponents as a major advance i n a l l o c a t i v e theory which w i l l  improve the q u a l i t y D f d e c i s i o n making and hence  i n c r e a s e the e f f i c i e n c y o f government  spending.  The h i s t o r i c a l  development o f PPBS i s d i s c u s s e d b e f o r e o u t l i n i n g the aims and mechanics o f the system.  The probable impacts o f PPBS are i n v e s t -  i g a t e d t o g e t h e r with some o f the p o s s i b l e problem areas, which are of  course as y e t not known with c e r t a i n t y , but t h e i r  w i l l enable a t l e a s t t a c i t  discussion  s o l u t i o n s to be sought t o minimise any  d e t r i m e n t a l e f f e c t s t o the system. i.  Historical  Background  Budgeting has always been conceived as a process f o r s y s t e m a t i c a l l y r e l a t i n g the expenditure o f funds to accomplishment of  o b j e c t i v e s , even though as seen from the d i s c u s s i o n o f the  t r a d i t i o n a l system i n s e c t i o n C f a r more emphasis has tended to be p l a c e d on input r a t h e r than output measures.  -47-  In the f i r s t d a t i n g approximately was  stage of budget reform from 1920  to 1935,  i n the United S t a t e s ,  the task of the budget  seen as developing an adequate system of expenditure  control,  and p l a n n i n g and management c o n s i d e r a t i o n s were s u b s e r v i e n t to t h i s aim o f p r o v i d i n g a r e l i a b l e system of expenditure During  accounts.  the l a t e r 1930's the o r i e n t a t i o n of the. budget  changed somewhat towards the reform o f the a p p r o p r i a t i o n s t r u c t u r e , development of management improvement and toork measurement p r o grammes, and the f o c u s s i n g of budget p r e p a r a t i o n on the work and a c t i v i t i e s of the agencies  ( i . e . a change of focus from, programme  i n p u t s to o u t p u t s ) . PPBS t r a c e s i t s l i n e a g e to the attempts of w e l f a r e economists to c o n s t r u c t a s c i e n c e of f i n a n c i a l management based on the economics p r i n c i p l e of marginal u t i l i t y .  T h i s i s intended t o  ensure the o p t i m a l a l l o c a t i o n of p u b l i c expenditures p e t i n g uses and hence maximise w e l f a r e .  among com-  The search f o r such a  w e l f a r e f u n c t i o n i s h i g h l i g h t e d i n K e y ' s ^ a r t i c l e , where he  noted  the absence of a theory which would determine whether "to a l l o c a t e d o l l a r s to a c t i v i t y A i n s t e a d o f a c t i v i t y  B".  67 IMovick  s p e c i f i c a l l y o u t l i n e s the h i s t o r y of PPBS w i t h i n  the U n i t e d S t a t e s f e d e r a l government, which began l a r g e l y as a r e s u l t of P r e s i d e n t R o o s e v e l t ' s N a t i o n a l Defence A d v i s o r y i n 1940,  intended to a s s i s t U.S.  facilitating  t h e i r war  efforts".  Commission  " f r i e n d s or a l l i e s to be  in  As there were a g r e a t many  p r i o r i t i e s , and a s c a r c i t y o f r e s o u r c e s , a P r o d u c t i o n Requirements Plan was  i n t r o d u c e d i n 1941  p r i o r i t y and  with the i n t e n t i o n o f h a n d l i n g  a l l o c a t i o n problem on a wide b a s i s r a t h e r than  p r e v i o u s piecemeal  analysis.  The  p l a n was  designed  the the  to i d e n t i f y  -48-  the m a t e r i a l and being and  placed  component requirements f o r c o n t r a c t s t h a t mere  by the m i l i t a r y , and  a l s o to measure the  c a p a c i t i e s of America's p r o d u c t i o n  the U.S.A. entry  i n t o World War  industries.  I I , the system was  inventories  Shortly after upgraded to a  mandatory requirement f o r budgetary a l l o c a t i o n s . I t was  learned  t h a t i n p r a c t i c e i t was  the broad scope o f requirements, and Board was  studying  by  1942  the t o t a l of m i l i t a r y and  necessary to view  the War  Production  war-essential  civilian  requirements i n terms of a s e r i e s of i d e n t i f i a b l e groupings  subject  68 to study by  analysis.  Indeed Schick  reasonably argues t h a t  the  main impetus f o r PPBS came from d e c i s i o n technology a s s o c i a t e d economic and  systems a n a l y s i s r a t h e r than from p u b l i c  or p o l i t i c a l  science.  As  administration  a r e s u l t of m a r g i n a l b e n e f i t a n a l y s i s , the War  Board r e a l i s e d the need f o r e v a l u a t i o n on an i n c r e m e n t a l  b a s i s , and  and  weighting o f  t h i s l e d to the  with  Production  proposals  i n t r o d u c t i o n of  the  69 C o n t r o l l e d M a t e r i a l s Plan i n l a t e 1942, first  which IMovick  terms  "the  programme budget used i n the f e d e r a l government, although  u s u a l l y t h i s i s not  i d e n t i f i e d as such because the measurement  was  materials  i n u n i t s o f raw  T h i s plan e f f e c t i v e l y duction  1943-1945 and "I. II. III.  r a t h e r than d o l l a r s ' * . c o n t r o l l e d the system o f war  comprised the  f o l l o w i n g broad  I d e n t i f i c a t i o n of major  pro-  features.  goals.  IV.  Each g o a l was s u b d i v i d e d i n t o programme o b j e c t i v e s . Programme o b j e c t i v e s were f u r t h e r d e f i n e d i n programme elements. Programmes c r o s s e d s e r v i c e l i n e s .  V.  The  VI.  Examination o f a l t e r n a t i v e of both supply requirements."70  use o f an extended time  horizon. and  -49-  The next steps i n the federal development of PPBS took place in the Bureau of Reclamation and the Coast Guard.  The  work of the tiuo Hoover Commissions was also useful in encouraging the development of federal Performance Budgeting which was defined 71 as " . . . a budget based upon functions, a c t i v i t i e s and p r o j e c t s " . It was contended that such an approach would focus attention on the general character and r e l a t i v e importance of the work to be done rather than simply the items to be acquired. However the main impetus was the work performed at RAIMD for the A i r Staff  which resulted in the publication of a proposal for  the f i r s t programme budget to be applied to the A i r Force.  Although  i t was not enthusiastically received RAND continued to study the idea and refine the techniques with the consequence that in I960 the concept was brought to the attention of o f f i c i a l s  i n the i n -  coming Kennedy Administration who were i n general agreement that the system might be an i d e a l way of f a c i l i t a t i n g the treatment, analysis and study of the m i l i t a r y component which comprised a large segment of the t o t a l U.S. federal budget. 72 Wright i s therefore correct when he states that "Planning, Programming, Budgeting as a management system had i t s b i r t h in the Department of Defence under the Secretary McNamara", although as 73 Hitch  states "there was previously plenty of planning a c t i v i t y of  a l l sorts i n the department, short, intermediate, and long range both m i l i t a r y and f i s c a l " .  The key to the existing disarray was  the almost complete lack of substantive  (planning of  objectives)  and f i s c a l planning, as these were performed by two different not readily translatable  groups,  for comparative purposes since the plans  were not written i n s i m i l a r terms, (military planning was in terms  -50-  of d i v i s i o n s e t c . and the f i s c a l p l a n n i n g i n terms of l i n e and  the l a c k of any  f i s c a l p l a n extending  objects)  beyond the next budget  year. The  Second Hoover Commission r e p o r t , p u b l i s h e d i n  1963 74  c o n t a i n e d the f o l l o w i n g recommendations as r e p o r t e d by  Schick:  "Economy i n Government should be measured by the r e l a t i v e b e n e f i t s and c o s t s of each programme... F e d e r a l programmes aimed at s u p p o r t i n g or improving the economic p o s i t i o n of i n d i v i d u a l s or i n d u s t r y s h o u l d be c o n s t a n t l y r e - e v a l u a t e d i n the l i g h t o f changing c i r c u m s t a n c e s . The a l t e r n a t i v e - r e s o u r c e - u s e t e s t should a l s o be a p p l i e d to F e d e r a l programmes which i n v o l v e no s i g n i f i c a n t Federal expenditures. The budgetary process should show how the v a r i o u s a c t i v i t i e s o f the F e d e r a l Government are r e l a t e d „^ to each other on a programme b a s i s (or as S m i t h i e s proposes, expenditure p r o p o s a l s should be c o n s i d e r e d i n the l i g h t of the o b j e c t i v e s they are intended to f u r t h e r , and i n g e n e r a l , f i n a l expenditure d e c i s i o n s should not be made u n t i l a l l c l a i m s on the budget can be c o n s i d e r e d ) and be based upon a c l e a r r e c o g n i t i o n of the longer range p r o s p e c t s f o r government programmes i n terms o f c o s t s and b e n e f i t s . S p e c i f i c a l l y the budget f o r each year s h o u l d be presented i n the context o f a longer run s e t o f budgetary p r o j e c t i o n s , probably c o v e r i n g a 5-year period...." T h i s l a s t s u g g e s t i o n was governing  specifically  adopted by the b a s i c d i r e c t i v e  the Defence programme as shown below:  "The F i v e Year Force S t r u c t u r e and F i n a n c i a l Programme i s the o f f i c i a l programme f o r the Department o f Defence (DoD.). The programming system, o u t l i n e d h e r e i n , w i l l p r o v i d e the means f o r submission, review, r e c o r d keeping and d e c i s i o n making on the DoD- programme. The p l a n n i n g , programming, r e s o u r c e , m a t e r i a l and f i n a n c i a l management system o f a l l DoD. components w i l l be c o r r e l a t e d with the programming system s e t f o r t h herein...."76 77 The major elements o f the Defence system were as f o l l o w s : "1.  A DoD F i v e Year Force s t r u c t u r e (as d e t a i l e d above) with elements grouped i n t o e i g h t major programmes: strate g i c r e t a l i a t o r y f o r c e s , c o n t i n e n t a l defence f o r c e s , general-purpose f o r c e s , a i r l i f t and s e a l i f t , Reserve  -51and Guard Forces, research and development, general support, and m i l i t a r y a s s i s t a n c e . . . ' . " This fundamental change in the budget to a mission rather than organisational unit orientation meant that programmes,  rather than  organizational units such as the Army, Navy or A i r Force, became the cost centres,  with an extended time horizon of five years being  utilised. "2.  A process for the review and approval by the Secretary of Defence and his m i l i t a r y and c i v i l i a n advisers of programme change proposals by the m i l i t a r y departments . . .  3.  A method for reviewing and changing the five year programme prior to the annual budget formulation . . .  4.  Submission of force and manpower l e v e l forecasts and cost projections by the m i l i t a r y department after each calendar quarter . . .  5.  Progress reporting by the m i l i t a r y departments i n both physical and f i n a n c i a l terms as a basis for control o f actual performance in accordance with the programme . . . "  Because D f the success of the PPBS concept i n the Defence Department President Johnson announced the extension to a l l the Executive Officers and Agencies o f the U.S. Government in 1965 o f : " . . . . a very new and very revolutionary system of planning and programming and budgeting throughout the vast Federal Government — so that through the tools of modern management the f u l l promise of a finer l i f e can be brought to every American at the lowest possible c o s t . . . " 78 The adoption of the PPBS within the Canadian Federal Government came l a t e r ,  with the Treasury Board publishing a "Planning Programming 79  Budgeting Guide" i n September 1969  , and the approval of a new form  of the Estimates on a PPBS basis far the f i s c a l year 1970-71, in which departmental estimates were prepared in terms of both programmes and a c t i v i t i e s , to serve.  recording the objectives which they were intended  -52-  I t can t h e r e f o r e be seen t h a t from i t s c o n c e p t u a l beg i n n i n g s i n the a d m i n i s t r a t i o n o f t h e U.S. war e f f o r t i n t h e 1940's, t h e concept and p r a c t i c e has been extended t o cover t h e f e d e r a l government a c t i v i t i e s o f both Canada and the U n i t e d S t a t e s -by ii.  Uhat i s a Planning-Programming-Budgeting-System (PPBS) and Uhat i s i t Designed t o A c h i e v e ? Having d i s c u s s e d the reasons f o r p u b l i c a u t h o r i t y i n v o l v e -  ment i n the economic sphere i n s e c t i o n B, and the t r a d i t i o n a l control  p r o c e s s u i t h i t s weaknesses i n s e c t i o n C, i t i s now p e r -  t i n e n t t o f o r m u l a t e and a p p r a i s e the concepts  and mechanics o f  PPBS which as mentioned above has been i n s t i g a t e d as a p l a n n i n g f o r F e d e r a l governments i n both Canada and the USA.  tool  The remainder  o f t h i s c h a p t e r c o n s i d e r s i n t u r n i t s aims, how i t works, i t s proba b l e impact i n both t h e s h o r t and l o n g r u n , and the problems f o r s e e n i n o p e r a t i n g such a r e v o l u t i o n a r y a l b e i t s y s t e m a t i c PPBS e s s e n t i a l l y undertakes  process.  t o assess costs of a c h i e v i n g  o b j e c t i v e s a g a i n s t the b e n e f i t s t o be expected  from them, and i n  t h i s way makes p o s s i b l e a more i n t e l l i g e n t use o f r e s o u r c e s by t h e BD public sector.  I t t h e r e f o r e c a l l s f o r an expansion  o f f o c u s from  merely c o n s i d e r i n g i n p u t s t o the c o n s i d e r a t i o n o f both i n p u t s and t h e i r r e l a t e d outputs  ( i . e . from p u r e l y e x p e n d i t u r e  considerations  as under the t r a d i t i o n a l budget c o n t r o l p r o c e s s t o an assessment o f g o a l r e l a t e d achievements) w i t h t h e o u t p u t s c l e a r l y choices r e l a t e d to the goals.  P a r t i c i p a n t s a r e expected  reflecting to consider  a t i m e - h o r i z o n consequence beyond t h e s i n g l e year which was almost i n v a r i a b l y t h e p l a n n i n g p e r i o d used f o r f i n a n c i a l i m p l i c a t i o n s o f c o n t i n u i n g programmes under t h e t r a d i t i o n a l e x p e n d i t u r e  budget.  -53-  The a c t u a l budget c h o i c e s are to be formulated as a r e s u l t o f c o s t - b e n e f i t , c o s t - u t i l i t y , or c o s t e f f e c t i v e n e s s s t u d i e s the methodology  (uith  described i n section C of t h i s chapter) within  a s y s t e m s - a n a l y s i s framework. 81 Black r e f e r s to PPBS as a programme-oriented method o f f i n a n c i a l p l a n n i n g o f government o p e r a t i o n s i n v o l v i n g s t r u c t u r i n g governmental a c t i v i t i e s a c c o r d i n g to s i m i l a r i t y o f o b j e c t i v e s or r e s u l t s , and i s t h e r e f o r e composed of elements which are comparable to the b e n e f i t s sought ..." and draws the s i m i l a r i t y between  the b a s i c p h i l o s o p h i e s of PPBS and  s y s t e m s - a n a l y s i s by remarking t h a t "Being composed of a number o f semi-autonomous p a r t s which i n t e r a c t with each other ( s i c ) to achieve movement towards common o b j e c t i v e s , PPBS i s p r o p e r l y c a l l e d a system. In the most formal sense, the des i g n a b j e c t i v e o f PPBS i s a budget i n which funds are a l l o c a t e d among major programmes and w i t h i n the s t r u c t u r e o f each. The o b j e c t i v e o f PPBS i s ' to achieve an a l l o c a t i o n o f funds that most e f f e c t i v e l y advances the broad mix of government o b j e c t i v e s , by a l l o c a t i n g support to programmes developed a n a l y t i c a l l y . . . " The U.S. Bureau o f the Budget i n i t i a l  PPBS i n s t r u c t i o n s to agency  heads f o l l o w i n g P r e s i d e n t Johnson's announcement i n August  1965  ( r e p o r t e d above) i d e n t i f i e d a need f o r the e x i s t e n c e i n each agency of: "An a n a l y t i c c a p a b i l i t y which c a r r i e s out by permanent s p e c i a l i s e d s t a f f s c o n t i n u i n g i n depth a n a l y s e s o f the agency's o b j e c t i v e s and i t s v a r i o u s programmes to meet these o b j e c t i v e s . A m u l t i - y e a r p l a n n i n g and programming process which i n c o r p o r a t e s and uses an i n f o r m a t i o n system t o present data i n meaningful c a t e g o r i e s e s s e n t i a l to the making o f major d e c i s i o n s by agency heads and by the P r e s i d e n t . A budgeting process t h a t can take broad programme d e c i s i o n s , t r a n s l a t e them i n t o more r e f i n e d d e c i s i o n s i n a budget c o n t e x t , and present the a p p r o p r i a t e programme and f i n a n c i a l data f o r p r e s i d e n t i a l and congressional action."32  -54  The tuo primary goals of PPBS as described by Haldi are f i r s t l y to help give the taxpayer  the right government pro-  grammes, and secondly to give him more from these programmes  —  that i s greater quantity or quality (higher l e v e l of service) of the output of the programme. 84 Mosher  refers to i t s use as a management aid by stating  "the Programme Budget should be designed  so as to furnish the most  meaningful information for top administrative and p o l i t i c a l review." The basic objectives of a PPB system have been i d e n t i f i e d in the Province of Ontario PPBS handbook as follows: "To define departmental objectives c l e a r l y and to relate them to defined needs and goals. To stimulate the i n depth analysis of a l l existing and proposed new programmes in terms of their costs and benefits. To link the planning and budgeting process through the annual review of multi-year plans. To measure actual and planned performance. To provide a systematic way of integrating a l l of these elements in order to arrive at a more e f f e c t i v e system for the a l l o c a t i o n and management of resources..." The e s s e n t i a l aspects of PPBS are given by Rowen as: "A careful s p e c i f i c a t i o n and a systematic analysis of objectives. A search for the relevant a l t e r n a t i v e s , the different ways of achieving these objectives. An estimate of the t o t a l costs of each alternative — both direct and i n d i r e c t costs, i n i t i a l and continuing, including an assessment of those costs that cannot be measured i n d o l l a r terms. An estimate of the effectiveness of each a l t e r n ative, of how closely i t s a t i s f i e s the objectives. A comparison seeking that promises the resources i n  and analysis of the a l t e r n a t i v e s , combination of alternatives that greatest effectiveness for given achieving the objectives."86  -55-  Schultze  o u t l i n e s tuo misconceptions  about the r o l e o f  PPBS by r e f e r r i n g to c r i t i c i s m t h a t i t might be seen as e i t h e r a naive attempt to q u a n t i f y and computerise make every  i n t a n g i b l e items t o  d e c i s i o n i n t o the programmed d e c i s i o n , or as an  arrogant e f f o r t on the p a r t o f l a t t e r day t e c h n o c r a t s to usurp the d e c i s i o n making f u n c t i o n i n a p o l i t i c a l  democracy.  83 As Rouen  suggests,  PPBS i s not d e c i s i o n making by com-  puter, s i n c e most d e c i s i o n making problems are simply not capable of  s o l u t i o n by even the most h i g h l y s o p h i s t i c a t e d mathematical o r  economic t e c h n i q u e s ,  although  c e r t a i n areas o f problems.  these can c o n t r i b u t e g r e a t l y i n  Systematic  a n a l y s i s should not n e g l e c t  a uide range o f human f a c t o r s , but i t s h o u l d not be expected, o r indeed attempt t o , measure those f a c t o r s u h i c h are r e a l l y unmeasurable.  There i s aluays a danger t h a t over zealousness by  o p e r a t i v e s o f the system u i l l  t r y to q u a n t i f y these i n t a n g i b l e s or  ignore the human f a c t o r s , bath o f u h i c h u i l l  r e s u l t i n the d e c i s i o n  makers being m i s l e d o r a t l e a s t l e a d to him being misinformed. danger u i l l  have to be guarded a g a i n s t , and i t i s suggested  a n a l y s i s takes tuo forms, one being the r a t i o n a l ,  This  t h a t any  quantifiable  a n a l y s i s , the other being a s u b j e c t i v e a n a l y s i s o f the p o s s i b l e i n t a n g i b l e consequences o f the v a r i o u s a l t e r n a t i v e s .  N e i t h e r i s PPBS  an attempt to supplant the p o l i t i c a l d e c i s i o n making p r o c e s s , as i t is  not, nor i s i t intended to be, a mechanical  s u b s t i t u t e f o r the  goad judgement, p o l i t i c a l uisJdom or l e a d e r s h i p o f these and  i t i s a fundamental requirement  the broad  p o l i c i e s and guidance  representatives.  o f the democratic  officials,  system t h a t  are i n i t i a t e d by the e l e c t e d  Houever to choose betueen competing c l a i m s on  s c a r c e r e s o u r c e s , some i d e a o f probable outcomes must be c o n s i d e r e d  -56-  i n order to r a t i o n a l i s e t h i s c h o i c e s t maker an i n c r e a s e d the v a r i o u s  decision  chance o f implementing h i s p o l i c i e s through  programme segments.  be able to f u l f i l l  l e a s t g i v i n g the  I t i s suggested that PPBS w i l l  t h i s information  r o l e without being  utilised  to the extent of a mechanical d e c i s i o n maker. In summary t h e r e f o r e perceived  the  aims of PPBS a r i s e from i t s  r o l e of being an e f f e c t i v e apparatus f o r i d e n t i f y i n g  l e g i t i m a t e n a t i o n a l o b j e c t i v e s and  f o r measuring progress towards  B9  t h e i r attainment.  These o b j e c t i v e s should be o p e r a t i o n a l  and  r e a c h a b l e , founded on socioeconomic a n a l y s i s yet r e l y i n g f o r petus and  broad p o l i c i e s l a i d down by e l e c t e d  I t i s not  however d e c i s i o n making by computer i n an attempt  wrest power from the  im-  representatives. to  p o l i t i c i a n s although of course the a n a l y t i c a l  techniques w i l l be even more powerful with i t s usage. iii.  The  Mechanics of a PPBS  T h i s s e c t i o n i s an extension o f f e r e d above to i n c l u d e some of the the  implementation of PPBS w i t h i n The  i n i t i a l step  end  i s to be  i n h i b i t the The if  p r a c t i c a l considerations  a n a l y s i s of  i n each major area of governmental  should not  an output o r i e n t e d  aim  i d e n t i f y the means by which  achieved, as i t i s intended to encourage r a t h e r a n a l y s i s of a l t e r n a t i v e means to achieve the  o b j e c t i v e s should be  in  a government agency.  These o b j e c t i v e s should be  p a r t i c u l a r a c t i o n but  c o n c e p t u a l framework  i s the s p e c i f i c a t i o n and  b a s i c programme o b j e c t i v e s activity.  of the  realistically  a t t a i n a b l e and  of the than  objectives.  i t i s useful  the wording of o b j e c t i v e s suggests a measurement c r i t e r i a  for  -57-  achievement.  T h i s procedure  i n i t s e l f should widen the frame o f  r e f e r e n c e o f government d e c i s i o n makers, s i n c e t r a d i t i o n a l l y few  very  Departments have a p r e c i s e s e t o f o b j e c t i v e s f a r r e f e r e n c e . Within each programme, s p e c i f i c goals should be e s t a b -  lished.  The s p e c i f i c g o a l s which are deemed a p p r o p r i a t e f o r the  f e d e r a l government w i l l r e q u i r e s e l e c t i o n i n the l i g h t o f a compr e h e n s i v e e v a l u a t i o n o f n a t i o n a l needs and o b j e c t i v e s by the democratic  process.  S m i t h i e s makes the f o l l o w i n g o b s e r v a t i o n s : "... N a t i o n a l g o a l s do not emerge f u l l y blown from the head o f Minerva. They are the r e s u l t o f dec i s i o n s reached during the p o l i t i c a l p r o c e s s . But i n r e a c h i n g d e c i s i o n s , p o l i t i c i a n s can be more or l e s s informed by o b j e c t i v e evidence, q u a n t i t a t i v e or q u a l i t a t i v e , concerning the s o c i a l , economic, and p o l i t i c a l consequences o f pursuing such g o a l s . A fundamental assumption i s t h a t they should be so informed."50 When these b a s i c o b j e c t i v e s are i d e n t i f i e d , at l e a s t t e n a t i v e l y , the r e s u l t i n g a c t i v i t i e s are grouped i n t o a programme s t r u c t u r e , which w i l l not n e c e s s a r i l y r e f l e c t form.  the o r g a n i s a t i o n a l  I t w i l l be a p p r o p r i a t e and d e s i r a b l e i n many cases to have  the b a s i c programme c a t e g o r i e s c u t a c r o s s the e x i s t i n g Departmental l i n e s . concerned  traditional  The s t r u c t u r a l aspects o f PPBS are t h e r e f o r e  with e s t a b l i s h i n g a s e t o f c a t e g o r i e s o r i e n t e d p r i m a r i l y  toward "end product" o r "end o b j e c t i v e " a c t i v i t i e s t h a t are meaningf u l from a long range p l a n n i n g viewpoint "end  even i f these so c a l l e d  p r o d u c t s " are i n f a c t i n t e r m e d i a t e when viewed from a more  senior  position. These programme c a t e g o r i e s are merely groupings  o f ,a  Department's a c t i v i t i e s s e r v i n g the same broad o b j e c t i v e or " m i s s i o n " .  -58The  second l e v e l o f i n f o r m a t i o n  c a t e g o r i e s , uhich  comprises the Programme sub-  combine a c t i v i t i e s on  the b a s i s of someuhat  narrower o b j e c t i v e s c o n t r i b u t i n g d i r e c t l y to the broad purpose of the programme category as a whole, with the t h i r d  level  being  the Programme Element, the b a s i c b u i l d i n g block of the PPBS s t r u c ture.  The  element may  be  a s p e c i f i c product t h a t c o n t r i b u t e s  to  91 the Programme's o b j e c t i v e s . The  o b j e c t i v e s should  i d e a l l y be o r i e n t e d towards the  e l i m i n a t i o n o f the problem which gave r i s e to the c o n s t r a i n t s may  programme, but  n e c e s s i t a t e -reduction of scope from f o c u s s i n g  on  the complete s o l u t i o n to a more modest o b j e c t i v e of reducing  a prob-  lem by a s p e c i f i e d amount or l i m i t i n g the area of a p p l i c a t i o n . A v i t a l element i n PPBS i s the  c l e a r and  objective  present-  a t i o n o f a l t e r n a t i v e s . Rawen makes the p o i n t t h a t : "... a p l a n n i n g document t h a t does not present and compare a l t e r n a t i v e ways of a c h i e v i n g the o b j e c t i v e s i s a document t h a t merely t r i e s to make a case f o r a predetermined p o s i t i o n . . . " 9 2 A fully  implemented PPBS should  therefore  provide  of i n depth s t u d i e s on these a l t e r n a t i v e s . form of c o s t - u t i l i t y  studies described  f o r the  preparation  T y p i c a l l y they take  i n s e c t i o n C of t h i s  the  chapter.  As e x p l a i n e d  e a r l i e r these s t u d i e s can only seldom provide  complete  answers, but  are  to  intended  c i s i o n makers concerning  p r i m a r i l y to provide the major trade  information  o f f s and  de-  implications  e x i s t i n g among the v a r i o u s a l t e r n a t i v e s . Although f o r major p r o j e c t s i t i s a d v i s a b l e depth s t u d i e s , a c o n s i d e r a b l e achieved  by a l e s s r i g o r o u s When e v a l u a t i n g  to perform i n -  understanding of a l t e r n a t i v e s can  be  analysis.  a l t e r n a t i v e s , a l l i d e n t i f i a b l e costs  should  -59-  be i n c l u d e d as f a r as p o s s i b l e i . e . the c o s t s must be "systems c o s t s , i n c l u d i n g i n a d d i t i o n to c u r r e n t o p e r a t i n g long range c o s t items as r e s e a r c h  c o s t s , such  and development, c a p i t a l  outlays,  93 training  etc." A PPBS contemplates t h a t each department w i l l r e v i e u i t s  o b j e c t i v e s and conduct programme analyses basis.  on a c o n t i n u i n g  year round  T h i s f a c t t h a t the programme s t r u c t u r e i s not a once and  f o r a l l e x e r c i s e , but a c o n t i n u i n g  process i s w e l l i l l u s t r a t e d by  the f o l l o w i n g diagram a t t r i b u t e d to Quade. Selecting Objectives  Resigning Alternatives Collecting Data  Formulating the Problem Opening new Alternatives  Building Models  \  Reexamining Objectives  Questioning Assumptions  F i g . 2.II  Source:  Weighing Cost Against Effectiveness  /  Testing f o r Sensitivity  PPBS i s a Continuing  Process  E.S.Quade Systems A n a l y s i s Techniques f o r PPB. Monica, C a l i f . 1966, RAND Paper P3322, p. 10.  Santa  -60-  In o r d e r that r e s u l t s of the programme may be and compared with budgeted r e s u l t s , must be u t i l i s e d .  v a r i o u s measurement  criteria.  Volume i n d i c a t o r s : volume or  straightforward size.  indicators  of  ii.  Performance i n d i c a t o r s : measure volume a g a i n s t past r e s u l t s , planned performance and s i m i l a r operations elsewhere.  iii.  Measures of e f f e c t i v e n e s s : i n d i c a t e achievement i n terms of c o n t r i b u t i o n to the programme objective.  iv.  Measures o f b e n e f i t :  a l s o i n d i c a t e programme accomp-  lishment but g e n e r a l l y  i n monetary  The handbook remarks that w h i l s t measures of b e n e f i t ness are u s e f u l  and  i n the p l a n n i n g and programming s t a g e s ,  and volume i n d i c a t o r s are capable s h o r t time p e r i o d s , trol  criteria  The O n t a r i o Government handbook on PPBS o u t l i n e s  four b a s i c c l a s s e s of e v a l u a t i o n "i.  evaluated  of measurement  and are thus more u s e f u l  terms."94 effective-  performance  over r e l a t i v e l y  as an o p e r a t i o n a l  con-  device. The two major p l a n n i n g outputs  o f a PPBS are d e s c r i b e d by  Posner to b e : "i. a m u l t i - y e a r programme and f i n a n c i a l p l a n , to be updated a n n u a l l y , which i s based on the programme s t r u c t u r e and which p r o j e c t s programme output and c o s t s f o r a p e r i o d of years - u s u a l l y f i v e . ii.  The purpose procedure,  a programme memorandum f o r each programme category to be p r o v i d e d a n n u a l l y , p r o v i d i n g a n a l y t i c a l data on the programmes d e s c r i b e d i n the programme and f i n a n c i a l plan."95 o f these documents i s  and i t  to permit a continuous p l a n n i n g  i s r e q u i r e d t h a t the i n f o r m a t i o n system should  p r o v i d e data a p p l i c a b l e  to the progress r e p o r t i n g and c o n t r o l , and  a l s o p r o v i d e the i n f o r m a t i o n r e q u i r e d by the a n a l y t i c a l process —  -61-  e s p e c i a l l y to a i d i n the  development of models t h a t w i l l  making e s t i m a t e s of u t i l i t y and courses of  c o s t of the  permit  a l t e r n a t i v e future '  action.  i v . Impact of PPBS 96 Rowen  suggests that  i f PPBS l e d to nothing more than a  re-examination of i t s o b j e c t i v e s then PPBS would have s t i l l objectives virtually  under the  by each government department,  made a u s e f u l c o n t r i b u t i o n ,  since  the  t r a d i t i o n a l system were never more than  meaningless p l a t i t u d e s ,  (e.g.  "to improve the  quality  of  life"). PPBS should become a v a l u a b l e  a i d f o r managerial c o n t r o l  w e l l as f o r d e c i s i o n making, producing more and  better  information  Systematic  w i l l play  f o r both p o l i t i c i a n s and  two  managers.  important r o l e s , namely the e v a l u a t i o n  programmes, and  i n the  a p p r a i s a l and  as  programme analysis  of e x i s t i n g  i n t e g r a t i o n o f new  proposals,  i n c l u d i n g the  adaption o f e x i s t i n g programmes to complement a d d i t i o n s . 97 However the author d i s a g r e e s with H a l d i when he takes the view t h a t "... i n i t s f u l l y developed s t a t e PPB w i l l become a complete d e c i s i o n making and c o n t r o l system which includes systematic a n a l y s i s . . . " Since i t i s f e l t s t r o n g l y information  to the  fact rather  analagous to  to f i r e the  gun."  t h a t the a n a l y s t ' s  task i s to PRESENT the  d e c i s i o n maker,not make the  decision.  "making the b u l l e t s but  It i s i n  being c a r e f u l  9 8  Novick sees the  impact of PPBS as:  "implementing the c o n c l u s i o n s o f a p o l i t i c a l p h i l osophy through the assignment o f r e s o u r c e s to t h e i r  not  -62-  accomplishment, uiith the advantage o f PPBS being t h a t i t should do t h i s more e f f e c t i v e l y and e f f i c i e n t l y by (1) p r o v i d i n g a framework f o r c l e a r l y d e f i n i n g the a l t e r n a t i v e s , and (2) c r e a t i n g an i n f o r m a t i o n system t h a t w i l l a s s i s t in.measuring c o s t s i n r e l a t i o n to results."59 P o s n e r * ^ s t a t e s t h a t by the s i m p l e s t a plan s t a t e d i n f i n a n c i a l terms — always i n v o l v e d planning  d e f i n i t i o n o f a budget  the f o r m u l a t i o n  o f budgets has  and programming, but the whole purpose  o f the PPBS i s t h a t i t REQUIRES a s y s t e m a t i c s h i p between the three  —  and r a t i o n a l r e l a t i o n -  elements v i z p l a n n i n g ,  programming and  budgeting r a t h e r than merely ASSUMING t h a t such a r e l a t i o n s h i p e x i s t s . Posner goes on to s t a t e "So f a r as the t r a d i t i o n a l budget f u n c t i o n i s concerned, i t can be argued t h a t the planning-programmingbudgeting system does l i t t l e more than modify budget f o r m u l a t i o n as i t has been conceived i n the p a s t . But as programme managers become more deeply i n v o l v e d i n the d e c i s i o n making process they are l e s s l i k e l y to permit budgeting to become a d e s u l t o r y mechanical p r i c i n g and c o m p i l a t i o n e x e r c i s e . " 1 0 1 The  i n s t i g a t i o n o f a f u l l PPBS w i l l i n c r e a s e  the budgeting workload,  s i n c e departmental budgets may r e q u i r e p r e p a r a t i o n one  upon two bases,  f o r o p e r a t i o n a l management c o n t r o l (the r e s p o n s i b i l i t y centre 102  concept),  and the other  f o r the PPBS approach.  found t h a t i n the U.S. e f f o r t s are being operating budget.  l e v e l s d i r e c t l y against Except i n r a r e i n s t a n c e s ,  McGilvery  has  made to gather c o s t s a t  elements o f the o v e r a l l programme however, these elements do not  c o i n c i d e with the t r a d i t i o n a l o r g a n i s a t i o n a l r e s p o n s i b i l i t y c e n t r e d arrangements f o r accomplishing He presents  work and i n c u r r i n g c o s t s .  the problem o f d e s i g n i n g  a c a s t account s t r u c -  t u r e as f o l l o w s : "a) Should the cost s t r u c t u r e be a d i r e c t e x t e n s i o n of a PPB s t r u c t u r e down t o the lowest l e v e l s a f operation, or  -63-  b)  Should the conventional concepts of responsi b i l i t y accounting dictate the structure design?"  It i s suggested that i f a department does b u i l d i t s management cost accounting system around the PPB element structure, the following consequences can be forseen: "1.  The operating levels Df management w i l l not have an effective management control system.  2.  The accounting system w i l l not produce cost reports which are useful to operating management.  3.  Cost accounting systems which already exist w i l l continue to e x i s t , r e s u l t i n g in d u p l i c a t i o n .  4.  If element costing proves not to be viable i t may be abandoned or overhauled at great expense.  5.  I t - i s probable that programme element cost structures w i l l be found not to satisfy the statutory requirements underlying the auditing function."103 104  Posner  indicates that the present accounting systems are  geared to current cost or obligation concepts, and to organisational, appropriation and other breakdowns designed to f i t t r a d i t i o n a l patterns.  These cannot be discarded because f i n a n c i a l controls and  accounting information w i l l continue to be required by organisational, l i n e object and a c t i v i t y c l a s s i f i c a t i o n s in the forseeable  by p o l i t i c i a n s , at least  future u n t i l a PPBS structure becomes a generally  acceptable organisational form.  At the same time, however, PPBS  w i l l stimulate governmental accounting by requiring meaningful cost projections and analysis making use of h i s t o r i c a l f i n a n c i a l departmental records.  Posner suggests that cost summarisation w i l l have  to be furnished i n at least three major  categories:  " T r a d i t i o n a l budget categories - by appropriation, a c t i v i t i e s , projects and object classes Organisational categories PPBS programme c l a s s i f i c a t i o n s and sub c l a s s i f i c a t i o n s . "  T h i s does not mean a t h r e e f o l d i n c r e a s e of the data p r o v i d e d  i n workload s i n c e much  under the t r a d i t i o n a l system may  be  easily  r e a l l o c a t e d to o r g a n i s a t i o n a l or programme budget c a t e g o r i e s , it  should  be noted t h a t there  j o i n t c o s t s to any  other  As r e p o r t e d was  but  i s always a problem of a l l o c a t i n g  than the broadest cost  by the U.S.  sector.  J o i n t Economic Committee^^, i t  a n t i c i p a t e d by the Hoover Commission t h a t an a c t i v i t y  or  programme c l a s s i f i c a t i o n would be e q u a l l y u s e f u l f o r both budgetary and it  o r g a n i s a t i o n a l s t r u c t u r e s , but an a c t i v i t y c l a s s i f i c a t i o n , i f is strictly  a p p l i e d , may  diverge  from the  l i n e s of r e s p o n s i b i l i t y  w i t h i n the o r g a n i s a t i o n , r e s u l t i n g i n l a c k of c o n t r o l s at the ational level.  U l t i m a t e l y PPBS w i l l have an impact over the  range of government management, not merely the f i n a n c i a l and  indeed the  initial  emphasis was  gramme and  p o l i c y planning  continuing  s t u d i e s and  and  operfull  process,  on the need f o r a c e n t r a l p r o -  s t a f f to s e t up  economic analyses  an e f f e c t i v e system f o r  of proposed programmes  t h e i r s o l u t i o n by f e a s i b l e a l t e r n a t i v e s o l u t i o n s . R e f e r r i n g to the composition of f u t u r e government  pro-  107 grammes, Ueidenbaum shift.  He  suggests t h a t there w i l l be a  r e f e r s to the  i n d i c a t i o n s o f p r e l i m i n a r y work being  s o p h i s t i c a t e d t o o l s such as c o s t - u t i l i t y g e n e r a l may  considerable  and  systems a n a l y s i s i n  i n c r e a s i n g l y show t h a t c e r t a i n government programmes  y i e l d a greater  economic r e t u r n than do o t h e r s .  ments i n "human r e s o u r c e s "  e.g.  education  and  So c a l l e d  h e a l t h , are  investlikely  to y i e l d e s t i m a t e d b e n e f i t s s u b s t a n t i a l l y i n excess of t o t a l and  that  costs,  by c o n t r a s t , some o f the more t r a d i t i o n a l p u b l i c works schemes  such as i r r i g a t i o n , power and seem l i k e l y to show up  multipurpose water resource  far less favourably.  projects  It i s therefore  -65-  suggeated  t h a t there w i l l be a s h i f t  c a p i t a l investment  from p h y s i c a l to human  w i t h i n the p u b l i c s e c t o r , although t h i s w i l l  s u b j e c t to m a r g i n a l a n a l y s i s to ensure of p r o j e c t types i s maintained We  t h a t the economic balance  at an o p t i m a l  level.  have d i s c u s s e d the change i n the r o l e of  w i t h the advent  from the merely  budgeting  of PPBS, with subsequent o v e r h a u l of the  accounting p r o c e s s .  I t i s suggested  be  traditional  t h a t accounting w i l l change  p a s s i v e r e c o r d keeping of expenditures to a more  dynamic i n f o r m a t i o n system, e n a b l i n g d e c i s i o n makers t o c a l l f o r economic s t u d i e s i n order to enable them to make informed r a t h e r than merely  intuitive decisions.  B l a c k w r i t e s of U.S.  experience  "...The p o s i t i o n of the E x e c u t i v e has probably been strengthened v i s - a - v i s Congress by the depth o f p l a n n i n g s t r u c t u r e p r o v i d e d by PPBS. To the extent t h a t PPBS work i s w e l l done, the r e s u l t may be a s h i f t i n power toward the E x e c u t i v e Branch."IGQ 109 LJeidenbaum tendency  comments t h a t t h e r e i s l i k e l y to be a reduced  f o r d e c i s i o n s on a u t h o r i s i n g and f i n a n c i n g  government programmes to be made i n i s o l a t i o n  (the  individual piece-meal  approach) on the b a s i s of s u b j e c t i v e judgement. Shick concludes t h a t "... the case f o r PPBS r e s t s on the assumption t h a t the form i n which i n f o r m a t i o n i s c l a s s i f i e d and used governs the a c t i o n s of budget makers, and, c o n v e r s e l y , t h a t a l t e r a t i o n s i n form w i l l produce d e s i r e d changes i n behaviour. Take away the assumption t h a t behaviour f o l l o w s form, and the movement f o r PPB i s reduced to a t r i v i a l m a n i p u l a t i o n o f techniques — form f o r form's sake without any s i g n i f i c a n t b e a r i n g on the conduct o f budgetary a f f a i r s . " 1 1 0 However, as mentioned e a r l i e r , care s h o u l d be taken to ensure  that  the process of government by e l e c t e d r e p r e s e n t a t i v e s does not  dis-  i n t e g r a t e to being merely  the rubber stamping  of executive decisions,  -66-  although i f the p o l i c i e s of parliamentarians i t l y by the staffs of public offices simplify the range of alternatives  are followed e x p l i c -  this u i l l  offered for  considerably consideration.  The impacts of PPBS are thus seen as r a t i o n a l i s i n g the decision process, possibly altering the composition of government expenditures,  and certainly having an effect upon public accounting  systems. v. Possible Problem Areas of PPBS This section discusses some possible problem areas u i t h PPBS since i t i s only by consideration of possible problems (some of uhich are common to the implementation of AMY neu system u i t h i n a large organisation)  that tentative solutions can be formulated to  ease the d i f f i c u l t i e s  faced.  One very r e a l problem i s a semantic one, since the term PPBS has not yet become standardised  through general use.  As McKean  and AnBhen s t a t e : " . . . To some i t (PPBS) suggests no more than a restructuring of budget e x h i b i t s , accumulating costs in more meaningful categories. . . . . To others i t implies a longer time horizon than i s commonly found in the t r a d i t i o n a l budget, u i t h i t s forward projection limited to one year. . . . . To s t i l l others i t includes, in addition, the use of cost u t i l i t y analysis, a l o g i c a l and measuring r e l a t i o n of inputs to outputs. . . . . To others (and the author i s included here) i t implies a l l the foregoing plus arrangements for enforcing the a l l o c a t i v e decisions through appropriate implementation p r o v i s i o n s . . . " I l l The defining of objectives u i l l certainly prove to be a 112 difficult  task.  Schick  remarks that PPBS does not offer  help  in the area of ultimate goals for public policy or in any decision  -67-  between alternative g o a l 9 .  Hinrichs notes the following p i t f a l l s  in the setting of objectives: "1.  Regarding means as ends: obviously one cannot use as the ultimate end;, happiness or s a t i s f a c t i o n ( i f indeed t h i s i s the ultimate end) for every problem. One i s always involved in choosing a preultimate or prior end which i s one of many means to a further end. The issue i s how far back to go...  2.  Not regarding means as ends: Paradoxical with the f i r s t extreme above of focussing on means as ends (e.g. maximising f e r t i l i z e r instead of food), the second c l a s s i c faux pas i s not to consider a means an end when indeed i t i s . (An example i s cited whereby e f f e c t i v e law guarantees rights rather than maximises convictions per d o l l a r spent.)  3.  To measure i s to know, but not necessarily the right thing: Quantification, i f improperly used may lead to distorted r e s u l t s in the art and science of government decision making . ..."H3  Troubles with the programme structure are thought inevitable by 114  McKean and Anshen  due to the p r a c t i c a l d i f f i c u l t i e s of making  the programme elements independent (which i s desirable when considering costs and u t i l i t i e s associated with the separate elements). The analysis of alternatives i s undoubtably an area where problems w i l l a r i s e .  Unquestionably i t i s easier to measure costs  and benefits that are amenable to market place assessment than i t i s to measure the true " s o c i a l cost" or "shadow p r i c e " of the more intangible e f f e c t s of public spending that are not subjected to market price determination.  Many d i f f i c u l t i e s are involved i n  selecting the measurement of output or performance of a p a r t i c u l a r programme.  Governments should be concerned with the quantity of  benefit accruing to each group, since they w i l l be interested i n broad s o c i a l issues of the dispersion of u t i l i t y or income transfers within society as well as the t o t a l benefits.  This may  lead to a  -68-  use o f " u e i g h t i n g s " to be a p p l i e d to b e n e f i t s t o each group t o achieve  any d e s i r e d socioeconomic g o a l s .  particular  The problem  of timing o f f u t u r e c o s t s and b e n e f i t s i s complex, as o f course is  the f o r m u l a t i o n o f the a p p l i c a b l e d i s c o u n t r a t e to be a p p l i e d ,  as d i s c u s s e d  i n s e c t i o n C of t h i s chapter.  In the case o f most  l a r g e new a c t i v i t i e s the common p r a c t i c e to date has been to estimate  and request  funding  f a r only f i r s t  year c o s t s , with  little  115 more than guesses or vague p r o j e c t i o n s f o r l a t e r time p e r i o d s . P u b l i c a d m i n i s t r a t o r s have l i m i t e d experience  of p r o j e c t i n g costs  or b e n e f i t s over say a f i v e year p e r i o d , and u i l l t h i s e x p e r t i s e i f meaningful analyses An  important  are to be  f a c t o r i s that a l l analyses  need to gather prepared. r e q u i r e data, and  under the t r a d i t i o n a l budgeting systems u s i n g l i n e o b j e c t s as items of e x p e n d i t u r e s ,  the i n f o r m a t i o n u i l l  amenable t o d i r e c t u t i l i s a t i o n for  g e n e r a l l y not be i n a form  i n e i t h e r the assessment o f the need  or the c o s t s o f programmes.  T h i s becomes e v i d e n t i n chapter  4,  uhere a c o s t i n g a n a l y s i s i s d i s c u s s e d , and the problems o f o b t a i n i n g the r e l e v a n t c o s t s (uhich may vary in  a practical The  f o r d i f f e r e n t s t u d i e s ) are seen  setting.  use o f a "zero base" budget, uhere every  j u s t i f i e d , r a t h e r than the " l a s t year's u s e f u l , but may be c o n s i d e r e d  item i s  p l u s X%" concept uould be  too expensive i n the s h o r t run, a t  l e a s t u n t i l PPBS have proved t o be implementable.'''^ have assumed t h a t uhat i s s t r u c t u r e d i n PPBS u i l l  Many proponents  automatically  become t r a n s l a t e d i n t o r e a l i t y . As Black goes on to s a y : "The complexity o f government o b j e c t i v e s i s obvious enough, as i s the o r g a n i s a t i o n a l complexity i n h e r e n t i n the F e d e r a l s t r u c t u r e . That e x t r a o r d i n a r y problems o f a c h i e v i n g p l a n implementation a r i s e from t h i s  -69-  s t r u c t u r e uas the t h r u s t o f Harry S. Truman's famous remark, quoted by R i c h a r t Neustadt, "Poor Ike, h e ' l l say 'dD t h i s , do t h a t ' , and nothing m i l l happen", s u g g e s t i n g t h a t the implementation s t r u c t u r e i n m i l i t a r y s e r v i c e s was s u b s t a n t i a l l y more automatic..." T h i s leads to the here, namely the  f i n a l problem area  i n s t i t u t i o n a l problems.  that i s  considered  It i s i n e v i t a b l e that  PPBS i s viewed throughout the o r g a n i s a t i o n a l bureaucracy as a t h r e a t to e x i s t i n g , f a m i l i a r and m a n i p u l a t a b l e arrangements.  Ide should  the a d m i n i s t r a t i v e  therefore  institutional  a n t i c i p a t e some d i s s e n t  echelons, p o s s i b l y as a r e s u l t of l a c k of  congruence between those of the p o l i c y makers and istrators.  But  within  McKean and  Anshen s t a t e  goal  i n d i v i d u a l admin-  that  " . . . t h i s i s i n no sense an argument f o r withdrawing the p r o p o s a l (of PPBS). I t does however urge the importance o f frank assessment of f u t u r e problems and i m a g i n a t i v e design of p o l i t i c a l , o r g a n i s a t i o n a l , and s o c i a l s t r a t e g i e s to b u i l d support f o r the p r o p o s a l i n both i t s acceptance and i n s t a l l a t i o n phases, and to implement i t i n such a way as to maximise i t s usefulness..."118 However, i n the event t h a t i t i s c o n s i d e r e d the process to make more e f f e c t i v e use i t w i l l become l e s s c o s t l y to ignore "bargaining"  necessary to c e n t r a l i s e  of the budgetary apparatus,  dissent, since i f less  i s necessary, neglecting  c r i t i c i s m costs l e s s .  With  i n c r e a s i n g c e n t r a l i s a t i o n , t h e r e f o r e , programmes are more n e a t l y t a i l o r e d to one  view of the  may  tend to make the  was  the case, and  "man  on the s p o t " .  f u t u r e , and  one  utility  function.  f i e l d p o s i t i o n s l e s s rewarding than  previously  a l s o to underscore the depth o f knowledge of The  the  author b e l i e v e s , t h e r e f o r e , t h a t i t i s  f a r more d e s i r a b l e to u t i l i s e  the e x p e r t i s e of the  w i t h i n a w e l l c o n c e i v e d , designed and f o r d e c e n t r a l i s a t i o n and  This  delegation  field  operatives,  implemented PPBS a l l o w i n g  r a t h e r than to c e n t r a l i s e the  -70-  t o t a l p r o c e s s , r i s k i n g the  a l i e n a t i o n of the f i e l d  T h i s s e c t i o n , uhich o f PPBS (some of uhich a large diverse concludes the  are  has  discussed  some of the  a p p l i c a b l e to ANY  organisation,  staff.  neu  p r i v a t e as u e l l as  problems  procedures i n governmental)  author's d i s c u s s i o n of the t h e o r e t i c a l background  to PPBS.  E.  Summary  T h i s chapter has the very e x i s t e n c e  discussed  the b a s i c reasons  of a p u b l i c s e c t o r , and  has  underlying  examined  the  t r a d i t i o n a l budgeting systems found u i t h i n them u i t h t h e i r over emphasis on i n p u t measurements (expenditures  of c a p i t a l , manpouer  e t c . ) r a t h e r than a proper a n a l y s i s of r e l a t e d i n p u t s and PPBS uas  then d e s c r i b e d  i n d e t a i l u i t h a consideration  h i s t o r i c a l background d a t i n g from World War e n t a t i o n u i t h i n the U.S.  outputs.  of i t s  I I through i t s implem-  Department of Defence i n the e a r l y 1960's  to i t s i n c e p t i o n u i t h i n the Canadian F e d e r a l Government framework i n 1970-71.  The  aims and  mechanics of the system have been d i s -  cussed, p r i o r to an attempt to f o r s e e f e d e r a l government s t r u c t u r e and  i t s impact not only on  procedures, but  the  also a passible  s h i f t i n the type a f programmes undertaken with t h i s more r a t i o n a l approach. F i n a l l y some of the p o t e n t i a l problem areas have been discussed  i n an e f f o r t to spot  e f f e c t on the  these i n advance, and minimise  implementation and  operation  their  o f a PPBS i n p r a c t i c e .  -71-  Chapter 3 following w i l l consider the s t r u c t u r a l framework and budgeting procedures within the Canadian Federal* Government in order to link the material presented in this chapter to a study within a f i e l d organisation of a Federal Department comprising chapter k and the appendix of t h i s paper.  -72-  F.  References  1.  M. J . Brennan, 1970) p. 401.  Theory o f Economic  2.  J . M. 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Department o f Defence D i r e c t i v e Number 7045-1, October 30, 1964.  77.  R. N. Grosse and A. Proschan, "The Annual C y c l e : PlanningPragramming-Budgeting" i n Defence Management e d . S. Enke (Neu J e r s e y : P r e n t i c e - H a l l , 1967) pp. 32-34.  78.  The White House, I n t r o d u c t i o n o f New Government-Wide and Budgeting System, August 25, 1965, p. 3.  79.  P l a n n i n g , Programming, Budgeting Guide, 1969 (Ottaua: Canada, 1969) 113 pp.  80.  Subcommittee on Economy i n Government o f J o i n t Economic Comm i t t e e , U.S, Congress, "The Planning-Programming-Budgeting System: Progress and P o t e n t i a l s " , i n Programme Budgeting and B e n e f i t - C o s t A n a l y s i s ed. H.H. H i n r i c h s and G. M. T a y l o r (Pacific Palisades: Goodyear, 1969) p. 372.  81.  G. B l a c k , The A p p l i c a t i o n o f Systems A n a l y s i s t o Government Operations (Washington D.C.: N a t i o n a l I n s t i t u t e o f P u b l i c A f f a i r s , 1966, p. 153.  82.  As quoted by B. Posner, "Planning-Programming-Budgeting", Accountant 15, Summer 1966, pp. 10-11.  83.  J . H a l d i , "Programme M o n i t o r i n g , E v a l u a t i o n and C o n t r o l " i n Programme Budgeting and B e n e f i t - C o s t A n a l y s i s ed. H.H.Hinrichs and G. M. T a y l o r ( P a c i f i c P a l i s a d e s : Goodyear, 1969) p. 339.  84.  B. Mosher, Programme Budgeting: Theory and P r a c t i c e with P a r t i c u l a r Reference to the U.S.Department o f the Army, p. 237.  85.  E f f e c t i v e Management through PPBS ( P r o v i n c e  States' (IMeu  Planning Govt, o f  o f Ontario,  Federal  1969) p.3,  -77-  86.  H. Rouen, " O b j e c t i v e s , A l t e r n a t i v e s , Cost and E f f e c t i v e n e s s " , i n Programme Budgeting and B e n e f i t - C o s t A n a l y s i s ed. H.H. H i n r i c h s and G. M. T a y l o r ( P a c i f i c P a l i s a d e s : Goodyear, 1969) p. 83.  87.  C. L. S c h u l t z e ,  88.  H. Rouen, op c i t . ,  89.  A. S c h i c k , "Systems P o l i t i c s and Systems Budgeting" i n Planning Programming Budgeting ed. F. J . Lyden and E.G. Chicago: Markham, 1972) pp. 78-99.  "why  B e n e f i t Cost A n a l y s i s ? " i n I b i d . , p.  6.  pp. 83-84.  Miller  90.  A. S m i t h i e s , " O u t l i n e f o r D i s c u s s i o n " , (unpublished prepared f o r PPB seminar, 1966).  91.  M. L. Weidenbaum, "Programme Budgeting: Applying Economic A n a l y s i s to Government Expenditure D e c i s i o n s " , Business and Government Review 7, July-August 1966, p. 27.  92.  H. Rowen, op.  93.  B. Posner, op. c i t . , p.  94.  E f f e c t i v e Management through PPBS (Province of O n t a r i o ,  95.  B. Posner, op. c i t . ,  96.  H. Rowen, op. c i t . , p.  97.  J . H a l d i , "Programme M o n i t o r i n g , E v a l u a t i o n and C o n t r o l " i n Programme Budgeting and B e n e f i t - C o s t A n a l y s i s , H.H. H i n r i c h s and G. M. T a y l o r ( P a c i f i c P a l i s a d e s : Goodyear, 1969) p. 339.  98.  P. J . Royce "Some P r a c t i c a l Problems of Cost B e n e f i t A n a l y s i s f o r Major Highway P r o j e c t s " (unpublished paper, 1972) p. 2.  99.  M. Anshen "The F e d e r a l Budget as an Instrument f o r Management and A n a l y s i s " , i n Programme A n a l y s i s and the F e d e r a l Budget ed. D. IMovick (Cambridge: Harvard U n i v e r s i t y Press, 1965) p.18.  100.  B. Posner, op. c i t . , p.  c i t . , p.  85. 13.  pp. 25-28.  p.  paper  1969)  13. 84.  14.  101. Loc. c i t . 102.  F. E. M c G i l v e r y , "Programme and R e s p o n s i b i l i t y Cost Accounting", P l a n n i n g , Programming, Budgeting, ed. F. J . Lyden and E.G. M i l l e r (Chicago: Markham, 1972) p. 336.  103.  I b i d . , pp. 336-337.  104.  B. Posner, op. c i t . ,  105.  I b i d . , p.  18.  p.  17.  -78106.  Subcommittee on Economy i n Government o f J o i n t Economic Committee U.S.Congress, "The Planning Programming-Budgeting System: Progress and P o t e n t i a l s " , i n Programme Budgeting and B e n e f i t - C o s t A n a l y s i s ed. H.H.Hinrichs and G.M.Taylor ( P a c i f i c P a l i s a d e s : Goodyear 1969) pp. 372-374.  107.  M. L. Ueidenbaum,  108.  G. Black, The A p p l i c a t i o n o f Systems A n a l y s i s to Government Operations (Washington D.C.: N a t i o n a l I n s t i t u t e o f P u b l i c A f f a i r s , 1966) p. 160.  109.  M. L. kleidenbaum, op. c i t . , p. 29.  110.  A. S c h i c k , "The Road to PPB: The Stages o f Budget Reform", i n P l a n n i n g , Programming, Budgeting, ed. F. J . Lyden and E. G. M i l l e r (Chicago: Markham, 1972) pp. 36-38.  111.  R. N. McKean and M. Anshen " L i m i t a t i o n s , R i s k s , and Problems (of Programme B u d g e t i n g ) " i n Programme A n a l y s i s and the F e d e r a l Budget, ed. D. Novick (Cambridge: Harvard U n i v e r s i t y P r e s s , 1965) p. 286.  112.  A. S c h i c k , "Multipurpose Budget Systems" i n Programme Budgeting and B e n e f i t - C o s t A n a l y s i s , ed. H.H. H i n r i c h s and G.M.Taylor ( P a c i f i c P a l i s a d e s : Goodyear, 1969) p. 359.  113.  H. H. H i n r i c h s , "Government D e c i s i o n Making and the Theory of B e n e f i t - C o s t A n a l y s i s " , i n I b i d . , pp. 12-13.  114.  R. N. McKean and M. Anshen, op. c i t . , pp.  115.  M. Anshen, "The F e d e r a l Budget as an Instrument f o r Management and A n a l y s i s " i n , Programme A n a l y s i s and the F e d e r a l Budget, ed. D. Novick, (Cambridge: Harvard U n i v e r s i t y Press, 1965) p.13.  116.  G. B l a c k ,  117.  Loc. c i t .  118.  R. N. McKean and M. Anshen, op. c i t . , p. 307.  op. c i t . , p. 29.  291-302.  dp. c i t . , p. 160.  CHAPTER  3  THE FEDERAL GOVERNMENT CONTEXT , HIGHLIGHTING THE DEPARTMENT OF ENVIRONMENT, WITH PARTICULAR REFERENCE TO MARINE SCIENCES DIRECTORATE  A.  Introduction  T h i s chapter f a c u s s e s an the o p e r a t i o n a l form o f f i n a n c i a l and d e c i s i o n making w i t h i n the F e d e r a l Government. a t t e n t i o n i s p a i d to the r o l e s o f the Treasury Board  Particular as both the  Cabinet's committee on the expenditure budget,and management, i n the implementation  o f PPBS.  The broad g o a l s o f the F e d e r a l Govern-  ment recommended by the P r e s i d e n t o f the Treasury Board  f o r Cabinet  c o n s i d e r a t i o n i n March 1972 are summarised, before examining the f o r m a t i o n , o r g a n i s a t i o n and g o a l s s e t f o r the Department o f the Environment f i r s t 1970,  announced by the Prime M i n i s t e r on October 9 t h ,  but o n l y o f f i c i a l l y  coming i n t o being on J u l y 11th, 1971,  f o l l o w i n g proclamation o f the Government O r g a n i s a t i o n Act 1970. A s m a l l subset of the Department, Marine S c i e n c e s  Direct-  o r a t e i s i n v e s t i g a t e d i n some d e t a i l r e g a r d i n g i t s g o a l s (as y e t only i n a f o r m a t i v e stage) and e f f o r t s being made at the s e n i o r l e v e l s to implement the recommendations o f the Treasury r e g a r d i n g PPBS.  Board  -80-  B. The  Canadian F e d e r a l Government and  the Role of  the  Treasury  Board  The  O r g a n i s a t i o n Chart presented  as F i g . 3.1  f o r the  Government of Canada shows the o r g a n i s a t i o n as at A p r i l 1971, to the formation of  the Department of  prior  the Environment d i s c u s s e d  i n some d e t a i l l a t e r i n t h i s chapter, but g i v e s an i n d i c a t i o n the scope o f the F e d e r a l Government, and  does r e f l e c t the  of  import-  ance of the Treasury Board i n i t s s t a f f f u n c t i o n . The  o v e r a l l d i r e c t i o n of government stems from the Prime  M i n i s t e r , and Doern* w r i t e s t h a t "compared to p r e v i o u s Prime Mini s t e r s Mr.  Trudeau has a much more e x p l i c i t philosophy of p o l i c y  making", and  i n h i s campaign f o r the l e a d e r s h i p of the L i b e r a l p a r t y  he s t r e s s e d the need f o r a government by l o g i c r a t h e r than passion.  In areas such as w e l f a r e , housing,  Indian p o l i c y ,  by and  f o r e i g n ownership of Canadian i n d u s t r y , s t u d i e s and task f o r c e s were launched  to gather b a s i c data, and to conduct  thorough reviews  of  2 past programmes, present and Mr.  future goals.  Trudeau's d e s i r e to r a t i o n a l i s e the p o l i c y making  s t r u c t u r e r a t h e r t h a t f o l l o w the i n c r e m e n t a l approach of t r a d i t i o n a l budgeting  i s best r e f l e c t e d  i n h i s statement  at a press  conference  i n August 1969 when he s t a t e d : "...and some of the programmes — i t ' s r e a l l y i n c r e d i b l e when you begin to look at these i n d e t a i l — some of the programmes were s t a r t e d back i n the 1920's — to meet a r e a l need t h e n . But they no longer have the same j u s t i f i c a t i o n . And there are o t h e r needs which are g r e a t e r , which we cannot meet because we don't have the wherewithal without r a i s i n g taxes ... So one of the purposes of these v a r i o u s reviews of the p r e s e n t government i s because we want to know more o f what we are doing, and become more e f f i c i e n t i n i t ..."3  THE  GOVERNMENT |  THE SOVEREIGN  OF  CANADA  |  Tn£ GOVERN0* GENERAL  | IEGISLJ-TUREH  JUDICIARY | I ln[ PPiMt ViMSTER~]  r-"%-.-h  ____5"__E]  DEPARTMENTS AND AGENCIES ]  35 §§ E  zc  fCr  D  tlsJ  4Hf]  F i g . 3.1  Source:  {Ml  ^ 1  The Government o f Canada - O r g a n i z a t i o n Chart  S t a t i s t i c s Canada - Canada Year Book 1972 (Ottawa, 1972)  p. 138.  -82-  Houever the a d d i t i o n o f f o r m a l p l a n n i n g u n i t s to both the Prime M i n i s t e r ' s O f f i c e and the P r i v y C o u n c i l O f f i c e although Mr.  Trudeau's p h i l o s o p h y are r e a l l y  t h a t have been i n t e r n a l l y Ue  a f o r m a l i s a t i o n of r o l e s  developing i n previous years.  t h e r e f o r e have a Premier  formal p l a n n i n g and examination realisation  reflecting  uiho r e c o g n i s e s the need f o r  of Federal o b j e c t i v e s u i t h  t h a t o n l y by a r e v i s i o n o f the t r a d i t i o n a l  system o f expenditure budgeting  the  incremental  can these o b j e c t i v e s be  efficiently  implemented. The from  c e n t r a l r o l e o f the Treasury Board  i n t h i s aim  i t s s t a t u s as the C a b i n e t ' s committee on both the  Budget and Management.  stems  Expenditure  Johnson u r i t e s :  "As the Committee on the Expenditure Budget i t i s f o r the Treasury Board to propose to Cabinet the a l l o c a t i o n of funds as between the myriads o f competing programmes and p r o j e c t s , t a k i n g i n t o account t h r e e t h i n g s : the p r i o r i t i e s o f the government and i t s broad p o l i c y d i r e c t i o n s ; the e f f e c t i v e n e s s o f the programmes i n a c h i e v i n g the government's o b j e c t i v e s , and the e f f i c i e n c y with which the programmes are being a d m i n i s t e r e d . The j o b , i n s h o r t , i s to propose an expenditure p l a n which at one and the same time r e p r e s e n t s an e x p r e s s i o n of the government's p o l i c i e s and p r i o r i t i e s , and r e s u l t s i n the optimum a l l o c a t i o n o f the t a x p a y e r s ' money i n terms o f value r e c e i v e d f o r each d o l l a r s p e n t . " 5 Turning to i t s r o l e as the C a b i n e t ' s Committee on Management Johnson writes: "The job o f the Treasury Board as the Cabinet Committee on Management,on the other hand, i s to e s t a b l i s h on b e h a l f o f the government the a d m i n i s t r a t i v e p o l i c i e s or r e g u l a t i o n s (the c o n s t r a i n t s ) u h i c h are seen by M i n i s t e r s as being d e s i r a b l e i n g u i d i n g or governing departments i n the use of the p u b l i c funds u h i c h have been a l l o c a t e d to them"6 Considering f i r s t l y  the Expenditure Budgeting  r o l e of the  Board, the budget i s seen as the meeting p o i n t o f the  Treasury  decision  making p r o c e s s , the p o i n t at u h i c h a l l o f the government's d i v e r s e  -83p r i o r i t i e s , p o l i c i e s and programmes must somehow be brought gether as an i n t e g r a t e d and meaningful  unit.  A conscious  to-  effort  has been made w i t h i n the Government to develop mechanisms f o r ensuring t h a t the Treasury Board  and i t s S e c r e t a r i a t are  aware o f the programme d e c i s i o n s and  the emerging  fully  priorities  of other Cabinet Committees, a l l of which must be approved  in  p r i n c i p l e by the Cabinet, u s u a l l y p r i o r to c o n s i d e r a t i o n by Treasury Board. of o f f i c i a l s  T h i s i s achieved to some extent by the  member of the committee),  or to r e p o r t to him  either  ( i f he i s a  the f i n a n c i a l  i m p l i c a t i o n s of p r o p o s a l s under d i s c u s s i o n .  sures t h a t at both m i n i s t e r i a l and o f f i c i a l Board  attendance  at each of the f u n c t i o n a l committees of Cabinet,  as a d v i s o r s to the P r e s i d e n t of the Treasury Board  managerial  the  l e v e l the  and  T h i s en-  Treasury  and i t s S e c r e t a r i a t are aware o f the programme p r o p o s a l s  which have been approved  by Cabinet Committees, as w e l l as the  f a c t o r s and p r i o r i t i e s emerging i n each o f the p o l i c y The  areas.  t r a d i t i o n a l a l l o c a t i v e mechanism i n the F e d e r a l Govern-  ment framework w i l l now  be d i s c u s s e d , b e f o r e t u r n i n g to the Treasury  Board's Management f u n c t i o n . The  f i s c a l framework i s the product of d i s c u s s i o n s of the  Cabinet Committees on Economic P o l i c y , and P r i o r i t i e s and  Planning,  based on p r o p o s a l s submitted by the M i n i s t e r o f Finance, who pares recommendations as t o the a p p r o p r i a t e o v e r a l l f i s c a l f o r the government.  These recommendations are based on the  pre-  policy latest  e v a l u a t i o n by the Department of Finance of the economic outlook f o r the f i s c a l year i n q u e s t i o n , i n c l u d i n g p r o s p e c t i v e revenues and e x p e n d i t u r e s .  Having  examined these p r o j e c t i o n s i n r e l a t i o n to  such c r i t e r i a as the r a t e o f growth o f the economy, employment  -84-  l e v e l s , p r i c e s t a b i l i t y , e t c . , the Department then makes s p e c i f i c proposals as to whether the economy should be s t i m u l a t e d or  con-  t r o l l e d , and the extent to which t h i s should be accomplished  by  t a x i n g or expenditure  changes.  M i n i s t e r s decide, on the b a s i s of  these p r o p o s a l s , the government's f i s c a l p o l i c y f o r the coming year, and s p e c i f i c a l l y what l e v e l s should be s e t f o r the s u r p l u s or d e f i c i t , b e a r i n g i n mind the t o t a l cash  budgetary  requirements  o f the government. In a r r i v i n g at these f i g u r e s , the expected  l e v e l s of  revenues are s e t , and t a r g e t l e v e l s of expenditure are e s t a b l i s h e d . These two  d e c i s i o n s c o n s t i t u t e the f i s c a l  framework, which a f t e r  a p p r o v a l by the C a b i n e t , w i l l form the Treasury Board's c o n s t r a i n t s i n i t s task of a l l o c a t i n g these agreed revenues and borrowings  among  a l l the competing expenditure c l a i m s f o r the p e r i o d . Given the enormous q u a n t i t y of programmes i n v o l v e d i n the area o f government, the range o f c h o i c e open to the Treasury  Board  must c l e a r l y be i d e n t i f i e d and to some extent narrowed to manageable p r o p o r t i o n s .  To enable t h i s , the government has adopted  a  "three budget system: which d i s t i n g u i s h e s between the programmes which have a l r e a d y been approved i t u r e budget (the "A" budget);  and are p a r t of the present expend-  those which have yet to be  or i n c o r p o r a t e d i n the budget (the "B" budget),  and f i n a l l y  approved those  e x i s t i n g programmes which are of lowest p r i o r i t y and might be dropped or reduced  i n s c a l e to make room f o r new  pected to c o n t r i b u t e more e f f e c t i v e l y i v e s (the "X" The  programmes which are  ex-  to the government's o b j e c t -  budget). "A" budget, which i s c a l c u l a t e d f i r s t  c y c l e , r e f l e c t s the c o s t o f merely  i n the  budgetary  c o n t i n u i n g present programmes  -85-  at the existing l e v e l s , with an allowance for both increasing expenditures required by inflationary affects,  and changes in volume  of service that may be required as a result of increases i n population (for example). The "B" budget represents new programmes, or improvements to the quality of existing programmes, which are being proposed by i n d i v i d u a l ministers for the next f i s c a l period (and i f major in .character w i l l have been discussed by the appropriate functional committee of the Cabinet).  These are the programmes which, along  with any potential tax cuts, must compete for any funds estimated to be available for the year in excess of the "A" budget. The "X" budget comprises a l i s t of those programmes within the "A" budget that contribute least to s o c i a l welfare, and result from an examination of the current programme either by the respective Department or more usually by the Treasury Board.  The Treasury Board  may select certain of these for elimination in favour of new programmes ("B" budget) or decide that tax cuts are appropriate within the o v e r a l l f i s c a l p o l i c y . The system described above conforms conceptually to the t r a d i t i o n a l budgeting model presented in chapter 2, being largely incrementally determined and lacking in direction towards goals other than i n the broadest sense. The evaluation of existing programmes (the "A" budget) has t y p i c a l l y received l i t t l e attention from the Treasury Board, thus making Mr. Trudeau's remarks presented e a r l i e r in this chapter p a r t i c u l a r l y well founded.  It i s here of course that the analysis  suggested by a PPBS should have a great impact. The Treasury Board's t r a d i t i o n a l management role is con-  -86-  cerned with l e a d e r s h i p , guidance  or r e g u l a t i o n r e s p e c t i n g the  s e v e r a l i n p u t s to programme a d m i n i s t r a t i o n , and the manner i n which they are combined or o r g a n i s e d , r a t h e r than with the programmes themselves.  As the t h e o r i e s of management have changed over  the  years so to have the views of the extent to which Departments should be r e g u l a t e d r e g a r d i n g the a c q u i s i t i o n and use of r e s o u r c e s . Under the more t r a d i t i o n a l or m e c h a n i s t i c o r g a n i s a t i o n a l theory, the Treasury Board was  looked on as "the manager" i n government,  t e r m i n i n g i n some d e t a i l the q u a n t i t i e s and manner of r e s o u r c e  de-  ac-  q u i s i t i o n and use, but l a t e r management t h e o r i e s f a v o u r i n g f r e e e x e r c i s e of good judgement by the v a r i o u s Departments on a c q u i s i t i o n and t h e i r manner of combination implementing  resource  f o r the purpose o f  the programmes f o r which they are r e s p o n s i b l e are more  p r e v a l e n t i n government  today. 7  However Johnson  w r i t e s t h a t the government  has. neverthe-  l e s s been slow to b r i n g about the r e q u i r e d reforms, p o s s i b l y due l e a s t i n p a r t to the overstatement of  of t h e o r i e s s u g g e s t i n g freedom  a c t i o n at the o p e r a t i n g d i v i s i o n a l l e v e l .  He goes on to s t a t e  that: "... The other and more important r e a s o n f o r the apparent slowness with which governments have adapted t h e i r o p e r a t i o n s to the newer t h e o r i e s of management, i s the f a c t t h a t the i n s t i t u t i o n s of the p a r l i a m e n t a r y system themselves impose c o n s t r a i n t s upon the freedom which may be accorded the departments and agencies of government. The Cabinet as a whole i s h e l d r e s p o n s i b l e by Parliament f o r the f a i r and even t r e a t ment of p u b l i c s e r v a n t s , w i t h i n the context of what the community regards as being f a i r and r e a s o n a b l e . The government, as a whale, i s r e s p o n s i b l e to Parliament f o r ensuring t h a t the accommodation p r o v i d e d to i t s c i v i l s e r v a n t s , and the expenses they i n c u r , are w i t h i n the range o f a c c e p t a b l e p u b l i c s t a n d a r d s . The Cabinet as a c o l l e c t i v e e n t i t y i s r e s p o n s i b l e to Parliament f o r ensuring t h a t i n p u t s are a c q u i r e d i n the most :;  at  -87economical manner, and t h a t c o n t r a c t s are l e t i n a way t h a t assures honesty i n p u b l i c administration. The government i s , and must remain f u l l y accountable to Parliament f o r a l l of the a c t i o n s o f Departments, and f o r the h a n d l i n g of the funds with which Parliament has e n t r u s t e d them . .."^ Despite these i n s t i t u t i o n a l f o r c e s opposing Treasury Board i n Canada may  has been r e c e p t i v e to the concept  change, the  of PPBS, which  be t r a c e d to the outcome of the Report  Commission on Government O r g a n i s a t i o n (the Glassco  of the  Royal  report).  g As r e p o r t e d by Yeomans , "the i n f l u x on accounting and p e r s o n n e l brought departmental  financial  i n to implement the Glassco recommendations on  accounting and c o n t r o l p r a c t i c e s soon produced  of e x p e r t s who  became concerned  of resource a l l o c a t i o n " . the f o r m a t i o n i n 1966  One  about the wider c o n t r o l  a cadre  processes  of the r e s u l t s o f t h i s concern  was  of a study group c a l l e d System of I n t e g r a t e d  Management P l a n n i n g and C o n t r o l (SIMPAC), c r e a t e d t o : "design a computer based system t h a t w i l l b r i n g t o gether v i t a l i n f o r m a t i o n from both the p u b l i c and p r i v a t e s e c t o r s f o r use by planners i n the c e n t r a l agencies and i n the v a r i o u s Departments of the F e d e r a l Government. These p l a n n e r s w i l l use t h i s data to develop long range plans f o r a l l o c a t i n g exp e n d i t u r e s based an meaningful a l t e r n a t i v e courses of a c t i o n . " 1 0 T h i s then c o u l d be s t a t e d as the b i r t h of PPBS w i t h i n the Canadian F e d e r a l framework, and brought  with i t the concept  o f a "top-down"  or d i s a g g r e g a t i v e approach r a t h e r than the "bottom-up" or a t i v e approach which l e d to budgets based R e f e r r i n g to t h i s new Board, Mr.  aggreg-  on piecemeal d e c i s i o n s .  approach the then p r e s i d e n t of the  Treasury  E . J . Benson, a s s e r t e d :  "One o f the prime reasons we have achieved such success i n the area i s t h a t we s t a r t e d at the top — where the d e t e r m i n a t i o n of p r i o r i t i e s has i t s g r e a t e s t impact and where the l a r g e s t amounts of the tax d o l l a r are at s t a k e . That i n f a c t i s  -aa-  what we are r a p i d l y developing — a comprehensive system of p r i o r i t y a l l o c a t i o n f o r a l l o f the ^ l i m i t e d revenues a v a i l a b l e to the F e d e r a l Government." The  Treasury Board's Planning-Programming-Budgeting Guide (PPB  guide) s e t s out the b a s i c concepts o f the new system as f o l l o w s : "(a)  The  the s e t t i n g o f s p e c i f i c  objectives,  (b)  the s y s t e m a t i c a n a l y s i s to c l a r i f y o b j e c t i v e s and to assess a l t e r n a t i v e ways o f meeting them,  (c)  the framing o f budgetary p r o p o s a l s i n terms o f programmes d i r e c t e d toward the achievement o f the o b j e c t i v e s ;  (d)  the p r o j e c t i o n o f the c o s t s o f these programmes a number o f years i n the f u t u r e ,  (e)  the f o r m u l a t i o n o f plans o f achievement year-by year f o r each programme, and  (f)  an i n f o r m a t i o n system f o r each programme to supply data f o r the m o n i t o r i n g o f achievement o f programme goals and to supply data f o r t h e r e a s s e s s ment o f the programme o b j e c t i v e s and the appropr i a t e n e s s o f the programme i t s e l f . " 1 2  guide then goes on t o s t a t e : " I d e a l l y there c o u l d e x i s t a complete framework f o r r e s o u r c e a l l o c a t i o n , one which begins a t the l e v e l o f the f u n c t i o n where only the broad i n t u i t i v e , and i n the t r u e s t sense " p o l i t i c a l " d e c i s i o n s can and must be made, and which extends dawn through the v a r i o u s l e v e l s o f the h i e r a r c h y , with c o s t - b e n e f i t a n a l y s i s e x e r t i n g a p r o g r e s s i v e l y g r e a t e r i n f l u e n c e on r e s o u r c e a l l o c a t i o n as the d e c i s i o n s to be taken f u l l w i t h i n ever narrowing terms o f r e f e r e n c e . At each l e v e l there would be c l e a r l y s p e c i f i e d needs to be met, i d e n t i f i a b l e r e s u l t s o r outputs that c o u l d meet the needs, and measurable b e n e f i t s that c o u l d be demonstrated. Such an i d e a l s t a t e i s , o f course, not easy to a c h i e v e . At the higher l e v e l s o f d e c i s i o n , i t i s not p o s s i b l e to r e l y to any great extent on c o s t - b e n e f i t a n a l y s i s , i n d e c i d i n g f o r i n s t a n c e how much should be spent on defence as a g a i n s t s o c i a l measures. And even a f t e r a d e c i s i o n i s taken to spend a c e r t a i n amount on h e a l t h and w e l f a r e , the subsequent d e c i s i o n s as t o what should be a l l o c a t e d to h e a l t h and the o t h e r subf u n c t i o n s are only c o m p a r a t i v e l y e a s i e r . " 1 3  -89-  I d e a l l y the Cabinet w i l l express i t s p r i o r i t i e s f o r any year a c c o r d i n g to broad  c a t e g o r i e s based  set  government w i l l e x e r c i s e i t s p o l i t i c a l  of p r i o r i t i e s .  The  judgement and send the f i n a l l y  agreed  on a c e n t r a l l y  given determined  set of p r i o r i t i e s to the lb  Treasury Board  as "expenditure g u i d e l i n e s " .  l i n e s are communicated however, i t u i l l the Treasury Board, i n combination and  still  guide-  be necessary f o r  u i t h the Cabinet  i n d i v i d u a l Departments, to determine  grammes would be undertaken  Once these  committees  u h i c h of s e v e r a l pro-  w i t h i n the given p r i o r i t y  areas.  15 Doern in  w r i t e s t h a t "a f u r t h e r key element of the PPBS,  so f a r as i t a f f e c t s c o n t r o l r e s o u r c e a l l o c a t i o n , i s the  develop-  ment, by government Departments of l o n g e r range p l a n n i n g and gramme f o r e c a s t s " .  The Treasury Board  f o r e c a s t submissions,  requirement  pro-  f o r programme  s e t s out i n i t s manual, the f o l l o w i n g o b j e c t -  i v e s f o r the Departments of the F e d e r a l Government: "(a) i t w i l l serve as a b a s i s f o r the d e t e r m i n a t i o n by the Treasury Board of an optimum a l l o c a t i o n of a v a i l a b l e r e s o u r c e s among the competing r e quirements f o r a l l programmes i n the next year, (b) i t ' w i l l serve as a b a s i s f o r improved o v e r a l l government p l a n n i n g i n subsequent y e a r s , (c) the p r e p a r a t i o n of programme f o r e c a s t s w i l l serve to p r o v i d e a d i s c i p l i n e f o r Departments so t h a t they might being to t h i n k of other than s h o r t run problems."1° Despite c r i t i c i s m o f the PPBS approach c e n t r e d as Doern  suggests  "on the n o t i o n t h a t processes of r a t i o n a l i s m i n v o l v e s i g n i f i c a n t c o s t s , both i n time and r e s o u r c e s . They imply a l s o t h a t the p o l i c y making means c o u l d become ends i n themselves, without a b e t t e r d e c i s i o n being reached. In s h o r t the r a t i o n a l i s t i c model can become mired i n a g e t t i n g ready to get ready syndrome,17" and a l s o on the i n i t i a l  requirements  f o r i n f o r m a t i o n (e.g.  Depart-  -90-  mental submission'of  programme f o r e c a s t s ) which may  d i r e c t use to d e c i s i o n makers at e i t h e r c e n t r a l or l e v e l s , he suggests  t h a t there i s evidence  that- the PPBS approach has generated political of  c o n t r o l over new  expenditure  priorities.  The  little  Departmental  to support the view  an i n c r e a s i n g sense Cabinet's  g u i d e l i n e s i s seen as an important  c l e a r l y helped to promote a breakthrough problem of how  be of  of  determination  change t h a t has  with regard tD the b a s i c  to gain c o n t r o l of governmental processes and  develop  a c a p a c i t y to s t e e r Departments i n the d i r e c t i o n of p r i o r i t i e s  set  by the p o l i t i c a l s e c t o r . W h i l s t PPBS i s s t i l l concept  i n i t s i n f a n c y , being adopted  in  f o r p a r t of the 1970-71 F e d e r a l Budget, i t should not  assumed t h a t there w i l l be a quick or dramatic breakthrough  be  with a l l  governmental e x p e n d i t u r e s or even budget e s t i m a t e s expressed i n PPBS terms i n the near f u t u r e , because as Johnson remarks: "... i t must be r e c o g n i s e d t h a t i n c r e m e n t a l i s m (a b a s i c concept of the t r a d i t i o n a l budget) remains a c o n t r o l element i n the d e c i s i o n making p r o c e s s . T h i s i s how a l a r g e p o r t i o n of p u b l i c p o l i c y d e c i s i o n s are and must be made, given the s c a l e of government and given the very nature of s o c i a l change. I t i s a matter of i n t e g r a t i n g and harmonising the PPBS approach ^ with t h i s more t r a d i t i o n a l approach to d e c i s i o n making." T h i s can be seen from the 1970-71 e s t i m a t e s , where U3 percent were s t a t u t o r y e x p e n d i t u r e s r e s u l t i n g from e x i s t i n g l e g i s l a t i v e ments.  commit-  I t i s only i n the other 51 percent where the government 19  has f l e x i b i l i t y i n the a l l o c a t i o n of r e s o u r c e s .  20 Doern  t h a t t h i s 51 percent i s m i s l e a d i n g s i n c e i t s e r i o u s l y  comments  overestimates  the degree o f f l e x i b i l i t y t h a t a government has i n a l t e r i n g b a s i c expenditure p a t t e r n s i n any s h o r t run p e r i o d , and t h a t a f i g u r e of between 10 and 20 percent would be c l o s e r to the mark i n t h i s r e s p e c t ,  -91-  the p a i n t being any  new  a long  t h a t given  priorities list  (the  a c e r t a i n l e v e l af taxation  "B"  budget" and  p o l i c i e s must compete u i t h  of e x i s t i n g programmes (the  The  "A"  programmes, u h i c h  it  may  be  i s na longer  remarks r e p o r t e d costs u i l l  budget).  author houever ventures to suggest t h a t under a f u l l y  implemented PPBS, a p e r i o d i c r e v i e u should  usefulness  be made of a l l e x i s t i n g  dropped i f i t can be shown t h a t apparent (the t h r u s t of Mr.  Trudeau's  mean t h a t these c o s t s are f i n a l l y  i n t o the  be  incurred.  Moreover i t may  o f proceeding versus s c r a p p i n g ,  not  future  committed ( i . e . are  sunk c o s t s ) , only t h a t IF the programme i s continued, costs u i l l  their  e a r l i e r i n t h i s c h a p t e r ) s i n c e although programme  show the t o t a l systems c o s t p r o j e c t e d  does NOT  (revenue),  simply  the programme  be a d e c i s i o n  s i n c e many programmes c o u l d  f o l l a u e d at a l o u e r l e v e l of a c t i v i t y u i t h r e s u l t i n g c o s t Turning  back to the  i s s u e of goals  the F e d e r a l Government p o l i t i c a l process,  be  savings.  f o r Canada as seen  an attempt has  by  been raade  21 to f o r m a l i s e these at a c o n c e p t u a l t h a t the weakest l i n k s i n the the e x p l i c i t achievement.  The  recognising  the measurement of  recommendations concerned the  of the t o t a l f e d e r a l budget —  i d e n t i f i e d together  are their  d i s t r i b u t i o n of  i n the f i s c a l year 1973-4 ( r e p r e s e n t i n g  based budgeting advocated by some).  given  , whilst  development o f such g u i d e l i n e s  i d e n t i f i c a t i o n o f g o a l s , and  some $430 m i l l i o n percent  level  a long way  from the  only zero  F i v e major p o l i c y areas were  with the recommended funding  a l l o c a t i o n as  below: " N a t i o n a l Wealth $175  2%  Million  w i t h p a r t i c u l a r emphasis given t o : - i n d u s t r i a l development measures r e l a t e d to new i n d u s t r i a l s t r a t e g y ,  the  -92-  - the improvement Df t r a n s p o r t a t i o n and communi c a t i o n f a c i l i t i e s i n c l u d i n g the Post O f f i c e , - on the job t r a i n i n g . Q u a l i t y o f L i f e $100 M i l l i o n with emphasis to be p l a c e d on the enhancement o f the p h y s i c a l environment but with the maintenance of the b a s i c approach 'the p o l l u t e r must pay'. S o c i a l J u s t i c e $75 M i l l i o n on the assumption that no neu u n i v e r s a l programmes w i l l be s t a r t e d . I n t e r n a t i o n a l Peace and S e c u r i t y $50 M i l l i o n with f o r e i g n a i d to be r a i s e d to 0.51 percent o f GIMP and the loan to grant r a t i o t o be at 50 p e r c e n t . f  Canadian I n t e g r i t y $30 M i l l i o n m a i n t a i n i n g the R e g i o n a l Economic Expansion commitment a u t h o r i t y at 1972 l e v e l s . . . " 2 2 W h i l s t the above schedule  i s by no means to be c o n s i d e r e d  as a major p o l i c y statement, and i t would be wrong to draw too many c o n c l u s i o n s from i t (indeed the o v e r a l l c a t e g o r i e s are l i a b l e to many i n t e r p r e t a t i o n s as to scope and meaning), i t does r e p r e s e n t an e f f o r t t o formulate  and rank government o b j e c t i v e s as r e q u i r e d  by PPBS a t the h i g h e s t l e v e l , and even though the t o t a l  expenditure  i s almost i n s i g n i f i c a n t with r e s p e c t t o the t o t a l f e d e r a l budget, it  does g i v e a t l e a s t an i n d i c a t i o n o f b a s i c government  philosophy.  I t i s now c o n s i d e r e d a p p r o p r i a t e to t u r n our a t t e n t i o n t o a s p e c i f i c F e d e r a l Department, namely the Department o f The E n v i r o n ment, and to narrow somewhat the sphere o f i n f l u e n c e from the o v e r a l l area o f government involvement environment.  to those matters a f f e c t i n g our  -93-  C.  The  F e d e r a l Department of the Environment  The  neui F e d e r a l Department of the Environment was  l i s h e d by the Government O r g a n i s a t i o n Act r e c e i v e d Royal Assent is  on J u n e 10,  a l s o knoun by i t s s h o r t t i t l e  primary  1971.  estab-  (S.C. 1970-71, c42) The  uhich  Department, u h i c h  Environment Canada, has as i t s  duty the p r o t e c t i o n o f Canada's a i r , u a t e r and  land  resources. Speaking the Act, Mr.  i n the Commons debate p r i o r to the p a s s i n g of  Davis  (then M i n i s t e r of F i s h e r i e s and  F o r e s t r y , but  soon to have the dual t i t l e o f M i n i s t e r of Environment and M i n i s t e r of  Fisheries) stated: " B i l l C-207 s e t s up a neu Department of the E n v i r o n ment. T h i s neu department r e p l a c e s the Department of F i s h e r i e s and F o r e s t r y . I t a l s o b r i n g s a number of r e l a t e d s e r v i c e s , branches and d i r e c t o r a t e s t o g e t h e r to d e a l u i t h p o l l u t i o n . . . Our neu F e d e r a l Department of the Environment u i l l be concerned u i t h Canada's reneuable r e s o u r c e s . I t u i l l be concerned u i t h u i l d l i v i n g t h i n g s , r e s o u r c e s such as t r e e s , f i s h and u i l d l i f e . It u i l l also concern i t s e l f u i t h t h e i r l i f e support systems, o t h e r r e s o u r c e s l i k e a i r , u a t e r and s o i l . . . " ^ 2  He then uent on to say t h a t the neu ment department, d i f f e r i n g  i n one  Department i s a resource manage-  important  r e s p e c t from the o t h e r  resource departments i n t h a t i t deals u i t h the animate, and reneuable,  living  being p r i m a r i l y b i o l o g i c a l i n i t s o r i e n t a t i o n .  Mr.  Davis a l s o r e f e r r e d i n h i s speech to p o l l u t i o n " i n t a n g i b l e s " , from the economic stance, but having  a r e a l i n h e r e n t value i n "our human  scheme o f t h i n g s " .  P o l l u t i o n abatement, he s a i d ,  top p r i o r i t y " , u i t h  "sound o p e r a t i n g procedure  the  letter".  "must be  given  being f o l l o u e d to  -9k-  A f t e r remarking on the problems o f water p o l l u t i o n c o n t r o l , the M i n i s t e r s t a t e d that he had h e l d d i s c u s s i o n s p r o v i n c i a l M i n i s t e r s regarding  transborder  with  situations, stressing  h i s w i l l i n g n e s s to complement r a t h e r than d u p l i c a t e p r o v i n c i a l law,  but a l s o making c l e a r the need f a r n a t i o n a l a i r q u a l i t y ob-  jectives  ( a i r p o l l u t i o n more than most other  pollutants'is i n -  d i f f e r e n t t o man made boundaries, s i n c e a i r c u r r e n t s a r e broadly c o n t i n e n t a l i n t h e i r sweep). Mr.  Davis s t a t e d t h a t he was:  "... opposed to a patchwork approach t o p o l l u t i o n , opposed to d i f f e r e n t standards i n d i f f e r e n t p l a c e s , opposed t o p o l l u t i o n havens, opposed to b i g i n d u s t r y p i c k i n g on our weaker p r o v i n c e s and m u n i c i p a l i t i e s , opposed to sloppy housekeeping anywhere, because i t i s the l o c a l c i t i z e n r y t h a t i s hurt i n the end. I am prepared t o argue a g a i n s t those who say t h a t each i n d u s t r y and each m u n i c i p a l i t y should be able to r e l y on the so c a l l e d ' a s s i m i l a t i v e c a p a c i t y ' o f i t s l o c a l waters and the a i r because o f cumulative e f f e c t s .... When does the r e g u l a t o r y a u t h o r i t y c r y h a l t ? And when does i t begin t o d i s c r i m i n a t e a g a i n s t l a t e comers, saying t h a t the r u l e s o f the game have t o be changed a f t e r a l l 7 " * 2 £  B i l l C-207 was subsequently passed as the Government A c t , 1970, and sections 5 and 6 o f Part  Organisation  I o f the Act g i v e n  in full  below r e f e r t o the d u t i e s o f the M i n i s t e r : "5.  The d u t i e s , powers and f u n c t i o n s o f the M i n i s t e r o f the Environment extend to and i n c l u d e a l l matters over which the P a r l i a m e n t o f Canada has j u r i s d i c t i o n , not by law assigned to any other department, branch or agency o f the Government o f Canada, r e l a t i n g t o (a) (b)  (c)  sea coast and i n l a n d f i s h e r i e s ; renewable r e s o u r c e s , i n c l u d i n g i. the f o r e s t r e s o u r c e s o f Canada, i i . migratory birds,and i i i . other non-domestic f l o r a and fauna; Water;  -95-  (d) (e)  (f)  (g)  6.  meteorology; the p r o t e c t i o n and enhancement of. the q u a l i t y of the n a t u r a l environment, i n c l u d i n g water, a i r , and s o i l q u a l i t y ; t e c h n i c a l surveys w i t h i n the meaning of the Resources and T e c h n i c a l Surveys Act r e l a t i n g to any matter d e s c r i b e d i n paragraphs (a) to (e) and; notwithstanding paragraph ( f ) of S e c t i o n 5 of the Department of N a t i o n a l Health and welfare Act, the enforcement of any r u l e s or r e g u l a t i o n s made by the I n t e r n a t i o n a l J o i n t Commission, promulgated pursuant to the t r e a t y between the United S t a t e s of America and His Majesty King Edward VII r e l a t i n g to boundary waters and questions a r i s i n g between the United S t a t e s o f America and Canada, so f a r as the same r e l a t e to p o l l u t i o n c o n t r o l .  The M i n i s t e r of the Environment, i n e x e r c i s i n g h i s powers and c a r r y i n g out h i s d u t i e s and f u n c t i o n s under s e c t i o n 5, s h a l l (a)  (b)  i n i t i a t e , recommend and undertake programmes, and c o - o r d i n a t e programmes o f the Government of Canada, t h a t are designed to promote the establishment or adaption o f o b j e c t i v e s or standards r e l a t i n g to environmental q u a l i t y , or to c o n t r o l p o l l u t i o n , and promote and encourage the i n s t i t u t i o n o f p r a c t i c e s and conduct l e a d i n g to the b e t t e r p r o t e c t i o n and enhancement of environmental q u a l i t y , and cooperate with p r o v i n c i a l governments or agencies t h e r e o f , or any b o d i e s , o r g a n i s a t i o n s or persons, i n any programmes having s i m i l a r o b j e c t s . . . "  Although the Department o f the Environment i s a new  Depart-  ment, i t i s e s s e n t i a l l y a combination c r e a t e d to amalgamate those elements a l r e a d y  e x i s t i n g w i t h i n the f e d e r a l framework i n v o l v e d i n  work r e l a t e d to the environment and t h e r e f o r e one there has  renewable r e s o u r c e s .  of the concepts o f PPBS has  In  effect  been a p p l i e d i n t h a t  been a r e o r g a n i s a t i o n of the government s t r u c t u r e based  an broad m i s s i o n  or programme, r a t h e r than a simple  programmes from v a r i o u s e x i s t i n g agencies, as a c o - o r d i n a t i o n mechanism to achieve  aggregation  of  at a s e n i o r l e v e l used  environmental o b j e c t i v e s .  -96-  Based on the former Department of F i s h e r i e s and the  Forestry,  f o l l o w i n g elements have been added: 1.  The Canadian M e t e o r o l o g i c a l S e r v i c e from the Ministry of Transport.  2.  The A i r P o l l u t i o n C o n t r o l D i v i s i o n from the partment o f N a t i o n a l H e a l t h and W e l f a r e .  3.  The P u b l i c H e a l t h E n g i n e e r i n g D i v i s i o n from the Department o f N a t i o n a l H e a l t h and W e l f a r e .  h.  The Water S e c t o r from the Department o f Energy, mines and Resources.  5.  The Canada Land Inventory from the Department o f R e g i o n a l Economic Expansion.  6.  The Canadian W i l d l i f e S e r v i c e from the Department of Indian A f f a i r s and Northern Development.  De-  Because o f the wide v a r i e t y o f t a s k s suggested by the above l i s t i n g , it  i s not s u r p r i s i n g t h a t Mr. Davis remarked: "Our new environmental department i s a d e c e n t r a l i s e d department. Less than 10 p e r c e n t of i t s workforce i s l o c a t e d i n the Ottawa a r e a . The r e s t are to be found out where the f i s h a r e , where the t r e e s a r e , where the l a k e s are and where the problems are .... Here i s d e c e n t r a l i s a t i o n with a purpose. I t i s dec e n t r a l i s a t i o n with an eye to the expansion of our r e s o u r c e base, and with a view to enhancing our environment i n the long r u n . " ^ 2  The g o a l s o f the Department as l i s t e d by the M i n i s t e r are t o : "1.  C a r r y an e s t a b l i s h e d r e s o u r c e programmes and services.  2.  Clean up and c o n t r o l  pollution.  3.  Assess and c o n t r o l the environmental impact o f major development.  k.  Initiate  5.  Promote and support i n t e r n a t i o n a l environmental initiatives.  6.  Develop an environmental i n f o r m a t i o n and e d u c a t i o n programme."26  long-term environmental programmes.  -97-  The  o r g a n i s a t i o n c h a r t presented  five organisations  indicates  at the s e r v i c e l e v e l , each headed by  a s s i s t a n t deputy m i n i s t e r  (ADM).  These s e r v i c e  are supported by ADM's f o r Finance and  of a d m i n i s t r a t i o n a c r o s s  P o l i c y Planning  and  an  organisations  Administration  f o r a l l aspects  programmes).  as F i g . 3-II  (responsible  the Department) and  Research ( p r o v i d i n g o v e r a l l c o - o r d i n a t i o n  Advice from o u t s i d e  an Environmental A d v i s o r y  the government i s p r o v i d e d  C o u n c i l and  s e v e r a l resource  adapted from d e t a i l s given  i n Information  by  advisory  c o u n c i l s r e p o r t i n g d i r e c t l y to the M i n i s t e r or h i s Deputy. f u n c t i o n s of the f i v e s e r v i c e s o r g a n i s a t i o n s  of  are c o n s i d e r e d  Canada's b o o k l e t  The beloui on  27 the Department F i g . 3-II  are d e s c r i b e d  i n the same order  as shouin i n  ( r e a d i n g l e f t to r i g h t ) . i. Atmospheric Environment S e r v i c e , which has absorbed the f u n c t i o n s and r e s p o n s i b i l i t i e s o f the former Canadian M e t e o r o l o g i c a l S e r v i c e , i s o p e r a t i o n a l on a year round, around the c l o c k b a s i s . The s e r v i c e w i l l continue to provide weather i n f o r m a t i o n to the p u b l i c , to i n d u s t r y , and to other government departments. Research a c t i v i t i e s i n c l u d e examination o f the s c a t t e r i n g and d e p o s i t i o n o f p o l l u t a n t s , and the chemical r e a c t i o n s t a k i n g p l a c e w i t h i n the atmosphere. S p e c i a l emphasis i s p l a c e d on r e s e a r c h c o v e r i n g n o i s e p o l l u t i o n , long term trends i n the content of a i r and i t s impact on c l i m a t e . ii.  '  and  Environmental P r o t e c t i o n S e r v i c e i s a new organi s a t i o n w i t h i n the Department t a k i n g a c t i o n i n p r e v e n t i n g or combatting environmental problems under the M i n i s t e r ' s j u r i s d i c t i o n , and i n c l u d e s the s u r v e i l l a n c e of a l l areas as w e l l as p o l l u t i o n c o n t r o l i n water and a i r , the management of s o l i d wastes, the c o n t r o l and d i s p o s a l of environmental contaminants, the c o n t r o l of a c t i v i t i e s having an e c o l o g i c a l impact, n o i s e c o n t r o l , the opera t i o n of an emergency p o l l u t i o n centre and the management o f the f e d e r a l government c l e a n up programme.  secfcerAey  3*ACW  *  ACWtSoCf C O O 1*4 C l L.  OA. VMS  .--AT  MAMA&CM.  touct {Acs.  fiOMA.  AfcM  ADM  ENM-  d  ADfA WATER „  ACM FtMAN&E i  OlCECTDft  Dtftcroe  . F U N C T I O N A L . S E R V ICES  ORGANISATION  CHART • D E P A R T M E N T OF ENVIRONMENT,  F i g . 3-II Source:  '  /;  Information Canada "Environment Canada,.Its O r i g i n a t i o n and O b j e c t i v e s , pp. 7-8.  [5 •  -99-  iii.  The F i s h e r i e s S e r v i c e comprises the former s e r v i c e w i t h i n the Department of F i s h e r i e s , and the F i s h e r i e s Research Board (FRB). By b r i n g i n g together i n one o r g a n i s a t i o n the o p e r a t i o n s and r e s e a r c h , and development f u n c t i o n s of the former F i s h e r i e s S e r v i c e and FRB, i t i s c o n s i d e r e d t h a t a more e f f e c t i v e approach to the problems of Canada's f i s h i n g i n d u s t r y w i l l be p o s s i b l e .  iv.  The Lands, F o r e s t s and W i l d l i f e S e r v i c e i s as i t s name suggests comprised of three b a s i c programme groups:  v.  (a)  The Lands Branch, b r i n g i n g together concerned with land c l a s s i f i c a t i o n , and p l a n n i n g .  (b)  The  Canadian F o r e s t r y  Service.  (c)  The  Canadian W i l d l i f e  Service.  units inventory  The Water Management S e r v i c e , which has the respons' i b i l i t y f o r improving the q u a l i t y , management and use of both i n l a n d and marine water r e s o u r c e s , o p e r a t i n g through two D i r e c t o r a t e s : (a)  Inland Waters D i r e c t o r a t e which plans and manages n a t i o n a l and i n t e r n a t i o n a l water management programmes, conducts r e s e a r c h and data g a t h e r i n g r e l a t e d to i n l a n d waters and p r o v i d e s f o r the a d m i n i s t r a t i o n o f the Canada Water Act, o p e r a t i n g through i t s three branches and f i v e r e g i o n s .  (b)  Marine S c i e n c e s D i r e c t o r a t e , which p r o v i d e s f o r the development of knowledge on the p h y s i c a l , chemical and dynamic p r o p e r t i e s of the marine environment both adjacent to Canada and major i n l a n d water bodies w i t h i n the n a t i o n . The D i r e c t o r a t e w i l l c o n t r i b u t e to the e f f e c t i v e use of these r e s o u r c e s and preserve and improve t h e i r u s e f u l n e s s . The D i r e c t o r a t e c o n s i s t s of three Regions, each having a Hydrographic D i v i s i o n (based on the Canadian Hydrographic S e r v i c e ) r e s p o n s i b l e f o r planning and implementing the n a t i o n a l hydrographic s u r v e y i n g and c h a r t i n g programme, an Oceanographic D i v i s i o n r e s p o n s i b l e f o r b a s i c and a p p l i e d r e s e a r c h , and a Ships Divi s i o n to manage the s u r v e y - r e s e a r c h fleet of the Region i n support of f e d e r a l marine and i n l a n d survey and r e s e a r c h programmes."  -100-  A p a r t i a l o r g a n i s a t i o n c h a r t showing the Uater Management S e r v i c e , and i n p a r t i c u l a r (the  the Marine  P a c i f i c Region  S c i e n c e s D i r e c t o r a t e with i t s Regions  i s the s u b j e c t o f more e x t e n s i v e study i n  chapter 4 and the appended r e p o r t ) i s shown i n F i g . 3 - I l l  following.  Water Management S e r v i c e s  1  D i r e c t o r General Inland Waters  D i r e c t o r General Marine S c i e n c e s  P a c i f i c Region (Victoria,B.C.)  F i g . 3-III  C e n t r a l Region (Burlington, Ont.)  A t l a n t i c Region (Dartmouth, N.S.)  HQ (Ottawa, Ont.)  P a r t i a l O r g a n i s a t i o n Chart Water Management S e r v i c e .  In the c o n s t r u c t i o n o f the F e d e r a l e s t i m a t e s f o r f i n a n c i a l 1971-72 the t o t a l Departmental  estimate o f $179.1 M i l l i o n  year i s divided  between t h r e e c a t e g o r i e s , Operating Expenses ($139.8 M), C a p i t a l Expenditures  ($28.9 M) and Grants and C o n t r i b u t i o n s ($10.4 M).  More s i g n i f i c a n t  i s the a l l o c a t i o n  Department o f Environment.  o f funds by programme f o r the  Three major programme areas are i d e n t i f i e d ,  each with i t s s e t o f o b j e c t i v e s , although the items o f expenditures w i t h i n these three areas are c l a s s i f i e d a c c o r d i n g to the t r a d i t i o n a l o b j e c t code, and show the i n c r e m e n t a l change from the 'previous year's estimate and f o r e c a s t  expenditure.  Although the programme areas are extremely broad they do r e p r e s e n t an attempt  to c l a s s i f y e x p e n d i t u r e s a c c o r d i n g to m i s s i o n  -101as required by PPBS. The stated programmes with their objectives are: "1.  Administration Programme Objective:  2.  To provide o v e r a l l policy direction and advisory, planning and administrative support services far a l l departmental programmes.29  Environmental Quality Programme Objective:  To i n i t i a t e , recommend, undertake and coordinate programmes designed to enhance the quality of the environment.  Sub-Objectives: To preserve, restore and improve the cond i t i o n of the aquatic and forest environments. To improve the quality, management and use of water resources for the benefit of Canada. To develop preventive and other control measures directed to a i r and water pollution. To provide meteorological and ice information services to encourage and promote the application and development of meteorological science, and to discharge Canada's i n t e r n a t i o n a l obligations i n the f i e l d of meteorology.^ 3.  Renewable Resources Programme. Objective:  To promote the e f f e c t i v e management and economic and sustained use of the renewable resources of the nation.  Sub-Objectives: To achieve r a t i o n a l and economic u t i l i s a t i o n of the fishery resources available to Canadian fishermen. To perform, promote and a s s i s t research in the conservation, increase and use of aquatic renewable resources and on the b i o l o g i c a l productivity of the aquatic environment. To promote e f f e c t i v e management and use of the forest resources of the nation. To conserve and manage w i l d l i f e resources including migratory birds and their habitat i n Canada.^1  -102-  With the r e s p e c t i v e budgeted expenditure f o r each programme 1.  Administration  Programme  2.  Environmental Q u a l i t y Programme  3.  Reneuable Resources Programme  being:  $4.9 M 100.7 73.5  Total  $179.1 M  Ue can see t h e r e f o r e , t h a t at the h i g h e s t  l e v e l every attempt has  been made to implement the major concepts o f a PPBS, u i t h  Depart-  mental o b j e c t i v e s p r o v i d i n g the frameuork f o r the c o m p i l a t i o n o f the e s t i m a t e s ,  r a t h e r than a schedule based t o t a l l y on the f u n c t i o n a l  departments as uould be expected under a t r a d i t i o n a l  system.  Because o f the breadth o f the programmes, the budget o f a s m a l l subset u i t h i n the Department u i l l  not r e a l l y be i n a PPBS  format a t t h i s l e v e l ( f o r example the budget f o r Marine D i r e c t o r a t e uould f a l l  Sciences  e n t i r e l y u i t h i n the Environmental Q u a l i t y  Programme, except f o r the A d m i n i s t r a t i o n  element u h i c h ,  uould be u i t h i n the scope o f the Departmental  o f course  Administration  Programme). Although the c o s t i n g concept s t i l l system u i t h comparisons a g a i n s t (incrementalism at  l a s t year's f i g u r e s by o b j e c t  code  and f u n c t i o n a l c o s t i n g ) the author's v i e u i s t h a t  t h i s l e v e l the b a s i c i d e a s o f PPBS d i s c u s s e d  being at  f o l l o u s the t r a d i t i o n a l  i n chapter 2 are  f o l l o u e d i n a Department t h a t i t s e l f oues i t s very  existence  l e a s t i n p a r t t o the adoption o f the PPBS concept o f a broad  mission  r a t h e r than the t r a d i t i o n a l f u n c t i o n a l approach to government  operations. Ue nou focus on a s m a l l subset u i t h i n the Department, The P a c i f i c Region o f Marine S c i e n c e s ment S e r v i c e s  D i r e c t o r a t e , p a r t o f the Uater Manage-  as shoun i n F i g 3-III  and o u t l i n e d above.  -103-  D.  Marine S c i e n c e s D i r e c t o r a t e  As mentioned e a r l i e r i n t h i s chapter Marine S c i e n c e s D i r e c t o r a t e forms one  h a l f of the r e s p o n s i b i l i t i e s of the Uater  Management S e r v i c e s u n i t , having the task of p r o v i d i n g development of knowledge on p h y s i c a l chemical and dynamic p r o p e r t i e s of the marine environment, and q u a r t e r s branch  i s comprised  of three r e g i o n s and a head-  as i n d i c a t e d i n F i g . 3 - I I I (on page 100 )-•  The  t r a d i t i o n a l budget system w i t h i n the D i r e c t o r a t e i n v o l v e d the submission by the R e g i o n a l D i r e c t o r s of f u n c t i o n a l c o s t e s t i m a t e s based  l a r g e l y on an i n c r e m e n t a l i n c r e a s e over the p r e v i o u s year's  f i g u r e with l i t t l e  supporting data.  At t h i s stage i t should be  r e a l i s e d t h a t the R e g i o n a l D i r e c t o r r e p r e s e n t s the f i f t h the e x e c u t i v e (under  l e v e l of  Deputy M i n i s t e r , S e n i o r A s s i s t a n t Deputy  M i n i s t e r , A s s i s t a n t Deputy M i n i s t e r - Uater Management S e r v i c e , and D i r e c t o r General-Marine  S c i e n c e s ; r e f e r to F i g s . 3 - I I , and  3-III)  with consequent d i f f u s i o n of the g o a l congruence so v i t a l i f PPBS i s to be s u c c e s s f u l l y The  implemented.  R e g i o n a l budgets were aggregated  b e f o r e being passed to the Departmental  and briefly examined  Finance and A d m i n i s t r a t i o n  s e c t i o n f o r f u r t h e r a g g r e g a t i o n with a l l other s e r v i c e u n i t c o s t estimates.  The  complete Departmental  to Treasury Board or suggested  estimates were then  forwarded  f o r assessment,who e i t h e r t a b l e d them f o r a p p r o v a l  r e v i s i o n s g e n e r a l l y based  on any p r e c o n c e i v e d o b j e c t i v e a n a l y s i s .  on t o t a l c o s t r a t h e r than However, as a r e s u l t  of  the f e d e r a l government commitment to the concepts of PPBS, and the Treasury Board  Guide r e f e r r e d to e a r l i e r i n t h i s chapter, an  attempt at the D i r e c t o r General l e v e l i s being PPBS v i a a programme a n a l y s i s e x e r c i s e , and  made to implement  on January 12,  1973  32 a memorandum year.  was  i s s u e d g i v i n g e s t i m a t e s r e l a t e d to the  D i r e c t o r a t e Goals were summarised "1.  2.  3.  I t should  1974-75  as:  To provide c h a r t i n g and s c i e n t i f i c s e r v i c e s f o r marine t r a n s p o r t a t i o n , resource management and engineering. To provide n a v i g a t i o n a l , s c i e n t i f i c and t e c h n i c a l i n f o r m a t i o n commensurate with the needs of s h i p p i n g , resource development, e n g i n e e r i n g , f i s h e r i e s , defence, and l i f e and p r o p e r t y , such i n f o r m a t i o n w i l l i n c l u d e n a u t i c a l and resource c h a r t s and a s s o r t e d p u b l i c a t i o n s , and w i l l d e a l with marine phenomena such as t i d e s , c u r r e n t s , waves, storm surges and sea i c e . To have the c a p a b i l i t y of s u p p l y i n g s c i e n t i f i c i n f o r m a t i o n and advice on the marine environment where the s h o r t and long term i n t e r e s t s o f Canada are a f f e c t e d by e i t h e r n a t u r a l phenomena or human '. i n t e r v e n t i o n , e s p e c i a l l y i n areas of resource development and e x p l o i t a t i o n . Such a c a p a b i l i t y i s o b t a i n e d by developing i n a l l waters of Canadian i n t e r e s t an understanding of the b a s i c p r o p e r t i e s and mechanisms by means of ongoing o b s e r v a t i o n s from s h i p s , buoys, a i r c r a f t and other p l a t f o r m s together with l a b o r a t o r y experiments, a n a l y s i s and mathematical modelling. Areas of primary a t t e n t i o n are the G u l f of S t . Lawrence, the S t r a i t s of Georgia and Juan de Fuca, the Canadian A r c t i c and S u b - A r c t i c waters, and the Northwest A t l a n t i c and Northeast P a c i f i c . To f o s t e r a growing l e v e l o f s c i e n t i f i c and t e c h n o l o g i c a l e x p e r t i s e i n the marine s c i e n c e s and i n marine o r i e n t e d s e r v i c e and p r o d u c t i o n i n order t h a t the g r e a t e s t b e n e f i t s accrue to Canada. This growth s h a l l be f o s t e r e d i n the p u b l i c , p r i v a t e and academic s e c t o r s to enable Canada to have a s t r o n g and d i v e r s e c a p a b i l i t y i n the p r o v i s i o n of s e r v i c e s and the manufacture of products, and to p r o t e c t her i n t e r e s t s and to meet her o b l i g a t i o n s i n the i n t e r n a t i o n a l marine forum."33  be noted t h a t t h i s e x e r c i s e of g o a l s p e c i f i c a t i o n was  undertaken subsequent to the c o s t i n g r e p o r t by the author forming the appendix to t h i s t h e s i s , and  although the goals  appear i n the  r e v i s e d e d i t i o n of the D i r e c t o r a t e Programme A n a l y s i s , they  should  -105-  not be taken as b e i n g  final-  S p e c i f i c goals have been i d e n t i f i e d u i t h i n each  goal  s p e c i f i e d as above f o r example, a s p e c i f i c g o a l u i t h i n g o a l 1 i s : "to have completed a l l b a s i c hydrographic c h a r t i n g f o r safe n a v i g a t i o n on a l l major Canadian s h i p p i n g r o u t e s on the P a c i f i c Coast, the A t l a n t i c Coast route to B e l l e I s l e , the Mackenzie waterway, and the major i n l a n d uateruays, i n c l u d i n g c h a r t s f o r r e c r e a t i o n a l boating and Dther s m a l l c r a f t , " 3 4 and  these g o a l s are to be achieved  the f i n a n c i a l years  by the year 1980  1974-75 to 1979-80).  Ulithin the g o a l p e r i o d of s i x years, uill  a s e r i e s of targets  need to be e s t a b l i s h e d , the t a r g e t r e p r e s e n t i n g  achievement during  ( i . e , during  a one  year or annual budget  Although the f u l l  the  desired  period.  d e t a i l s of the s p e c i f i c t a r g e t s are  not  yet completed even on a d e s c r i p t i v e l e v e l , the t e n t a t i v e schedule of the nine areas i s given "00.  below:  The s u p p l y i n g of f a c i l i t i e s and s e r v i c e s to other . Department (of Environment) agencies, f e d e r a l and p r o v i n c i a l departments, u n i v e r s i t i e s and i n t e r n a t i o n a l agencies.  01. P h y s i c a l and chemical p r o p e r t i e s and processes i n Ocean waters. Includes a i r - s e a i n t e r a c t i o n , wave s t u d i e s , i c e s t u d i e s ; t h a t are g e o g r a p h i c a l l y l o c a t e d i n areas o u t s i d e the t e r r i t o r i a l l i m i t s . 02.  Inshore and e s t u a r i n e p r o c e s s e s . Includes a l l p h y s i c a l and chemical s t u d i e s not i n c l u d i n g c h a r t i n g t a k i n g p l a c e w i t h i n t e r r i t o r i a l waters.  03. N a v i g a t i o n a l c h a r t i n g and i n f o r m a t i o n , i n c l u d i n g the e n t i r e process o f s u r v e y i n g , a n a l y s i s and cartography l e a d i n g to the p r o d u c t i o n of n a v i g a t i o n a l c h a r t s and a s s o c i a t e d p u b l i c a t i o n s such as S a i l i n g D i r e c t i o n s (e.g. B . C . P i l o t ) . 04.  Resource c h a r t i n g and i n f o r m a t i o n . Includes the e n t i r e process o f s u r v e y i n g , a n a l y s i s and c a r t o graphy l e a d i n g to the p r o d u c t i o n of resource c h a r t s and a s s o c i a t e d p u b l i c a t i o n s such as t e c h n i c a l p a p e r s .  05. S m a l l c r a f t c h a r t i n g and i n f o r m a t i o n . As f o r t a r g e t s 03 and 04 a p p l i e d to s m a l l c r a f t c h a r t i n g .  -106-  06. Marine S c i e n t i f i c and T e c h n i c a l Information and Advisory S e r v i c e . Includes c h a r t d i s t r i b u t i o n , work on any Task Forces, Committees uhere members of the D i r e c t o r a t e s t a f f provide i n f o r m a t i o n o r advice. 07.  Development o f marine i n d u s t r y . Includes uork c a r r i e d out to develop a marine i n d u s t r y i n Canada i n c l u d i n g the c o n t r a c t i n g o f surveys, instrument design, e t c .  Ofl. F a c i l i t i e s ( C a p i t a l E x p e n d i t u r e s ) . Activities d i r e c t e d towards the a c q u i s i t i o n o f neu b u i l d i n g s , neu s h i p s e t c . In the case o f the l a t t e r does not i n c l u d e o p e r a t i o n and maintenance charges. I t i s i n t e r e s t i n g t o compare the t a r g e t areas u i t h those o f the D i r e c t o r a t e goals  given  the f o l l o w i n g t a b l e d e v i s e d  Target  Area Code  e a r l i e r , and t h i s i s summarised i n by the author from D i r e c t o r a t e  D i r e c t o r a t e Goal Areas A f f e c t e d  00  1, 2, 3  01  1 (20%) 2 (60%) 3 (20%)  02  1 (30%) 2 (50%) 3 (20%)  03  1 (85%) 2 (10%) 3 (5%)  04  1 (70%) 2 (10%) 3 (20%)  05  1  06  1 (60%) 2 (30%) 3 (10%)  07  1 (5%) 2 (5%) 3 (90%)  08  1, 2, 3  Table 3-1  data.  Target Area Codes Related to D i r e c t o r a t e Goals  I t can be seen from the above t a b l e t h a t although the i n t e n t i o n s of PPBS r e g a r d i n g and  the s e t t i n g o f o b j e c t i v e s and goals  (termed  goals  t a r g e t s by the D i r e c t o r a t e ) have been f o l l o u e d , i t i s a n t i c i p a t e d  by the author t h a t the c r o s s l i n k i n g o f the t a r g e t s and goals may  - 1 0 7 -  l e a d to problems of measurement of both i n p u t s and to each g o a l , u i t h the a l l o c a t i o n  outputs  of j o i n t c o s t s being  related  particularly  difficult. The ness, has  f a c t t h a t such a framework, even u i t h the above ueak-  been formulated  shous an auareness at the  General l e v e l o f the p o t e n t i a l  usefulness  Director  of PPBS u i t h i n h i s sphere  of i n f l u e n c e . The c o s t i n g and  use  o f the o v e r a l l programme as a b a s i s f o r subsequent  submission f o r approval  of funds r e p r e s e n t s  advance i n the s c i e n c e o f government budgeting. s h a l l see  i n the f o l l o u i n g  chapter,  p e c i a l l y u i t h i n the o p e r a t i n g be overcome, not and  divisions  there  i s to persuade harassed  interpretation  Another d i f f i c u l t y f o r s e e n  t h i s again  This therefore  scientists  i s uorthuhile. i s meaningful measurement  u i l l be  secondly to  discussed  i n the f o l l o u i n g ' c h a p t e r i n the c o n s i d e r a t i o n ate u i t h i n Marine Sciences  their  i n greater  concludes the s e c t i o n on the p r a c t i c a l the  follouing  F e d e r a l Government, the P a c i f i c Region of Marine Sciences the appendix to t h i s t h e s i s ) , u i t h  a t t i t u d e s t h a t had  setting  chapter examines i n  namely the o b t a i n i n g o f c o s t data u i t h i n a s m a l l subset of  o f data and  detail  of a R e g i o n a l D i r e c t o r -  d e t a i l a p r a c t i c a l study concerned u i t h a s m a l l p a r t of PPBS  (forming  and  Directorate.  of the F e d e r a l Government, and  orate  es-  i n t h e i r time devoted  assignment o f c o s t s f i r s t l y tD the t a r g e t s and g o a l s , and  ue  are many problems to  t e c h n o l o g i s t s t h a t the necessary i n c r e a s e  associated  Houever as  at the R e g i o n a l l e v e l , and  the l e a s t o f u h i c h  to data c o l l e c t i o n and  a major  theory,  the Direct-  the problems both  to be overcome by the  author.  F i n a l l y , chapter 5 in summary includes some observations by the author as an outcome of the p r a c t i c a l exercise which hopefully w i l l aid in the guidance of staff  involved in the  setting up of a PPBS throughout the Federal Government departments, with suggested areas for further research.  -109-  E.  1.  References  G. B. Doern, "Recent Changes i n the Philosophy o f P o l i c y • Making i n Canada" ( u n p u b l i s h e d paper, 1971) p. 1.  2.  F. S c h i n d l e r and C. M. L a n p h i e r , " S o c i a l S c i e n c e Research and P a r t i c i p a t o r y Democracy i n Canada", Canadian P u b l i c A d m i n i s t r a t i o n XII No. 4 (Winter 1969) pp. 481-49B.  3.  " T r a n s c r i p t o f the Prime M i n i s t e r ' s Press Conference", Ottauia, August 13th, 1969, p. 10.  4.  G. B. Doern, op. c i t . p.  5.  A. W. Johnson, "The T r e a s u r y Board o f Canada and the Machinery of Government o f the 1970's", ( u n p u b l i s h e d paper, 1971) p. 2.  6.  Loc. c i t .  7.  I b i d . , p.  8.  Loc. c i t .  9.  D. R. Yeomans, "PPB i n the F e d e r a l Government o f Canada", address to 26th S p r i n g Conference, The P e r s o n n e l A s s o c i a t i o n of Toronto, A p r i l 5th, 1968, p. 2.  10.  Treasury Board News Release, Jan. 26th, 1967,  11.  E. J . Benson, Address to O n t a r i o n I n s t i t u t e o f C h a r t e r e d Accountants, Waterloo O n t a r i o , June 3rd, 1968, p. 3.  12.  Planning,Programming, Canada, 1969) p. 8.  13.  I b i d . , p.  14.  G. B. Doern, op. c i t . ,  15.  I b i d . , p.  16.  Programme F o r e c a s t and E s t i m a t e s Manual (Ottawa: Aug. 1969) chapter I .  17.  G. B. Doern, op c i t . ,  18.  A. W. Johnson "PPB and D e c i s i o n Making i n the Government o f Canada" address to 50th A n n i v e r s a r y Conference of S o c i e t y o f of I n d u s t r i a l Accountants, June 18, 1970.  19.  C.  5.  19.  Budgeting Guide,  1969  p.  2.  (Ottawa: Govt, o f  10. p.  14.  15.  M. Drury,  p.  Treasury  Board;  16.  "New. Release on T a b l i n g o f 1970-71 Estimates'; p.  3.  -110-  20.  G. B. Doern, op. c i t . p.  18.  21.  Memorandum f o r Cabinet Approval, P r e s i d e n t of Treasury Board March 24th, 1972.  22.  As quoted i n "Marine Science D i r e c t o r y Programme A n a l y s i s Handbook" (unpublished, Ottawa, December 1972.)  23.  Commons Debates, Hansard Jan. 27th, 1971,  24.  I b i d . , p. 2830.  25.  I b i d . , p.  26.  Environment Canada, I t s O r g a n i s a t i o n and O b j e c t i v e s (Ottawa: Information Canada, 1971) p. 5.  27.  I b i d . , pp.  28.  F e d e r a l Government Estimates 1971-72 (Ottawa, 1971)  29.  I b i d . , p.  4-6.  30.  I b i d . , p.  6-10.  31.  I b i d . , p.  6-20.  32.  "Programme A n a l y s i s - Revised E d i t i o n " (unpublished, Ottawa, January 1973).  33.  G. B. Doern, op. c i t . ,  34.  I b i d . , p.  35.  Marine S c i e n c e s D i r e c t o r a t e , I n t e r n a l D r a f t Memorandum pp. 1-2.  p. 2826.  2831.  1-3.  pp.  pp. 24-25.  3-5.  3. 1972,  -111-  CHAPTER <+  A FIELD STUDY AT THE OPERATIONAL LEVEL OF THE FEDERAL GOVERNMENT - MARINE SCIENCES DIRECTORATE (PACIFIC REGION)  A.  Introduction The intention of this chapter is to l i n k the theory and reason-  ing behind a PPBS as investigated in chapter 2 and the objectives of Federal Government at the M i n i s t e r i a l l e v e l as outlined chapter 3 and to see what a PPBS may have to offer at the f i e l d operational l e v e l of a Federal Government Department, namely Marine Sciences Directorate ( P a c i f i c Region) a subset of one of the five operational units within the Department of the Environment. Chapter 3 contained three organisation charts, showing the connection between the Federal Government hierarchy, and the P a c i f i c Region of the Marine Sciences Directorate, located in V i c t o r i a , B. C . , where the ensuing cost c l a s s i f i c a t i o n analysis was performed.  B.  Marine Sciences Directorate ( P a c i f i c Region) Before presenting the organisation structure and outlining  the various r e s p o n s i b i l i t i e s within the region, i t i s considered useful to discuss the recent history of the Directorate which at the Regional Director l e v e l i s at the f i f t h t i e r of the hierarchy below the Cabinet Minister l e v e l .  The Directorate i s s t i l l in the  -112-  ernbryonic stages of i t s development, and t h i s m i l l give a u s e f u l frame of r e f e r e n c e for. the a n a l y s i s , p a r t i c u l a r l y u i t h r e s p e c t to some of the d i f f i c u l t i e s encountered.  The  t r a d i t i o n a l costing  system u t i l i s e d u i t h i n the Region i s o u t l i n e d , and e x e r c i s e , u h i c h i s presented c r i b e d i n some d e t a i l both  the c o s t i n g  as an appendix to t h i s t h e s i s , i s des-  as to a b j e c t i v e and r e a s o n i n g  the s p e c i f i c methods adopted as a p p r o p r i a t e f o r the  behind  study.  F i n a l l y there i s an o u t l i n e of recommendations by author,  the  u h i c h i t i s hoped uould a d j u s t the e x i s t i n g system to  c o n c e p t u a l l y capable  one  of p r o v i d i n g the i n f o r m a t i o n r e q u i r e d by a  f u l l y o p e r a t i o n a l PPBS s t r u c t u r e u i t h i n the F e d e r a l government. Expansion o f the scope of Marine S c i e n c e s a c t i v i t i e s i n the P a c i f i c Region uas  p l a c e d i n the hands a f the Department a f  Energy, Mines and Resources i n 1962,  soon a f t e r t h a t Department took  on the major f e d e r a l r e s p o n s i b i l i t y f o r the development of oceanography i n Canada. I n s t i t u t e uas  C o n s t r u c t i o n of a West Coast  o r i g i n a l l y scheduled  f o r the mid  f e r r e d i n favour of the Canada Centre During appointed  and  the f o r m a t i o n  Dceanographic  196a s, but uas  f o r Inland Uaters  at B u r l i n g t o n .  the l a t e 1960;s the d i r e c t o r and h i s deputy uere  took up f u l l  time a c t i v i t i e s ,  and g r a d u a l l y s u p e r v i s e d  of the r e s e a r c h d i v i s i o n s u h i c h nou  of the i n s i d e s t a f f ' s  form n e a r l y  30%  personnel.  At the same time, as o u t l i n e d i n chapter Government O r g a n i s a t i o n Act 1970:  3, under the  P a r t I - Department of the  ment Act, the r e s p o n s i b i l i t y f o r Marine S c i e n c e s uas neu  de-  1  Department of the Environment from June 1971,  Environ-  vested i n the  under the  direct  s u p e r v i s i o n of the A s s i s t a n t Deputy M i n i s t e r - Water Management  -113-  Service.  T h i s o r g a n i s a t i o n a l change had  the Branch i n t o formal  the e f f e c t of  bringing  a s s o c i a t i o n with many groups such as  F i s h e r i e s Research Board and  the Atmospheric Environment S e r v i c e ,  with whom there have always been c l o s e working r e l a t i o n s . the  the  However,  farmer c l o s e o r g a n i s a t i o n a l l i n k with those performing marine  geology and  geophysics has  been broken, s i n c e those groups r e -  mained w i t h i n the Department of Energy, Mines and It was Branch was  not u n t i l summer 1972  redesignated  c h a r t took the The  Resources.  t h a t the Marine  as a D i r e c t o r a t e , when the  form as shown i n F i g .  Sciences  organisation  4-1.  r e s p o n s i b i l i t i e s o f the v a r i o u s  d i v i s i o n s of the  Region  are as o u t l i n e d below: i.  R e g i o n a l Hydrography T h i s d i v i s i o n comprises approximately one  support p e r s o n n e l w i t h i n the Region, and  h a l f of the  p r i o r to the a d d i t i o n of  the Research D i v i s i o n formed the major r e s p o n s i b i l i t y of  the  D i r e c t o r a t e as p a r t o f the Canadian Hydrographic S e r v i c e . s p o n s i b i l i t i e s may a) f i e l d  volves for  be c o n v e n i e n t l y  hydrography and  c h a r t c o n s t r u c t i o n , and  The  re-  categories  b) t i d e s and  currents.  a)  F i e l d hydrography and  The  hydrographic survey a c t i v i t y on the P a c i f i c coast i n -  the  field  c o l l e c t i o n and  the p r o d u c t i o n  ibility  d i v i d e d i n t o two  chart  non  office  construction  compilation  o f the n a u t i c a l c h a r t s .  comprises a l l n a v i g a b l e  The  area o f respons-  waters o f Western Canada to  Alberta-Saskatchewan border, with the e x c e p t i o n R i v e r , and  of data e s s e n t i a l  o f the Lower F r a s e r  a l s o the Western Canadian A r c t i c , i n c l u d i n g the  MacKenzie waterway.  In g e n e r a l ,  the  Athabasca-  the data as c o l l e c t e d i s f a r more  D £ P . OlQECTOQ "! >•.>•  :  -•t"... ••  '"v 51  <fc' . .  ' • v: A D M lis).  FINANCE  CE&tOMAU  CE&iO'-JAL  CCS SHIPS  DU2. PAC. O C C A M  OCEArJ  E M 6 I M .  CHEIA  CVELO  ELECT RO-  C A C 8 0 M  m m 0 « 0 6  MECHAMIC&  fe«jd6et  OCEAM fHiSlCS  SEA CES.  r  OCEAN>C>6 «  -  PEBSOMNEL  CHART  LAUNCHES  -  MECHANIC-  H^OGoCACft.  EKl£»ltsi.  AMAC-ftlS  •  &EMBCAU  MARINE  T O ACE e4.eMe»«JT AKlAVX&lS  COCCEMTS  SOENACES  (PACIFIC  GOAVTAL. ©Cap»iMO0>  - •  TIDES 4  DEPOT  EUECTOO • £N6. ORG. C H A R T  .  OPFtMOCE  C U M  ATE  OC£.A«4  CHEMICAL  NOMeQtCAL  ANALYSIS  HOb6.U.i«>6  AIZCTVC  INUST 4 ESTUAtty  DIRECTORATE  g £ G < Q N )  GEMOTE  I  Figure  4-1  Source:  Directorate  P e r s o n n e l Records.  -115-  p r e c i s e than i s r e q u i r e d f o r immediate use, be o f i n c r e a s i n g value,  and  other s p e c i a l p r o j e c t s .  The  c u r r e n t programme  tanker  includes  Quatsino Sound o^fVancouver  I s l a n d , the approaches to P r i n c e Rupert, and  on the MacKenzie R i v e r .  the e a r l y 1950's, s m a l l surveys have been conducted i n the  western A r c t i c .  T h i s programme has  the Region's l a r g e s t s h i p CSS  r e c e n t l y been i n t e n s i f i e d ,  Parizeau  spending approximately  months each summer o b t a i n i n g d e t a i l e d sounding i n f o r m a t i o n , p h y s i c a l and  oceanographic o b s e r v a t i o n s  a d d i t i o n to the standard d e t a i l e d bathymetric use,  to  required  to p o s s i b l e deep sea p o r t s , super  surveys i n the S t r a i t of Georgia,  Since  i s considered  as i n the f u t u r e they might be  u i t h p a r t i c u l a r reference routes  but  and  a new  contouring  Sea.  are a v a i l a b l e f o r commercial  i s now  Currents  being  with fishing  compiled p r i o r to p u b l i s h i n g ,  (surveys)  t i d a l section i s responsible  f o r p r o v i d i n g the  datums f o r the hydrographic c h a r t s , and  i n the Western A r c t i c .  Cross s e c t i o n s i n the  from G a b r i o l a I s l a n d to L u l u I s l a n d , and  Cape Lazo to Texada I s l a n d , and  Pacific  N a v i g a t i o n a l data f o r the MacKenzie  waterway i s a l s o compiled w i t h i n the s e c t i o n . S t r a i t o f Georgia  tidal  a l s o f o r the  measurement o f t i d a l c u r r e n t s i n r e s t r i c t e d passages on the Coast and  In  format of f o l d e d c h a r t , designed s p e c i f i c a l l y f o r -  b) Tides and  reference  two  geo-  navigational charts, s p e c i a l charts  s m a l l boat r e c r e a t i o n a l use  The  i n the Beaufort  uith  i n the Malaspina S t r a i t  are  from being  s t u d i e d from data c o l l e c t e d over p e r i o d s of s e v e r a l months during the past year, use Work i s i n progress  being made of s t r i n g s of moored c u r r e n t meters. on a mathematical model of the Lower F r a s e r  R i v e r , i n c o r p o r a t i n g r i v e r flow and  t i d a l e f f e c t s , and  i f successful  -116-  the model w i l l be able t o determine water l e v e l s i n the t i d a l reaches  o f the F r a s e r e s t u a r y .  D i r e c t b e n e f i t s should be d e r i v e d  f o r n a v i g a t i o n and f l o o d c o n t r o l , with p o s s i b l e gains t o f i s h e r i e s and p o r t development as w e l l as p o l l u t i o n ii.  Ocean  Engineering  The  present e f f o r t  upon wave f o r e c a s t i n g .  control.  i n t h i s area i s concentrated  largely  Because o f the l o c a t i o n on the western edge  of the c o n t i n e n t , the Region has a s t r o n g i n t e r e s t i n the i n t e r a c t i o n between atmosphere and s e a , bath i n s h o r e and o f f s h o r e .  I t i s be-  l i e v e d t h a t the knowledge i s now a v a i l a b l e t o produce a d a i l y f o r e cast o f wave c o n d i t i o n s throughout the S t r a i t o f G e o r g i a .  This  will  be o f use t o r e c r e a t i o n a l b o a t i n g , towing o p e r a t i o n s , and would  pro-  v i d e c o n s i d e r a b l e a s s i s t a n c e i n p o l l u t i o n c o n t r o l a c t i v i t i e s such as d e b r i s c l e a r a n c e and s p i l l iii.  Ocean  clearance.  Chemistry  T h i s programme i s o n l y two years o l d , and i s p r i m a r i l y aimed a t determining  the c o n c e n t r a t i o n and movement o f v a r i o u s minor  c o n s t i t u e n t s i n the open sea, some o f which are very from the p o i n t o f view o f the world ocean.  significant  Since the expected  con-  c e n t r a t i o n o f p o l l u t a n t s o f f s h o r e i s g e n e r a l l y f a r l e s s than i n inshore waters, such a programme ensures the development o f t e c h niques shore  t o meet the f u t u r e needs o f p r o g r e s s i v e l y more s t r i n g e n t i n pollution control.  At the present  time, n u t r i e n t and carbon-  d i o x i d e a n a l y s i s systems are i n o p e r a t i o n . years i n c l u d e r e s e a r c h on ocean content l e a d , mercury and cadmium.  Plans f o r the next few  o f heavy metals, i n c l u d i n g  When i n f u l l o p e r a t i o n , the programme  should p r o v i d e a v a l u a b l e f a c i l i t y  f o r the s e n s i t i v e and p r e c i s e  -117-  measurement a f p o l l u t a n t s i n sea u a t e r , and ation  (by t a g g i n g  f o r source  determin-  i f n e c e s s a r y ) , as u e l l as g i v i n g some u s e f u l  p o i n t e r s on a i r p o l l u t a n t s . i v . Ocean P h y s i c s The  c u r r e n t shipborne  c i r c u l a t i o n and mixing i n those  programme i s aimed at d e f i n i n g ocean  i n t h a t p a r t of the n o r t h e a s t P a c i f i c ,  inshore u a t e r s u h i c h are o f p a r t i c u l a r concern  u a t e r management and c l i m a t o l o g y v i e u p o i n t . made from the Canadian u e a t h e r s h i p s vironment S e r v i c e ) , o f f the c o a s t , and  (under  and  from a  Observations  are  the c o n t r o l of Atmospheric  manning ocean s t a t i o n  "Papa" some 500  miles  from Marine S c i e n c e r e s e a r c h v e s s e l s i n the  o f Georgia and other i n s h o r e u a t e r s .  The  Frozen Sea Research Group  has r e s p o n s i b i l i t y f o r a p p l i e d r e s e a r c h on i c e formation and  arctic  oceanography, and has s e t up base f a c i l i t i e s at Cambridge Bay on Greely F j o r d i n the v. Support  and  Arctic.  Services  Even though the f o r e g o i n g s e c t i o n s d e s c r i b e the of the D i r e c t o r a t e , the support  activities  s e r v i c e s of the A d m i n i s t r a t i o n  Department and p a r t i c u l a r l y of the Ships D i v i s i o n under the Marine Superintendent istration  Strait  should be c o n s i d e r e d .  Regional  The manager o f admin-  i s designated R e g i o n a l A d m i n i s t r a t o r , and  i s responsible  f o r the day to day running o f the o r g a n i s a t i o n , i n c l u d i n g m a t e r i a l procurement and payments, personnel matters  and  the p r e p a r a t i o n  of accounts  f o r both the D i r e c t o r General of Marine S c i e n c e s i n  Ottaua,  internal reporting.  and  budget comprises  approximately  The  one  R e g i o n a l Marine  h a l f of the t o t a l  Superintendent's Regional  En-  -118-  Budget o f $4.5 m i l l i o n per year, and i t i s t h e r e f o r e e s s e n t i a l t h a t the c o s t l y resource o f s h i p a c t i v i t i e s i s e f f i c i e n t l y cated among the hydrographic achieved  and r e s e a r c h d i v i s i o n s .  allo-  This i s  by a s e r i e s o f programme c o - o r d i n a t i o n meetings between  the v a r i o u s d i v i s i o n a l managers where a compromise i s reached c o n s i d e r a t i o n o f a l l the competing requirements  f o r ship  after  time.  For management purposes, the o r g a n i s a t i o n i s d i v i d e d i n t o responsibility  c e n t r e s , each c o n s i d e r e d as a c o s t c e n t r e with i t s  own r e f e r e n c e code (termed a c o l l a t o r number). gives a l i s t  Table 4-1 f o l l o w i n g  o f these c o l l a t o r s t o g e t h e r with the budget  allocation  f o r each (year 1971-72) which by r e f e r e n c e to the o r g a n i s a t i o n c h a r t ( F i g . 4-1 on page 114 ) can be a l i g n e d to the v a r i o u s management r e s p o n s i b i l i t i e s .  Collator Code  Budget Allocation  % of Regional budget  S a l a r i e s as % of s e c t i o n budget  Administration  3130  $253,000  5.6  64.8  Field  3135  592,000  13.0  69.5  Tides & Currents  3136  379,000  8.4  37.3  Chart  3137  182,000  4.0  83.5  Frozen Sea Research  3150  224,000  4.9  59.0  Offshore Oceanography  3151  194,000  4.3  48.0  Ocean Mixing  3152  88,000  1.9  45.5  Ocean  3154  86,000  1.9  40.5  Oceanography and Limnology  3155  273,000  6.0  58.0  Ship  3160- -69 2^70,000  50.0  54.5  100.0  56.6  Hydrography Construction  Chemistry  Division  Total  #4 ,541,000 Table 4-1  Cost Centred  Budget  Responsibilities.  -119-  Th e c l a s s i f i c a t i o n  system used u i t h i n the Region to control  the expenditure of these budget allocations  closely follows the  t r a d i t i o n a l model presented in chapter 2 of this thesis, with the main concern being the proper stewardship of the funds.  The c o l -  lator based allocations are partitioned into functional " l i n e objects", which for convenience of Regional record keeping have been aggregated into series of l i k e categories as l i s t e d in the following t a b l e .  Mote that the allocations are subdivided into two  major sections, namely Operational and Maintenance (including a l l personnel costs) and c a p i t a l  1.  expenditures.  Operational and Maintenance i.  Personnel  Salaries - subdivided into established and casual s t a f f . Overtime - subdivided into established and casual s t a f f . A l l other personnel expenses  ii.  Other 0 & M Expenditures  2. Capital  Travel Freight Communications Advertising and P u b l i c i t y Training and Education Miscellaneous Professional and Special Services Rentals Repairs and upkeep of machinery and equipment Materials and Supplies Acquisition or construction of c a p i t a l machinery and equipment.  Table 4-II  Schedule of Cost Categories U t i l i s e d Uithin the Regional System.  -120-  It system  can be seen t h e r e f o r e t h a t u i t h i n the e x i s t i n g  there are none of the requirements  Regional  f o r the immediate  e n t a t i o n of a PPBS, s i n c e there i s no l i s t  of objectives  implem-  utilised  u i t h i n the expenditure frameuork, and a l l c o s t s are a l l o c a t e d firstly  to the s e c t i o n r e q u i r i n g the expenditure and then to the  p a r t i c u l a r category of expenditure as shoun i n t a b l e No attempt uhich u i l l system,  has been made to c o n s i d e r t o t a l systems c o s t s ,  cut a c r o s s the tuo dimensions  time  (the present budget system  one y e a r ) and c o l l a t o r to  be aggregated  of the present  ( t h e r e i s no automatic mechanism f o r c o s t s  i n any  form other than by these c o s t c e n t r e s ) . utilise  (3136).  The  v e s s e l s (3160-69),  field  party u i l l  and f i n a l l y  and  u t i l i s e one of the  the data u i l l  and p l o t t i n g by the c h a r t c o n s t r u c t i o n s e c t i o n  need c o m p i l i n g  (3137).  It i s highly  probable t h a t even f o r the s m a l l e r p r o j e c t s ( e . g . the sounding minor i n l e t ) the t o t a l process from datum f i x i n g to f i n a l uill  Georgia.  W h i l s t the problems o f implementing  cussed more f u l l y  of a  plotting  take g r e a t e r than the one year budget p e r i o d , and t h i s  c e r t a i n l y be t r u e f o r the l a r g e r surveys e.g. soundings of  For  a f i e l d party  r e q u i r i n g p r i o r datums f i x e d by the t i d e s  currents section Region's  classification  has a time h o r i z o n of only  example a hydrographic c h a r t i n g p r o j e c t u i l l ( c o l l a t o r 3135)  4—II.  Df  a PPBS are  uill Strait dis-  l a t e r i n the c h a p t e r , the simple example g i v e n  above at l e a s t g i v e s some i n s i g h t to the problems u h i c h can be borne in  mind u h i l s t  i n v e s t i g a t i n g the v a r i o u s procedures adopted  project costing exercise described belou.  i n the  -121-  C.  The Project Costing  Exercise  This section describes i n d e t a i l the objectives and general methods adapted for a costing exercise performed u i t h i n Marine Sciences D i r e c t o r a t e - P a c i f i c Region by the author.  No attempt  has been made to focus an measures of output, or revenues received for any services, as this uas outside the scope of the study.  Ex-  tensive references are made to the r e s u l t i n g report, the tables of uhich are reproduced as the appendix to this t h e s i s . The abjective  af the casting study uas to "allocate a l l  expenditures u i t h i n the Regional budget for f i n a n c i a l year 1971-72 to the various projects and a c t i v i t i e s carried on u i t h i n the Region during the year".  I t should be r e a l i s e d at the outset that these  t o t a l expenditures include many j o i n t costs (for example the services of the Administration  Division) but s p e c i f i c a l l y excludes any  free goods (for example the r e n t a l far the o f f i c e s i n V i c t o r i a , and use made of vessels operated by both Canadian Armed Forces and Ministry of Transport  for uhich there i s no procedure for cast  recovery  Houever every e f f o r t has been made to shDu  or charge).  the "cost" of services supplied to other agencies uithout charge, and this i s of p a r t i c u l a r relevance  to ship costs, uhere i t can  be seen from Table 11.20 (page 20S)that approximately $880,000 or 34.6%  of the t o t a l D i v i s i o n a l budget may reasonably be allocated to  non Marine Science  Directorate users.  It should also be noted that  a l i m i t a t i o n exists throughout this study uith reference to c a p i t a l expenditures u i t h i n the Region, since no attempt i s made to "charge" the cost of c a p i t a l assets to various users over their  -122-  period of useful l i f e .  T h i s o f course has s e r i o u s i m p l i c a t i o n s  when c o n s i d e r i n g major c a p i t a l e x p e n d i t u r e s such as t h e purchase of v e s s e l s w i t h a r e s u l t i n g u n d e r c h a r g i n g o f a l l u s e r s . The  general  approach t o t h e problem may b e s t be summarised  by t h e f o l l o w i n g r e v i e w o f the procedure adopted. The  author, a f t e r studying  t h e o r g a n i s a t i o n a l c h a r t and  spending some time w i t h t h e deputy D i r e c t o r d e c i d e d t o conduct p r e l i m i n a r y i n t e r v i e w s w i t h a l l the d i v i s i o n a l managers, and a t t h i s s t a g e t h e o b j e c t i v e s o f t h e e x e r c i s e were e x p l a i n e d  i n the  hope t h a t t h i s would a t l e a s t g i v e an i n d i c a t i o n o f what " t h a t stranger  i n t h e end o f f i c e " was t r y i n g t o a c h i e v e .  t h i s was a very s u c c e s s f u l t e c h n i q u e ,  • Upon r e f l e c t i o n  and made t h e subsequent i n  depth i n t e r v i e w s f a r e a s i e r t o c o n d u c t , when each d i v i s i o n a l manager was asked t o c o n s i d e r  a l i s t of sub-objectives  suitable f o r project  c o s t i n g , something which was q u i t e new t o t h e v a s t m a j o r i t y o f them. A f t e r these p r e l i m i n a r y i n t e r v i e w s , and subsequent t o t h e author g a i n i n g a thorough u n d e r s t a n d i n g o f t h e e x i s t i n g R e g i o n a l e x p e n d i t u r e a s s i m i l a t i o n system b r i e f l y d e s c r i b e d the i n depth i n t e r v i e w s were c o n d u c t e d .  i n s e c t i o n B above,  The concept was t o d i s c u s s  a l i s t o f p r o j e c t s and how the c o s t s w i t h i n each c o l l a t o r might be a l l o c a t e d to each.  T h i s was c o n s i d e r e d  problem o f a p p o r t i o n i n g  a t the same time as t h e  the c o s t s o f t h e major j o i n t p r o d u c t s v i z  A d m i n i s t r a t i v e c o s t s and t h e e x p e n d i t u r e s a t t r i b u t a b l e t o t h e S h i p Division. A b a s i c understanding of the process,  which i s d e s c r i b e d  i n more d e t a i l below, may be had from t h e f l o w c h a r t p r e s e n t e d as Fig.  4-II following.  -123-  Administratian  Ship Division Costs  Costs  I  \  Ship Records  Functional Costs  I  (logs)  \  Proxy l/ariables  Time as Variable  Primary Apportionment to each c o l l a t o r  Direct Allocation to projects (internal)  I  \  I  or users  (external)  Secondary Apportionment to each c o l l a t o r (not including Admin.)  Collator Totals from Ledgers  Totals to be Allocated to Projects Materials  Personnel Costs (Include s a l a r i e s , matls., t r a v e l , telephone, l i b r a r y charges) to Projects based on time  Direct Allocation of certain known materials  Apportionment to other c o l l a t o r s  I  Project Costs  F i g . 4-II  Flow Chart I l l u s t r a t i n g Cast Allocation and Apportionment Procedure.  -124-  Th e apportionment of j o i n t costs i s generally a d i f f i c u l t problem.  For periodic cost reporting such apportionments  are  useful i f the cost i s considered controllable (which may be the case with excessive wasteful usage of ship time), and may serve as an attention-directing and decision making device even i f the consumption of the service i s not c o n t r o l l a b l e , the p r i n c i p l e being to make the departmental manager at least AWARE of other costs being incurred to support his a c t i v i t i e s .  However i f these non  controllable costs are used as a determinant of managerial performance i t i s almost certain to provoke feuding regarding the most equitable means of apportionment, which w i l l generally be "that method which allocates the least cost to the departmental manager concerned". Whilst i t could be reasonably argued that administration i s a function of government i n i t s own right (and indeed the Department of Environment u t i l i s e s  i t as a separate programme as discussed i n  chapter 3) the author was s p e c i f i c a l l y required to make reasonable suggestions for the apportionment of such costs at least to the r e s p o n s i b i l i t y or c o l l a t o r number l e v e l . within the administrative o f f i c e ,  After spending some time  the author f e l t that the  activities  of the d i v i s i o n may be f a i r l y represented by the l i s t of functions given in page 179 of the appended report. penditure, adjusted to r e f l e c t  The t o t a l c o l l a t o r ex-  l i b r a r y costs was then allocated to  each function by consideration of actual s a l a r i e s paid, plus the allocation of non-salary expenditures spent).  (on the basis of man years  Proxy variables had to be u t i l i s e d to make the apportionment  of functional costs to c o l l a t o r s ,  and the various variables,  with  rules for t h e i r application were devised by the author after con-  -125-  s u l t a t i p n with the  functional operatives.  Table II-3, page  i l l u s t r a t e s the percentage apportionments, uhich i n t o d o l l a r values  i n Table II-4 on page 185.  i n c l u d e apportionment to the A d m i n i s t r a t i v e  are  As  translated  these  costs  Department, these uere  "stepped doun" to the remaining c o l l a t o r s by pro r a t i n g . e x e r c i s e forms Table II-5 Dn page 185 and a l l o c a t e d to the a d m i n i s t r a t i v e  effort  administration  of the Region.  schedule of expenditures  The  This  also includes costs  re-  from F i e l d Hydrography  ( c o l l a t o r 3135), s i n c e the R e g i o n a l Hydrographer, as one s e n i o r management team, i s h i s t o r i c a l l y  184,  of  the  concerned u i t h the o v e r a l l  f i n a l apportionments comprise a  to be added to the  the remaining r e s p o n s i b i l i t y c e n t r e s  ledger  e x p e n d i t u r e s of  f o r the purpose of p r o j e c t  c o s t i n g u i t h i n each (e.g. $34,242.00 f o r F i e l d Hydrography from Table II-5 i s c o n s i d e r e d the  as an apportionment from A d m i n i s t r a t i o n  in  l i s t i n g o f F i e l d Hydrography e x p e n d i t u r e s on page 211). The  a l l o c a t i o n of ship D i v i s i o n expenditures i s a v i t a l  c e r n , s i n c e the D i v i s i o n a l budget forms 50% of the t o t a l expenditures.  After a v i s i t  Establishment-Pacific  Regional  to the o f f i c e s of Defence Research  (DREP) at E s q u i m a l t , uho  c o s t i n g the CFAV f l e e t ,  con-  i t uas  decided  by  are r e s p o n s i b l e  for  the author t h a t a simple  method f o r the a l l o c a t i o n of c o s t s u o u l d be on the b a s i s o f s h i p time spent on each p r o j e c t . lems o f i n c r e m e n t a l  T h i s of course ignores  fundamental prob-  c o s t s or indeed the s p e c i f i c a l l o c a t i o n of  p a r t i c u l a r s h i p to the p r o j e c t , as i t can be seen from Table  the 11-10  on page 193 t h a t the s h i p c o s t s f o r each v e s s e l are by no means similar. itly  Houever i t has  considered  been assumed t h a t t h i s i s at l e a s t i m p l i c -  i n the s h i p schedule meetings, and  a l l o c a t i o n of v e s s e l s to p r o j e c t s r e p r e s e n t s  that  the most  the  efficient  -126-  r e s o l u t i o n of the The  first  problem. task t h e r e f o r e , i n the absence  of any f o r m a l  r e c o r d keeping system of s h i p usage, uas to c o n s t r u c t a meaningful  schedule o f time spent by the v a r i o u s v e s s e l s on  particular  p r o j e c t s as o u t l i n e d by the v a r i o u s departmental managers. f o l l o w e d from the second time sequence,  This  i n t e r v i e w with the v a r i o u s managers i n a  but has been i n c l u d e d at t h i s stage i n the des-  c r i p t i o n s i n c e c o n c e p t u a l l y the a l l o c a t i o n o f s e r v i c e c o s t s s h o u l d be the f i r s t  item c o n s i d e r e d i n such an e x e r c i s e .  p r o j e c t s were then c o r r e l a t e d with the masters' spent on each, which was  department These  logs to o b t a i n time  not without d i f f i c u l t y s i n c e the s h i p  r e p o r t s were independently compiled, and r e f e r r e d to n a u t i c a l r a t h e r than p r o j e c t l o c a t i o n s .  I t was  decided by the author to u t i l i s e  a t a b u l a r format f o r the s h i p u t i l i s a t i o n , and a "ship usage summary s h e e t " as comprises Table 11-12-19 (pages 2LD-2D7  was  designed.  As  can be seen, a l l r e l e v a n t times per p r o j e c t s ( f o r the R e g i o n a l u s e r s ) and e x t e r n a l users (nan R e g i o n a l ) f o r each v e s s e l were thus  de-  termined, and these form d i r e c t a l l o c a t i o n s tD the p r o j e c t s , being summarised per c o l l a t o r s e c t i o n and e x t e r n a l user i n Table (page 203).  From t h i s t a b l e i t can be seen t h a t approximately 35% o f  the s h i p usage c o s t s may  reasonably be charged a g a i n s t the v a r i o u s  non R e g i o n a l u s e r s , with the most s i g n i f i c a n t sum  (20%) or over  $500,000 being a t t r i b u t a b l e to use by U n i v e r s i t y o f B r i t i s h The  11-20  i n t r a and i n t e r c o l l a t o r a l l o c a t i o n s comprised  Columbia. the  next stage, with i n depth i n t e r v i e w s o f each manager, and i n most cases s e v e r a l o f h i s s e n i o r s t a f f .  I t was  d u r i n g these d i s c u s s i o n s  t h a t the a c t i v i t i e s o f each d i v i s i o n were p a r t i t i o n e d i n t o  projects  -127-  • r at l e a s t p r o j e c t areas  (such as the p r o d u c t i o n of data by the  ' S a i l i n g D i r e c t i o n s Group l e a d i n g to the p u b l i c a t i o n o f the "B.C. P i l o t " a two volume compendium o f inshore waters w i t h i n the r e g i o n - see page 222.)*  During  these d i s c u s s i o n s i t became  apparent  t h a t there was some d i f f e r e n c e i n p e r s o n a l i t y between the heads o f the newer Research D i v i s i o n s ( g e n e r a l l y younger s c i e n t i s t s ) and those o f the mare t r a d i t i o n a l f u n c t i o n s o f the  Hydrographic  D i v i s i o n , who were c i v i l s e r v a n t s o f many years experience,  i n that  the r e s e a r c h managers were g e n e r a l l y more r e c e p t i v e to the concept of PPBS and the requirement necessarily  f o r t o t a l systems c o s t i n g with i t s  longer time h o r i z o n .  A f t e r the l i s t i n g o f p r o j e c t s , a l l o c a t i o n s o f c o s t s t o them was performed i n two s t a g e s . important  Since the s a l a r y c o s t s form such an  s e c t o r o f most c o l l a t o r c o s t s (see Table 4-1, page 1 1 8 ) ,  t h i s seemed to be the l o g i c a l s t a r t i n g p o i n t .  S a l a r y l i s t s were  checked, and by a l l o c a t i n g these c o s t s a g a i n s t the p a r t i c u l a r members ( i n c l u d i n g the pro r a t i n g o f any d i s c r e p a n c y — g e n e r a l l y o f the order o f 6%) and adding a t t r i b u t a b l e to p a r t i c u l a r  v a r i o u s other expenses  e t c . the t o t a l  c o s t s can never be s t r i c t l y payments —  accurate  expenses,  "personnel" cost  f o r the c o l l a t o r c o u l d be assessed per i n d i v i d u a l .  with overtime  which was  i n d i v i d u a l s , such as telephone  t r a v e l , l i b r a r y apportionments,  staff  Whilst  these  ( e . g . there i s the d i f f i c u l t y  cash a c t u a l l y p a i d i n hard c u r r e n c y , as  a g a i n s t time taken as leave i n l i e u o f such payment, a " s o f t money" or paper t r a n s a c t i o n ) i t was thought  t h a t a t l e a s t t h i s method was  a f a i r attempt i n view o f the c o n s t r a i n t s o f both time and data availability.  These " p e r s o n n e l " expenses were a l l o c a t e d to p r o j e c t s  -128-  an the b a s i s o f time spent on each,but the data, a f t e r the event cannot be anything except f o r the hydrographic f i e l d  other  being  acquired  than a crude assessment  p a r t i e s , who are r e q u i r e d t o  submit a d e t a i l e d monthly r e p o r t o f uork performed, which i s l a t e r compiled i n t o a comprehensive F i e l d Report.  Subsequent to t h i s  a l l o c a t i o n o f personnel c o s t s , the remaining two p r i n c i p a l expendi t u r e c a t e g o r i e s o f Operation and Maintenance ( m a t e r i a l s ) and c a p i t a l acquisitions required analysis. to be an extremely t e d i o u s and  other  T h i s proved i n g e n e r a l  e x e r c i s e , i n v o l v i n g the t r a c i n g o f accounts  back up i n f o r m a t i o n  to supplement the ledger  which only g i v e the payee and d o l l a r v a l u e . c o s t s were a l l o c a t e d to personnel, for  postings,  In some i n s t a n c e s the  as i n Table I I I - 7  Hydrographic d i v i s i o n purchases, and i n o t h e r s  (page 213)  were a l l o c a t e d  d i r e c t l y to p r o j e c t s , as i n Table IV/-3 (page 250) f o r Offshore Oceanography e x p e n d i t u r e s .  The c o n s i d e r a t i o n  of capital  expenditures,  which comprise an e n t i r e l y separate c o s t i n g category both w i t h i n the R e g i o n a l budget (and a l s o a t the F e d e r a l Budget l e v e l ) was concept u a l l y simple, decided  but i n p r a c t i c e r a t h e r d i f f i c u l t  by the author to charge any c a p i t a l c a s t s  with a p r o j e c t e d u s e f u l l i f e the  it  greater  items were purchased s p e c i f i c a l l y  an any one p r o j e c t . use  to r e s o l v e .  I t was  ( c o s t s o f equipment  than one y e a r ) to p r o j e c t s  that  f o r , and would be used s o l e l y  However i f a p a r t i c u l a r p r o j e c t r e q u i r e d the  o f c e r t a i n equipment, and at the time o f purchase o f the item was known t h a t i t would subsequently be used over a p e r i o d o f  years on other  p r o j e c t s , then t h i s cost was not a l l o c a t e d to the  p r o j e c t , but was recorded  separately  as a c o l l a t o r c o s t .  behind t h i s dichotomy was t h a t i n the former i n s t a n c e represents  The r a t i o n a l e  the cost  p a r t o f the t o t a l system c o s t r e q u i r e d by the p u r s u a l o f  -129-  p r o j e c t , w h i l s t i n the l a t t e r o n l y p a r t o f the c o s t should be a t t r i b u t e d to the p r o j e c t i n q u e s t i o n , with subsequent of  c o s t t o other p r o j e c t s l a t e r i n the a s s e t ' s Although  the r e s u l t i n g  life.  "timing d i f f e r e n c e " i s o f im-  portance under the present t r a d i t i o n a l budgetary of  transfer  system,  advent  the PPBS " t o t a l system c o s t " renders i t f a r l e s s s o , and an  e q u i t a b l e c h a r g i n g system c o u l d be achieved by an i n v e n t o r y system where the c o s t o f c a p i t a l a s s e t s can be r e c o r d e d , and a '.iseful l i f e "  determined,  charges being made each year a g a i n s t  p r o j e c t s f o r the d e p l e t i o n i n the worth o f the a s s e t s e i t h e r  over  a time base, o r perhaps on a usage base ( f o r example a machine w i t h an e s t i m a t e d u s e f u l l i f e to  o f 1D,0QQ hr  p r o j e c t s a t ( c o s t - s a l v a g e ) -S- 10,DOD).  would be charged However a t present  t h e r e i s no R e g i o n a l Inventory f o r these items, and although the author recommended the u s e f u l n e s s o f such a system a system performing  (indeed  a s i m i l a r f u n c t i o n i s a t present being de-  v i s e d ) , i t was not c o n s i d e r e d p r a c t i c a l t o a l l o c a t e p a r t o f the c o s t o f c a p i t a l a s s e t s purchased  d u r i n g t h e year on a somewhat  a r b i t r a r y b a s i s to p r o j e c t s undertaken,  as t h i s might be mis-  l e a d i n g i n the t o t a l c o n s i d e r a t i o n o f TOTAL REGIONAL expenditure a l l o c a t i o n to project categories. P r a c t i c a l examples o f the two approaches may be seen i n the appended r e p o r t as f o l l o w s : a)  F i e l d Hydrography - C a p i t a l Expenditures NOT a l l o c a t e d (page 220 ) .  b)  Ocean Chemistry D i v i s i o n - C a p i t a l Expenditures a p p o r t i o n e d as per Table IV-13 (page 26U ).  F o l l o w i n g t h e c o n s i d e r a t i o n o f p r o j e c t s , the d e t e r m i n a t i o n o f  -130support s e r v i c e and m a t e r i a l s  apportionments,  the a l l o c a t i o n o f p e r s o n n e l  c o s t s to p e r s o n n e l or p r o j e c t s as  and a c a r e f u l c o n s i d e r a t i o n of the most e q u i t a b l e capital costs,  a final  convenient a n a l y s i s  (rather  appropriate, treatment  being a t a b u l a r  format,  uith a series practical  than a r a t h e r complex s o l u t i o n u t i l i s i n g s i m u l -  taneous e q u a t i o n s ) .  The g e n e r a l method i s u e l l  f o r F i e l d Hydrography i n Table I I I - 9 ,  illustrated  page 227 , uhere a step  by step a n a l y s e s r e s u l t s i n the f i n a l i s a t i o n o f p r o j e c t as summarised on page 228 •  A s i m i l a r procedure uas  i n each o f the r e s p o n s i b i l i t y c e n t r e s ,  u i t h the f i n a l  result  ments study.  being  to  (except f o r the e x c l u s i o n o f some c a p i t a l c a s t s r e c o r d e d  separately), revenues,  costs  performed  an a l l o c a t i o n o f t o t a l R e g i o n a l Expenditure f o r the year projects  of  apportionment uas undertaken, the most  of step douns being c o n s i d e r e d to have s u f f i c i e n t accuracy  costs  although as s t a t e d p r e v i o u s l y no i n c l u s i o n o f  or c o s t s o f s e r v i c e s  (i.e.  free  goods) uas  supplied free  by o t h e r  either  depart-  c o n s i d e r e d u i t h i n the scape o f  this  -131-  D.  Recommendations f o r PPBS at the R e g i o n a l  Before d i s c u s s i n g considered  recommendations i n d e t a i l i t i s  u s e f u l to r e s t a t e the  u t i o n o f PPBS. to be  the  The  concepts u n d e r l y i n g  the  most commonly agreed j u s t i f i c a t i o n  instit-  appears  an a n t i c i p a t e d improvement i n the e f f i c i e n c y o f r e s u l t s o f  governmental d e c i s i o n s . i s not  However a simple d e f i n i t i o n of " e f f i c i e n c y "  r e a l l y appropriate.  Ulildavsky*" o u t l i n e s three  s u b - d e f i n i t i o n s p e r t a i n i n g to i t s use c i s i o n complexity.  These may  at v a r i o u s  be c o n s i d e r e d  distinct  l e v e l s of  de-  as:  -  meeting a s e t o b j e c t i v e at lowest . i c o s t , or o b t a i n i n g the maximum amount o f the o b j e c t i v e f o r a s p e c i f i e d amount o f r e s o u r c e s .  mixed e f f i c i e n c y  -  here the a n a l y s t a l t e r s the o b j e c t i v e to s u i t a v a i l a b l e r e s o u r c e s , recognisi n g t h a t the d e i s r a b i l i t y of o b j e c t i v e s may be dependent upon the c o s t of a c h i e v i n g them.  total efficiency  -  o c c u r s when the a n a l y s t , who has a l r e a d y a l t e r e d both means and ends (resources and o b j e c t i v e s ) d i s c o v e r s that the most e f f i c i e n t system cannot be achieved without a change i n the d e c i s i o n machinery. Thus a f u r t h e r v a r i a b l e , implying a change i n p o l i t i c a l r e l a t i o n s h i p s i s introduced."  "pure e f f i c i e n c y  lile can and  Level  f u r t h e r subdivide  the concept of e f f i c i e n c y i n t o a l l o c a t i v e  d i s t r i b u t i o n a l . In the p r i v a t e s e c t o r both of these measures  are based on s u p e r i o r i t y of power i n the market p l a c e .  In  the  wider sphere of p u b l i c d e c i s i o n making, based on u t i l i t y v i a an implied  s o c i a l w e l f a r e f u n c t i o n , i t i s suggested that not  t o t a l r e s u l t s o f d e c i s i o n making are c o n s i d e r e d , various  groups a f f e c t e d by the d e c i s i o n .  but a l s o  only  the  the  In e f f e c t t h e r e f o r e , i t  -132-  may not be s u f f i c i e n t t o simply highest  undertake those p r o j e c t s ranked  by c o s t - b e n e f i t o r s i m i l a r s t u d i e s .  much?" should benefits.  The "who and by how  be i n v e s t i g a t e d i n a d d i t i o n t o the t o t a l c o s t s and  T h i s i s the u t i l i t y  sense, whereas at present  concept being a p p l i e d i n a micro  the d e c i s i o n may be simply  s i n g l e f i g u r e a r i s i n g from c o n v e n t i o n a l  analysis.  based on a  Distributive  e f f e c t s may be i n c l u d e d i n the a n a l y s i s by the u t i l i s a t i o n o f v a r i o u s weightings t o be a p p l i e d to the c o s t s and b e n e f i t s a p p l i c able t o the v a r i o u s  f a c t i o n s as a r e s u l t o f the p r o j e c t , but t h i s  may prove a complex p r a c t i c a l e x e r c i s e , as there way t o compare l o s s e s and gains  among d i f f e r e n t p e o p l e .  t h e r e f o r e see t h a t f a r from there being ive  function underlying  i s no s c i e n t i f i c Uie can  a seemingly simple  object-  d e c i s i o n making i n the p u b l i c s e c t o r ,  there  i s a mesh o f i n t e r d e p e n d e n c e s none o f which i s amenable to a simple s c i e n t i f i c s o l u t i o n .  PPBS i s seen as an attempt to r a t i o n -  a l i s e the non r a t i o n a l as f a r as p r a c t i c a b l e , but we must guard against  the danger t h a t i t might become hidebound and p e r c e i v e d as  an end i n i t s e l f ,  being  f o l l o w e d r e l i g i o u s l y f o r i t s own sake  r a t h e r than used j u d i c i o u s l y as an a i d t o management. The  f o l l o w i n g schedule o f recommendations a r i s e s both from  the c o s t study d e s c r i b e d  e a r l i e r i n t h i s chapter,  and the b a s i c  considerations  o f the aims and theory  o f PPBS d i s c u s s e d  in detail  i n Chapter 2.  I t i s thought u n l i k e l y t h a t many o f the s u g g e s t i o n s  can be i n s t i g a t e d immediately w i t h i n the Region (or Department o f the Environment as a p p l i c a b l e ) but are a t l e a s t worthy o f f u r t h e r study r e g a r d i n g  practicability.  -133-  1.  Use o f T o t a l Systems Cost  A b a s i c requirement  of a PPBS i s t h a t c o s t s should be based  on programmes r e f l e c t i n g a s e t of departmental present the budget p e r i o d of one u i t h i n the Region, and  objectives.  year i s s t r i c t l y  At  adhered to  i n e f f e c t the e s t i m a t e s r e p r e s e n t an ad  e f f o r t to both estimate and c o n t r o l expenditures u i t h i n  hoc  the  f u n c t i o n a l l i n e o b j e c t s s e t doun by Marine S c i e n c e s D i r e c t o r a t e Headquarters,  although  as d i s c u s s e d i n Chapter  being made to implement the programme approach. of  3, an e f f o r t i s W h i l s t the  a zero base budget (where EACH item of expenditure  concept  requires  j u s t i f i c a t i o n i n every budget) i s perhaps i m p r a c t i c a l u i t h i n Region due  to c o n s t r a i n t s o f time and s t a f f , the e x i s t i n g  approach o f being a l l o u e d " l a s t year's a l l o c a t i o n p l u s for  i n f l a t i o n a r y e f f e c t s " i s extremely  the  incremental  x%  crude, and o b v i o u s l y needs  refining. A comprehensive s e t o f programmes s h o u l d be designed  and  c o s t e d , i n order t h a t there i s some r a t i o n a l e to support the budget requests.  The  e x i s t i n g i n f o r m a t i o n system u i t h i n the Region i s  d e f e c t i v e i n t h a t although the managers r e c e i v e p e r i o d i c statements,  they are not a c c u r a t e l y informed  i n the "commitment" and incorrect  "remaining  being g i v e n . of  o f the d o l l a r  values  "expenditure" c a t e g o r i e s , u h i c h r e s u l t s i n  balance" f i g u r e s of t h e i r c o l l a t o r  T h i s i s o f v i t a l concern,  the f i n a n c i a l p e r i o d .  financial  The  allotment  e s p e c i a l l y n e a r i n g the  end  i n f o r m a t i o n system i s c u r r e n t l y b e i n g  r e v i s e d as a r e s u l t o f a separate r e p o r t by the  author,considered  o u t s i d e the scope o f t h i s t h e s i s , but i t i s c o n s i d e r e d u o r t h u h i l e  -134-  to i l l u s t r a t e the g e n e r a l problem of s t a t u s d i f f e r e n t i a l between "commitments'  1  and  " e x p e n d i t u r e s " by a simple example, and to see  the e f f e c t t h a t the implementation  of a PPBS would have.  Consider Department X - Budget A l l o c a t i o n : 1.  2.  Year  19X1  Operations and Maintenance Personnel  $100,000  Materials  50,000  Capital  50,000  T o t a l Departmental At the year end,  Budget  $200,000  the manager i s c o n f i d e n t t h a t a l l the monies  have been spent, s i n c e he r e q u i s i t i o n e d and has r e c e i v e d goods and s e r v i c e s a g a i n s t those items w e l l before the March 31st year Expenditure  Outstanding Balance  0  200,000  0  25,000  175,000  Commitment Manager's B e l i e f Accounting System Data  end.  25,000  However the accounting system i n d i c a t e s t h a t o f the $100,000 worth of r e q u i s i t i o n s r a i s e d during the year  ( a g a i n s t which goods and  s e r v i c e s have been r e c e i v e d ) $25,D00 value have NOT presumably due  to l a t e r e c e i p t of i n v o i c e s .  p e n d i t u r e s r e p o r t e d to Headquarters  The  yet been p a i d ,  departmental  ex-  i n Ottawa are t h e r e f o r e $175,000  r a t h e r than the $200,000 allowed f o r by the budget (note t h a t only a c t u a l disbursements  are r e p o r t e d as e x p e n d i t u r e s , no  allowance  being made f o r commitments or o b l i g a t i o n s ) , and f o r which the department has presumably r e c e i v e d good v a l u e . The  i m p l i c a t i o n s o f t h i s divergence are t w o f o l d :  -135-  (i)  Next year's budget (19X3  19X2  i n f a c t , s i n c e the budget f o r  m i l l have been f i x e d by t h i s time) f o r department X u i l l  be  based on the r e p o r t e d expenditure of $175,000 f o l l o w i n g the t r a d i t i o n a l budget a l l o c a t i o n (ii)  procedure.  As p e r s o n n e l e x p e n d i t u r e s are g e n e r a l l y assured,  means the budget a l l o c a t i o n f o r goods and s e r v i c e s u i l l from $100,000 ( i n year 19X1)  this be cut  to $75,000 ( i n year 19X3).  Houever s i n c e the $25,000 s h o r t f a l l  of e x p e n d i t u r e s i s  r e a l l y a commitment a g a i n s t f u t u r e budgeted funds r a t h e r than a " s a v i n g " , the manager i s i n s e r i o u s t r o u b l e f o r the coming y e a r . e f f e c t h i s " d i s c r e t i o n a r y " spending  pouer has been cut not  In  merely  from $100,000 to $75,000, but a l s o by the a d d i t i o n a l $25,000 a l r e a d y committed from non payments i n 19X1,  i . e . because o f the l a c k o f  adequate i n f o r m a t i o n , h i s e f f e c t i v e budget had been h a l v e d . Note t h a t i f the manager had KNOWN t h a t c e r t a i n would not be p a i d d u r i n g the year 19X1, for  c e r t a i n equipment from h i s 19X2  accounts  he c o u l d order and  e s t i m a t e s by  pay  transferring  e q u i v a l e n t d o l l a r v a l u e s o f budget monies between the two T h i s would r e s u l t i n the expenditure t o t a l f o r 19X1  years.  being as budgeted,  although o f course the p h y s i c a l goods and s e r v i c e s p a i d f o r would not be e x a c t l y as intended by the budget. The  above i l l u s t r a t i o n ,  has been exaggerated  although the o u t s t a n d i n g commitment  to h i g h l i g h t the concept,  problem both f o r managers w i t h i n the Region, D i r e c t o r h i m s e l f who of  i s a very  real  and of course  the  i s r e s p o n s i b l e f o r the e f f i c i e n t a d m i n i s t r a t i o n  the R e g i o n a l budget to the D i r e c t o r General i n Ottawa.  This  - 1 3 6 -  problem, however, c o u l d be r e s o l v e d by the a p p l i c a t i o n of a simple PPBS concept to the D i r e c t o r a t e . I f the R e g i o n a l budget c o u l d be summarised by programme ^ (and i n t o sub programmes or elements  at the d i v i s i o n a l  level)  capable of being costed on a b a s i s of output, then the year  end  a n a l y s i s c o u l d shou progress made towards p r o j e c t completion v a r i a n c e s o f both schedule  and  ( e f f i c i e n c y v a r i a n c e e ) and c o s t f o r  r e s u l t s achieved (spending v a r i a n c e ) c o u l d be a n a l y s e d .  It i s  r e a l i s e d t h a t an o b j e c t i v e measurement of outputs may  difficult,  but an assessment of percentage of  output may  be  c o s t completion at a g i v e n stage  be s u f f i c i e n t , and t h i s can be compared a g a i n s t the  budgeted f i g u r e s on the c o n t i n u i n g programme to analyse the variances. The budget p e r i o d of one performance  year would s t i l l  be r e l e v a n t f o r  or achievement, but would not p l a y such a v i t a l  role  as the present "spend i t or l o s e i t " d o c t r i n e so p r e v a l e n t w i t h i n the Region suggests, s i n c e i f f o r circumstances such as a harsh A r c t i c summer prevented the hydrographers than a c o n t i n u i n g budget a l l i e d  from t a k i n g soundings,  to the programme would r e c o g n i z e  t h i s d e v i a t i o n and allow funds t o be t r a n s f e r r e d forward to ensure t h a t monies were a v a i l a b l e to c o n t i n u e the p r o j e c t as and when required. In  the U.S.,  the "spend i t o r l o s e i t " d o c t r i n e , which  f o r m e r l y l e d to a l a s t minute spending spree towards the year was  somewhat reduced by a Budget Bureau apportionment  2 allotments.  end  in quarterly  -137-  The  overall  the c o n t i n u i n g  concept advocated above may  c o s t concept, but  be  defined  as  the author p r e f e r s to i n c l u d e i t  i n the more widely a p p l i c a b l e approach o f T o t a l System Concept, which may  be d e f i n e d to i n c l u d e the t o t a l cost o f each programme,  i n c l u d i n g f a i r value The  n o t i o n of f a i r value may  as d i s c u s s e d may  for a l l services u t i l i s e d . c o n f l i c t with " s o c i a l  i n Chapter 2, when i t was  not be a p p r o p r i a t e  former w e l f a r e  f o r goods and  r e c i p i e n t i s taken on the labour  payment of w e l f a r e  monies), but  f o r c e , then  of s o c i a l  2.  the to  i n s m a l l piecemeal analyses  i s an adequate p r a c t i c a l  such  i t is measure  cost.  The  Use  The  t o t a l system c o s t should  are at present  o f Cost Based T r a n f e r  Prices i n c l u d e those r e s o u r c e s  s u p p l i e d as a f r e e good (an example w i t h i n  r e g i o n would be the use  of the o f f i c e s w i t h i n the F e d e r a l  on Government S t r e e t , s u p p l i e d without any the M i n i s t r y o f P u b l i c Works). would be the Victoria  if a  r e f l e c t the b e n e f i t s due  as the Region with i t s t o t a l s t a f f o f approximately 260 thought t h a t the market value  value  services (for instance  s o c i a l cost o f h i s employment should non  argued t h a t market  value"  o f P u b l i c Works.  the *bpportunity  I t i s suggested t h a t t h i s  the Building  t r a n s f e r of funds by  a p p l i c a b l e c o s t to be  f a i r r e n t a l c o s t of e q u i v a l e n t  area, r e p r e s e n t i n g  each c o l l a t o r  The  which  charged  o f f i c e space i n the c o s t " to the  Ministry  cost be apportioned  to  p r o p o r t i o n a l l y to the area u t i l i s e d , with the common  areas of h a l l w a y s , u t i l i t i e s ,  e t c . being  excluded, but  their  cost  -138-  being  implicitly  i n c l u d e d i n a c a l c u l a t i o n of r e n t a l , by  basing  the annual cost per square f o o t of USABLE space. The  use  of o p p o r t u n i t y  cost i n t h i s manner i s r e a l l y  i l l u s t r a t i o n of t r a n s f e r p r i c i n g i . e . t h a t p r i c e charged by  an one  department f o r i t s output t h a t becomes an input o f another. theory  and  c a l c u l a t i o n of p a r t i c u l a r t r a n s f e r p r i c e s i s o u t s i d e  the scope o f t h i s t h e s i s , but and  the reader i s r e f e r r e d to S h i l l i n g l a w ^  H i r s c h l e i f e r * * f o r a f u l l e r e x p o s i t i o n of the t o p i c .  general  concept however may  be summarized as charging  which l e a d s to the most e f f i c i e n t use organisation.  department can  of r e s o u r c e s  I f a " p r i c e " can be recovered  then the r e s o u r c e  should  from an e x t e r n a l user  to  the the  department  transfer can  However, i f the e x t e r n a l market cannot absorb  the t o t a l produce there  i s room f o r b a r g a i n i n g  between the  r e c e i v i n g departments f o r a mutually a c c e p t a b l e  f o r t h i s excess  any i n t e r n a l  In t h i s i n s t a n c e  p r i c e would be the market p r i c e i f the s u p p l y i n g s e l l a l l i t produces.  that p r i c e  at l e a s t as much as t h i s sum  o f an added v a l u e .  The  w i t h i n the TOTAL  be s o l d e x t e r n a l l y , u n l e s s  contribute  o r g a n i s a t i o n by way  and  The  supplying  transfer price  supply.  From the b r i e f summary given above i t can be seen t h a t  the  problem of t r a n s f e r p r i c i n g , e s p e c i a l l y as i n the many areas of government where there  i s no e x t e r n a l market i n the  s e c t o r , i s extremely complex, and  the matter i s g e n e r a l l y  under the t r a d i t i o n a l system e i t h e r by s u p p l y i n g f r e e good, or by u s i n g and  a cost b a s i s  the  l e a d i n g to p o s s i b l e i n e f f i c i e n c i e s ) .  use  resolved  item as a  (lack of e f f i c i e n c y  r e g u l a t i n g t h a t the departments do not  (again  private  external  control) sources  In the absence o f  any  -139-  F e d e r a l Government wide study to c o n s i d e r t r a n s f e r p r i c i n g , i t i s considered the e f f e c t o f charging  the whole i s s u e o f  useful to at least investigate  at cost f o r s e r v i c e s rendered to other  departments, so they are at l e a s t aware o f t h e i r r e s p o n s i b i l i t y to ensure t h a t e f f i c i e n t use i s made o f any seemingly " f r e e " goad. The  d i v i s i o n o f R e g i o n a l workload i n t o cost c e n t r e s may  be extended t o the e x i s t i n g c o l l a t o r system and t r a n s f e r p r i c e s c a l c u l a t e d a t predetermined dates based on a n t i c i p a t e d c a s t s and usage f o r the p e r i o d .  The problem o f t r a n s f e r p r i c e s a p p l i e d to  j o i n t products ( f o r example s h i p u t i l i s a t i o n ) i s d i s c u s s e d recommendation 6 on page  3.  The C o s t i n g The  143 .  by P r o j e c t s  s e l e c t i o n o f p r o j e c t s t o be c o s t e d  q u i r e much f o r e s i g h t t o a v o i d p r o j e c t s being nor  a l l consuming.  under  separately  neither irrelevant  I t i s suggested t h a t c e r t a i n s e r v i c e  f o r example A d m i n i s t r a t i o n ,  be designated  will re-  areas,  as a s e r v i c e p r o j e c t and  NOT a l l o c a t e d t o the working o r d i r e c t p r o j e c t s . Although i t may be argued t h a t an attempt should  be made  to a l l o c a t e a l l c o s t s , when d e a l i n g with the marginal d e c i s i o n , i t i s the i n c r e m e n t a l  cost that i s appropriate,  the A d m i n i s t r a t i o n  Department p r o v i d e s  and i n g e n e r a l  s e r v i c e s to other  i n the marginal case these c o s t s w i l l be i r r e l e v a n t .  although  sections,  However an  e q u i t a b l e b a s i s o f cost a l l o c a t i o n such as used i n the appended r e port could be u t i l i s e d to g i v e the r e s p e c t i v e managers a t l e a s t an i n d i c a t i o n o f the c o s t o f support r e q u i r e d by t h e i r programmes i n a s i m i l a r manner to t h a t d i s c u s s e d  i n the t r a n s f e r p r i c i n g s e c t i o n  -ma-  in  recommendation 2 above. It i s recognised  s e v e r a l years away, and  t h a t the f u l l the  PPBS  implementation of  is  t r a d i t i o n a l l i n e object a l l o c a t i o n  m i l l of n e c e s s i t y be r e q u i r e d to supplement the newer programme or p r o j e c t cost system. r B s u l t i n a higher should  As such an o p e r a t i o n  w i l l of  necessity  workload f o r the v a r i o u s managers, t h e i r support  be a c t i v e l y sought. I t i s suggested t h a t the s i m p l e s t  programme and  method o f a c h i e v i n g  f u n c t i o n a l c o s t i n g i s to use  Regional accounting.  both  a m a t r i x approach to  In the budgetary p l a n n i n g  phase, c o s t s  of  programmes w i l l i n e v i t a b l y comprise f u n c t i o n a l requirements, which w i l l need c o s t i n g t o g i v e an i n d i c a t i o n o f t o t a l programme c o s t s . These f u n c t i o n a l c o s t s should t h a t both the f u n c t i o n and  be entered  programme are  i n t o a m a t r i x box  such  identifiable.  At the expenditure stage however, such a system w i l l knowledge o f both dimensions before  appropriate  c o s t coding  require can  be  a l l o c a t e d , which w i l l prove i m p r a c t i c a l f o r the r o u t i n e  bookkeeping  a s s o c i a t e d with the purchase of j o i n t items ( e . g . a new  filing  cabinet  f o r the hydrography o f f i c e ) and  c o u l d r e s u l t i n much  a d d i t i o n a l work to s a t i s f y an i m p r a c t i c a l system. I t i s t h e r e f o r e suggested t h a t w h i l s t a matrix approach w i l l be u s e f u l i n the p r e p a r a t i o n  o f programme estimates,  c a t i o n of many e x p e n d i t u r e s w i l l o f n e c e s s i t y r e q u i r e  posting  " a f t e r the f a c t " , p o s s i b l y as a r e s u l t o f a d e t a i l e d year a n a l y s i s s i m i l a r to the appendix as prepared by the  the  end  author.  allo-  -141-  4.  Capital Acquisitions  As d i s c u s s e d  earlier  i t was not p o s s i b l e to t r e a t the  c o s t i n g o f c a p i t a l a s s e t s t o p r o j e c t s i n an e q u i t a b l e manner, s i n c e no i n v e n t o r y The  o f these a s s e t s i s maintained u i t h i n the Region.  method adopted o f charging  to s p e c i f i c p r o j e c t s when i t c o u l d  be e s t a b l i s h e d t h a t t h e i r purchase and use was t o be f a r t h a t p r o j e c t alone,  and s e p a r a t e l y  listing  assets  v a r i e t y o f p r o j e c t s both i n the c u r r e n t  to be used on a  and f u t u r e years, was  r e a l l y an attempt by the author t o achieve a balance between p r a c t i c a b i l i t y and e q u i t a b i l i t y .  Note t h a t even i f i t had been p o s s i b l e  to a s s e s s the p r o p o r t i o n a l use o f a s s e t s purchased w i t h i n the year considered, values  the l a c k o f an i n v e n t o r y  f o r a l l c a p i t a l a s s e t s a t present  have precluded budget  system g i v i n g e s t i m a t e d book h e l d by the Region would  a s i m i l a r assessment f o r a s s e t s bought i n PRIOR  periods. The  author made recommendations f o r a simple i n v e n t o r y and  p r o j e c t c o s t assessment system t h a t was the s u b j e c t o f a s e p a r a t e r e p o r t , and t h i s i s now being  i n v e s t i g a t e d p r i o r t o i t s adoption  w i t h i n the R e g i o n a l i n f o r m a t i o n  system.  B a s i c a l l y i t involves  l i s t i n g o f a l l c a p i t a l a s s e t s g i v i n g h i s t o r i c a l c o s t and a l l o w i n g f o r a n t i c i p a t e d salvage be s e t a g a i n s t  value.  T h i s i s the " c o s t " o f the assBt to  usage over the expected l i f e o f the item on a  h i s t o r i c a l c o s t b a s i s , s i m i l a r to d e p r e c i a t i o n expense as used i n the p r i v a t e s e c t o r .  A p r a c t i c a l problem o f a s s e s s i n g  l i f e w i l l o c c u r , s i n c e f o r many a s s e t s , there  the expected  i s no h i s t o r i c a l  experience o f t h i s f a c t o r - f o r items such as the departmental v e s s e l s , twenty years was thought to be a p p r o p r i a t e  by the R e g i o n a l  -142-  Marine Superintendent, but  the Region's o l d e s t s h i p  Stewart" i s over f o r t y years o l d .  J.  With e l e c t r o n i c equipment,  t e c h n i c a l obsolescence i s more l i k e l y to be f a c t o r r a t h e r than any  "Ulm.  physical l i f e  the c o n t r o l l i n g  c h a r a c t e r i s t i c s , and  again  l a c k o f experience i n t h i s r a p i d l y advancing t e c h n o l o g i c a l makes an assessment of l i f e  i n the e a r l y stages of the  system l i t t l e more than a guessing game.  inventory  However none of  above i s meant to d e t r a c t from the p o t e n t i a l u s e f u l n e s s inventory  system which w i l l provide  as i n f o r m a t i o n  5.  the  of  required.  "opportunity  rate of r e t u r n " i s  u t i l i s e d to determine which of the competing items should T h i s r a t e o f r e t u r n uses a d i s c o u n t  s u f f i c i e n t to cover both the c o s t o f c a p i t a l and (indeed  i t can  considered  well  Decisions  In the p r i v a t e s e c t o r an  the c a p i t a l budget.  the  a p o l i c i n g o f a s s e t s as  to a i d i n p r o j e c t c o s t i n g as  Purchase, Lease or Rent  field  comprise rate  a measure o f  profit  be argued t h a t a "normal" p r o f i t can reasonably  as a c o s t o f doing b u s i n e s s ) .  sidered appropriate  f o r b e n e f i t - c o s t analyses  around a: s o c i a l d i s c o u n t s o c i e t a l welfare  The  I t s extension  cost of c a p i t a l i s conceptually i n t a n g i b l e f a c t o r s can be  i n t e r e s t r a t e s coni n Chapter 2  centred  r a t e determined from c o n s i d e r a t i o n s  function.  sound, but  be  to use  as an  of a  opportunity  p r a c t i c a l only  i f a l l the  i n c l u d e d i n the a n a l y s i s .  For p r a c t i c a l purposes i n a s m a l l o p e r a t i o n a l  department  such as the Region with i t s f a i r l y r e s t r i c t e d time h o r i z o n a f i v e ysar p e r i o d , the market r a t e w i l l p r o v i d e IF the ensuing b e n e f i t s can be  of  a good proxy,  say and  q u a n t i f i e d , then the c a p i t a l budgeting  -143-  technique can be a p p l i e d t o the purchase o f c a p i t a l a s s e t s .  The  a n a l y s i s can a l s o i n c l u d e a comparison w i t h a l t e r n a t i v e methods of f i n a n c i n g e.g. r e n t a l or l e a s i n g o f a s s e t s Whilst  can be i n v e s t i g a t e d .  i t i s r e a l i s e d that many o f the a s s e t s  acquired  by the Region are extremely s p e c i a l i s e d (thus having l i m i t e d value i n the r e s a l e market) and t h e r e f o r e agreement i s l i a b l e t o prove c o s t l y duration,  a long term r e n t a l or l e a s i n g f o r c e r t a i n p r o j e c t s of short  a l t e r n a t i v e s t o purchase although c o s t l y , might w e l l  prove cheaper than purchase and subsequent At present  the purchase o f a s s e t s  scrapping. i s i n v a r i a b l y more  a t t r a c t i v e than r e n t a l o r l e a s e agreements because the c o s t o f c a p i t a l i s ignored  by the Region, whereas i t would be u t i l i s e d by  the l e a s i n g agency conducting the agreement.  I t i s not known  whether the use o f the approach suggested above w i l l have a marked e f f e c t on the composition o f c a p i t a l a s s e t s , but i t would a t l e a s t ensure a r a t i o n a l approach t o a c q u i s i t i o n d e c i s i o n s , a i d i n g the g e n e r a l 6.  PPBS concept o f t h o u g h t f u l  a n a l y s i s p r i o r to a c t i o n .  The Problem o f Shared Resources o r J o i n t Costs No mention o f any form o f cost a l l o c a t i o n w i t h i n a m u l t i -  use  o r g a n i s a t i o n would be complete without a c o n s i d e r a t i o n o f  "shared r e s o u r c e s " , one  or r e s o u r c e s  which are u t i l i s e d by more than  f u n c t i o n a l department o r d i v i s i o n . In g e n e r a l  these items are l i m i t e d t o a d m i n i s t r a t i v e  which are l i k e l y not t o form an important p a r t o f the t o t a l  costs, depart-  mental c o s t , e s p e c i a l l y i n a t e c h n i c a l D i r e c t o r a t e where much o f the o v e r a l l task  i s performed by t r a i n e d t e c h n o l o g i s t s and s c i e n t i s t s .  -144-  Houever the major s i n g l e segment o f expenditure the Region may be a t t r i b u t a b l e t o the Ship  uithin  D i v i s i o n , and so the  c o s t i n g method adopted f o r t h i s s e c t o r has v i t a l i m p l i c a t i o n s f o r d i v i s i o n a l expenditures  i n g e n e r a l , and p r o j e c t c o s t i n g i n  particular A f t e r study o f Defence Research Establishment (DREP) who have u t i l i s e d a p r o j e c t p l a n n i n g years,  i t uas decided  system f o r the past tuo  t o employ a s i m i l a r system o f t r a n s f e r c o s t s  based on a c t u a l s h i p expenditures there  Pacific  and u t i l i s a t i o n .  At present  i s no p r a c t i c a l a l t e r n a t i v e s u p p l i e r f o r the s h i p s , although  because o f the s p e c i a l requirements o f the Athabasca-Mackenzie p r o j e c t , a c h a r t e r v e s s e l has been used f o r t h a t p a r t i c u l a r t a s k . T h i s means t h a t a l l competing users are " l o c k e d " i n t o the Region's Ship D i v i s i o n , uho i n a l l f a i r n e s s do make every e f f o r t t o s a t i s f y the competing demands o f the users by means o f a s e r i e s o f c o o r d i n a t i o n meetings u e l l before  the "busy season"-of May-October.  (A complete schedule o f users can be seen i n Table Each v e s s e l i s c o n s i d e r e d  11-20, page 208 ) .  as a c o s t c e n t r e , and a l l expend-  i t u r e s ( i n c l u d i n g the annual r e f i t , but e x c l u d i n g  any assessment f o r  d e p r e c i a t i o n ) are c o s t e d t o the p a r t i c u l a r s h i p .  In t h i s uay the  t o t a l cost f o r the s h i p may be determined f o r the budget p e r i o d . Some o f the c o s t s u i l l be p a i d uhether o r not the s h i p i s a c t u a l l y used (e.g. creu c o s t s e x c l u d i n g  overtime and maintenance c o s t s o f  p a i n t i n g , e t c . ) , and may reasonably for  the p e r i o d .  costs  Costs d i r e c t l y a t t r i b u t a b l e t o s h i p s ' usage  be l o a d i n g o r c o n v e r s i o n allouance.  be thought o f as f i x e d  uill  c o s t s , f u e l , crew's overtime o r s a i l i n g  Food, e t c . and these form the v a r i a b l e p o r t i o n o f t o t a l  -145-  cost.  These c o s t s i n g e n e r a l w i l l be unimportant  compared to  the f i x e d c o s t mentioned above, and b a s i c c o s t accounting  theory  t e l l s us t h a t t h i s m a r g i n a l c o s t of usage (or i n c r e m e n t a l c o s t ) i s the s h o r t run c o s t o f o p e r a t i n g the v e s s e l s . of  However the  these v e s s e l s i s a long run, and c r i t i c a l f i n a n c i a l  a l l o c a t i o n , and  c o n s i d e r a t i o n l i m i t e d s o l e l y to the  c o s t would r e s u l t i n the s h i p being seen as almost the v a r i a b l e c o s t s are r e l a t i v e l y  acquisition  resource  incremental a " f r e e good", as  insignificant.  A c o s t i n g system based on i n c r e m e n t a l data would not t h e r e f o r e be as g r e a t a c o n s t r a i n t f a v o u r i n g e f f i c i e n t usage as a system based on f u l l c o s t i n g , and f o r t h i s reason author t h a t a f u l l  i t i s suggested  charging r a t e should be adopted.  with f u l l c o s t i n g should not be i g n o r e d however. summarised  The  by  the  problems  These may  be  as  (i)  the snowball usage e f f e c t - where the c o s t to each user  depends on the q u a n t i t y of usage by o t h e r u s e r s t r o l l a b l e of any  ( i . e . i s an uncon-  one manager) e.g. p r i c e per day w i l l be  halved with double  virtually  the t o t a l usage,  ( i i ) average c o s t p r o v i d e s the wrong i n c e n t i v e to the s u p p l y i n g department, as there i s no c o n s i d e r a t i o n of effects.  marginal  With the present system g i v i n g the R e g i o n a l Ship  Division  a monopoly over supply, i f a l l c o s t s are to be r e c o v e r a b l e a g a i n s t u s e r s , there i s no i n c e n t i v e f o r the R e g i o n a l Ship D i v i s i o n to cut c o s t s or even m a i n t a i n them w i t h i n reasonable the t r a d i t i o n a l i n c r e m e n t a l and  limited  ( o f course,  f u n c t i o n a l budget system has i t s  use as a p o l i c i n g device under these  circumstances).  Because o f the l a c k of e x t e r n a l c o m p e t i t i o n i n the  restricted  -146-  market segment o f s c i e n t i f i c v e s s e l c h a r t e r , a r e l a x a t i o n i n the r e g u l a t i o n s p r e v e n t i n g the user from shopping  around u i l l not have  a great e f f e c t . It  i s suggested  by the author t h a t the most p r a c t i c a l  s o l u t i o n i s to v i e u the problem i n the long run, s i n c e a s h i p a c q u i s i t i o n d e c i s i o n cannot  be taken u i t h a s h o r t time h o r i z o n ,  and any s a l e as a r e s u l t o f l i t t l e  usage uould undoubtedly  prove  a costly proposition. All expected of  users should be prepared t o submit  usage p a t t e r n s , u h i c h u i t h  PPBS  the r e q u i r e d long term departmental  programmes o f t h e i r  u i l l simply be an e x t e n s i o n  programme.  This u i l l  be analysed i n terms o f e x i s t i n g and f u t u r e requirement  then  D f ship  time, and meetings o r g a n i s e d t o a c c u r a t e l y programme the t o t a l demand requirements  i n p r a c t i c a l u n i t s ( f o r example s h i p days) and t o  assess a n t i c i p a t e d c o s t based on h i s t o r i c a l T h i s assessment u i l l  data.  enable u s e r s t o r e t h i n k t h e i r  grammes i n terms o f c o s t data, and to make adjustments  pro-  uhere approp-  r i a t e , u h i c h u i l l have a g r e a t e f f e c t i f the demand exceeds e x i s t i n g supply ( r e q u i r i n g the a c q u i s i t i o n o f a neu v e s s e l ) , but be o f n e g l i g i b l e e f f e c t uhere p o t e n t i a l supply s t i l l In  exceeds demand.  t h i s case, c o n s i d e r a t i o n s h o u l d be g i v e n t o l a y i n g o f f the creu  and e i t h e r m o t h b a l l i n g o r h i r i n g out the v e s s e l —  or i f govern-  ment p o l i c y p r o h i b i t s t h i s p r a c t i c e , then the a d d i t i o n a l monies r e q u i r e d s h o u l d be met from a s p e c i a l fund r a t h e r than the R e g i o n a l allocation. When f i n a l i s e d , the programmes may be c o s t e d u i t h a t l e a s t reasonable c o n f i d e n c e , and these c h a r g i n g r a t e s should be l e v i e d  -147-  against  ALL  users i n order  e f f i c i e n c y which i n the i f the  f l e e t can  t h a t they are encouraged towards  long run may  be reduced, but  l e a d to c o n s i d e r a b l e  savings  i n the s h o r t run w i l l not show  much r e t u r n because o f the major e f f e c t s of the f i x e d cost components. The  u s e r s at present  r e c e i v i n g s h i p time as a f r e e good  (e.g. U n i v e r s i t y of B r i t i s h Columbia) should, r e c e i p t of F e d e r a l funds to allow but  f a r from being  o f course be  f o r t h i s change i n c o s t i n g concept,  a "paper t r a n s a c t i o n " , t h i s . s h o u l d a l i g n respons-  i b i l i t y with a u t h o r i t y e n a b l i n g  a l l the r e l e v a n t a l t e r n a t i v e s f o r  the funds to be examined ( i . e . the u t i l i s a t i o n o f ships subject  in  will  be  to m a r g i n a l a n a l y s i s ) . The  charging  of A d m i n i s t r a t i o n  departments i s d i s c u s s e d  c o s t s to the v a r i o u s  i n the appended r e p o r t , page 179,  been r a t i o n a l i s e d as f a r as reasonably p r a c t i c a b l e . p r a c t i c e o f f u r t h e r charging  to p r o j e c t s (which was  r e q u i r e d by the D i r e c t o r ) i s not c o n s i d e r e d author even though PPBS does suggest the use costs".  (See  a n a l y s i s o f the v a r i o u s  by  the  o f " t o t a l system 3 on page  elements or p r o j e c t s should  not,  139.) bear since  a l t e r n a t i v e s w i l l become extremely cumber-  some i f an allowance (probably overhead.  has  specifically  I t i s suggested t h a t the o v e r a l l programme should the sub  and  However, the  appropriate  comments under recommendation No.  these c o s t s , but  other  a r b i t r a r y ) i s made f o r  administrative  -148-  7.  Costs f o r S p e c i f i c Analyses  The c o n t i n u a t i o n recommended  of project costing  u i t h i n the r e g i o n ,  i s specifically  and may be extended as g r e a t e r  experience i s gained o f the s p e c i f i c i n p u t s n e c e s s a r y , and the use  t h a t may be made o f the o u t p u t s .  the choice  S p e c i f i c amongst tjiese i s  betueen a l t e r n a t i v e s , uhere c o s t i n g o f s m a l l  elements  o f p r o j e c t s may be p a r t i c u l a r l y u s e f u l i n comparisons o f the follouing  type:  a)  betueen a l t e r n a t i v e in-house methods o f a c h i e v i n g objectives  b)  betueen in-house and e x t e r n a l methods.  The l a t t e r comparison uould need a c a r e f u l study o f the " r e l e v a n t and  incremental"  c o s t s i n o r d e r t o determine the a c t u a l d o l l a r  s a v i n g s to be r e a l i s e d , dependent upon the a c t i o n 8.  The Measurement o f B e n e f i t s  taken.  v i a Output Measures  The measurement o f b e n e f i t s forms an important p a r t o f a PPBS, i n o r d e r t h a t the b e n e f i t s can be assessed a g a i n s t costs.  resource  A l l i e d t o the problem o f measuring the b e n e f i t s i s the  prima f a c i e need f o r measuring output i n order t h a t performance t o wards end o b j e c t i v e s may be assessed both as t o e f f e c t i v e n e s s and efficiency. Perhaps the most fundamental problem u i t h a n a l y s i s u i t h i n the p u b l i c s e c t o r accrued b e n e f i t s .  i s the d i f f i c u l t y o f measuring outputs and t h e i r There u i l l  a l u a y s be same programmes that  p r e c i s e q u a n t i f i c a t i o n of b e n e f i t struction)^  defy  ( e . g . a programme o f park con-  s i n c e the b e n e f i t s may be i n t a n g i b l e s such as s c e n i c  -149-  beauty,  etc.  I t i s to be hoped t h a t PPBS does not  degenerate  i n t o a "number c r u n c h i n g " e x e r c i s e , with a l l programmes r e q u i r i n g a s i n g l e n u m e r i c a l value i n o r d e r to "pass the t e s t " ( r e c e i v e the necessary f u n d s ) . 2 specifically  The o b j e c t i v e s of PPBS as d e s c r i b e d i n Chapter  a l l o w q u a l i t a t i v e work, which should be  accorded  equal s t a t u s with the (seemingly) more r i g o r o u s q u a n t i t a t i v e analysis.  I t should be r e a l i s e d t h a t PPBS i t s e l f i s a r e s o u r c e  ( i . e . i t has a c o s t ) and should not be w a s t e f u l l y u t i l i s e d i n areas t h a t are not amenable to t h i s form o f a n a l y s i s . The  author suggests t h a t once the g e n e r a l approach o f PPBS  has been implemented dawn to the o p e r a t i o n a l l e v e l i n a Department and shown t o be a p r a c t i c a l p r o p o s i t i o n , i t s h o u l d i n other Departments.  I t i s f u r t h e r suggested  be  attempted  t h a t a t the  a t i v e l e v e l PPBS should always be u s e f u l (by f o r c i n g an  aggreg-  examination  of o b j e c t i v e s f o r example) but i n Departments having l e s s t a n g i b l e b e n e f i t s , the approach may  not o f f e r much a t the middle management  l e v e l , where r e s o u r c e s ( e . g . c o s t ) w i l l be the g e n e r a l measure o f performance as i n the t r a d i t i o n a l budget model.  T h i s area i s d i s -  cussed i n g r e a t e r d e t a i l under recommendation ID on page 184  .  The measurement o f b e n e f i t s of s c i e n t i f i c r e s e a r c h i s extremely  d i f f i c u l t , with the s m a l l but r e a l p o s s i b i l i t y of a major  breakthrough,  as o f t e n as not o c c u r r i n g by pure chance —  the  s e r e n d i p i t o u s d i s c o v e r y o f p e n i c i l i n by Fleming being an example. The a l l o c a t i o n o f funds to r e s e a r c h r e q u i r e s g r e a t i n g e n u i t y and f o r e s i g h t by the declaim maker s i n c e i t i s v i r t u a l l y i m p o s s i b l e , even with the a i d of s t a t i s t i c a l a n a l y s i s and p r o b a b i l i t y t o a c c u r a t e l y determine  b e n e f i t s (see recommendation 9 on page  153 ) .  -150-  A hypothetical  example from the Region might be the  assessment of p o t e n t i a l b e n e f i t s a c c r u i n g  i f i t uas  found p o s s i b l e to give complete accuracy i n ueather  possible suddenly forecasting  because o f a r e l a t i o n s h i p betueen movement of the u o r l d ' s uater  bodies, uind  to farmers and  patterns  and  fishermen c o u l d  u i t h d i f f i c u l t y ) but  r e s u l t i n g ueather. conceivably  raincoats  scheduling  benefits  be q u a n t i f i e d ( a l b e i t .  the b e n e f i t of knouing u e l l i n advance  exact ueather p a t t e r n u o u l d a v o i d and  The  major  i n v a i n , and  the need f o r c a r r y i n g  l e a d to i n t a n g i b l e b e n e f i t s  the  umbrellas regarding  o f s o c i a l events, e t c .  With the t e c h n i c a l a s p e c t s of the Region's output, namely the c o m p i l a t i o n  of n a u t i c a l c h a r t s , s t a n d a r d s t a t i s t i c s of output  are measured y e a r l y as a crude assessment of p r o d u c t i v i t y . though  Al-^  the data i s maintained as a check, i t s p r a c t i c a b i l i t y  an e f f i c i e n c y measure i s l i m i t e d because of the non  as  uniformity  of  survey a r e a s . The  t r a d i t i o n a l s t a t i s t i c s f o r 1971  (calendar  y e a r ) are  as  follows: Stations b u i l t  293  K i l o m e t e r s o f Sounding Shoals examined  20,602 km 1,236  2 Area sounded  17,702 km  Number of bottom samples But  1,143  w h i l s t these s t a t i s t i c s are u s e f u l , no measure or r e l a t i v e  d i f f i c u l t y of uorking, forms p a r t of the It i s nou  or a c c e s s i b i l i t y o f the p a r t i c u l a r l o c a t i o n  statistics. intended to i l l u s t r a t e a c o n c e p t u a l frameuork f o r  a s s e s s i n g b e n e f i t s from n a u t i c a l c h a r t s , before i n v e s t i g a t i n g a p a r t i c u l a r p r o j e c t performed u i t h i n the T i d e s and Current S e c t i o n of the Hydrographic  Division.  I t i s suggested nautical  by the author t h a t the prime b e n e f i t o f  c h ^ r f c t ^ g i s "the p r e v e n t i o n o f a c c i d e n t s a t sea by the  p r o v i s i o n o f r e l i a b l e data r e g a r d i n g s a f e passages and l a n e s , thereby s t i m u l a t i n g seaborne t r a d e betueen Canada and LJorld markets" u i t h an important  f r i n g e b e n e f i t a c c r u i n g t o the r e c r e a t i o n a l  sailor. The  s h i p p i n g tonnage o f the Canadian Marine (1971 data) i s  approximately  290 m i l l i o n t o n s , u i t h t h a t f o r B.C. being some 68 5  m i l l i o n tons.  The value o f the commercial f i s h i n g c a t c h uas  approximately  $172 m i l l i o n f o r Canada and $59 m i l l i o n f o r B.C.  Canadian v e s s e l r e g i s t r a t i o n s f o r s m a l l c r a f t  6  (no d e f i n i t i o n  of maximum tonnage a v a i l a b l e ) has r i s e n from 350,000 i n 1960 to approximately  1 m i l l i o n by 1971 and t h i s i n d i c a t e s the dramatic  grouth i n r e c r e a t i o n a l b o a t i n g . A c a l c u l a t i o n o f b e n e f i t s c o u l d be performed by a s s e s s i n g the l e v e l o f a c c i d e n t s t h a t might be expected  uith existing charts, t  many o f u h i c h date back t o the 1890's (being the r e s u l t o f Royal Naval  l e a d l i n e soundings) and comparing these t o the f u t u r e  o f accurate c h a r t s .  impact  Since i t uould not be f e a s i b l e to have c o n t r o l  areas u i t h d i f f e r e n t standards  o f c h a r t i n g accuracy  to test accident  frequency, much o f the assessment must be s u b j e c t i v e , but the o v e r a l l concept  i s presented  for consideration.  h y p o t h e s i s i s the comparatively  Superimposed on t h i s  r e c e n t development o f the Super  tanker, an e x t e n s i o n o f s h i p technology  from c o s t curve data t h a t  -152-  suggests t h a t : "the cost savings r e s u l t i n g from an i n c r e a s e i n s h i p s i z e are g r e a t e s t f o r s h i p s u i t h high speeds."7 The  r e s u l t i s t h a t ue must expect more o f these l a r g e v e s s e l s ,  u i t h high  speed and corresponding l a c k o f  manoeuverability  to be p l y i n g t h e i r trade o f f Canadian shores, u i t h the i m p l i c a t i o n s o f a p o s s i b l e super tanker route being  an important c o n s i d e r a t i o n  to Washington from  Alaska  f o r the Region.  To examine a p r a c t i c a l example o f a p r o j e c t c a r r i e d Dn u i t h i n the Region, the V / i c t o r i a Harbour model (Tides and p r o j e c t 9, page 229 ) i s i n v e s t i g a t e d .  As p a r t o f the c o n t i n u i n g  investigation into applied hydraulic research, model uas c o n s t r u c t e d Portage I n l e t .  Currents  a mathematical  o f V/ictoria Harbour, Gorge  A schematic diagram i s presented  Ulateruay and belou.  SCHEMATIZATION of NUMERICAL MODEL of  F i g . h-III.  Source:  Numerical Model o f V i c t o r i a Harbour, Gorge Wateruay and Portage I n l e t .  Marine. S c i e n c e s , P a c i f i c Region Annual Report 1971 ( c a l e n d a r ) p . 11.  -153-  The  model examined the e f f e c t of a proposed dam  V i c t o r i a Harbour and Harbour, and and  between  the Gorge upon the t i d a l behaviour i n the  a l s o the f e a s i b i l i t y of a c a n a l between Portage  Esquimalt  Harbour.  C a l i b r a t i o n of the model was  by f i e l d measurements of l o c a l t i d e s and of such models may  currents.  be summarized as accurate  Inlet  achieved The  benefits  p r e d i c t i o n of  the  e f f e c t s o f c o n s t r u c t i n g j e t t i e s , a l t e r i n g the topography of a watercourse (such as t r a i n i n g works or r e g r a d i n g bed by dredging) which may  have a f a r r e a c h i n g  a harbour unusable because of the  of the bed  of  impact, even  inducement of s e i c h e s .  the  rendering  A cost-  b e n e f i t study o f such models c o u l d only be a s c e r t a i n e d AFTER the f a c t i f the model l e d to the avoidance o f a major e r r o r i n cons t r u c t i o n , but experience  j u d i c i o u s use  o f p r o b a b i l i t i e s b u i l t up from s i m i l a r  over a number o f years  c o u l d g i v e reasonable  confidence  f i g u r e s f o r a n t i c i p a t e d b e n e f i t s to be compared a g a i n s t model study costs.  9.  S e l e c t i o n o f Research P r o j e c t s The  d e c i s i o n o f the a p p r o p r i a t e  l e v e l o f funding  f o r research  i s an extremely complex area, g e n e r a l l y r e s o l v e d as a r e s u l t  of  much p o l i t i c a l d i s c u s s i o n r a t h e r than d e t a i l e d q u a n t i f i a b l e a n a l y s i s . The  f i e l d o f r e s e a r c h may  be c o n s i d e r e d  as two  segments,  a p p l i e d r e s e a r c h being  the a p p l i c a t i o n o f known techniques  s p e c i f i c problems, and  pure or b a s i c r e s e a r c h being  study f o r i t s own  sake, with  d i s c o v e r y having  f a r reaching  the p o s s i b i l i t y of a effects.  to s o l v e  essentially  serendipitous  -154-  Since  applied research  has  a d e f i n i t e end  g e n e r a l l y more amenable to s y s t e m a t i c approach, u i t h an approximate man pared to the u t i l i t y  i n view, I t i s  analysis via a u t i l i t y - c o s t  year and  research  cost being  of b e n e f i t s a r i s i n g from a s u c c e s s f u l s o l u t i o n  of the problem a r e a .  Pure r e s e a r c h  i s g e n e r a l l y funded on a more  i n t u i t i v e b a s i s , as comparative analyses  are g e n e r a l l y not  applicable,  T h i s makes the process of d e c i d i n g where to g i v e support and to w i t h h o l d  i t particularly  uhere  difficult.  I t i s suggested t h a t the government s e t s the support as a r e s u l t of p o l i t i c a l b a r g a i n i n g a f f o r d e d b a s i s ) and  com-  l e v e l of  ( i . e . a what can  be  makes the a l l o c a t i o n o f these funds to those  p r o j e c t s which o f f e r the most promise, with p e r i o d i c review to see  i f t h i s promise i s being The  fulfilled.  r e a d e r i s r e f e r r e d to Science  C o u n c i l Report No.  18,  chapter 4, f o r a more complete d i s c u s s i o n o f p a s s i b l e s e l e c t i o n c r i t e r i a , but b a s i c a l l y a l o g i c a l s e t o f e v a l u a t i o n i n v e s t i g a t e d from f o u r p o i n t s o f view — s o c i a l and  technological,  o p e r a t i o n a l , although the v i t a l problem o f t h e i r  remains u n r e s o l v e d . provides  scientific,  criteria is  Even a l l o w i n g  ranking  for this deficiency, this  a u s e f u l frame o f r e f e r e n c e  f o r such as the  report  Regional  D i r e c t o r i n h i s submission o f p r o j e c t s to the D i r e c t o r General f o r approval.  10.  Strategy  The  f o r the  strategy  Implementation o f PPBS  f o r implementing PPBS may  be  fundamental to  i t s acceptance w i t h i n a widespread o r g a n i s a t i o n such as the Government.  I t i s not  seen as s u f f i c i e n t to design  Federal  a worthwhile  -155-  system, i t must be e f f e c t i v e l y  " s o l d " to the s t a f f who u i l l be  r e q u i r e d to perform the many ( a d d i t i o n a l ) f u n c t i o n s  necessitated  by i t s implementation.  g Adapting U i l d a v s k y ' s  d e f i n i t i o n of strategy  ,  the author  sees i t as the l i n k betueen the i n t e n t i o n s and p e r c e p t i o n s o f management, and the b u r e a u c r a t i c t u n i t i e s and imposes r e s t r a i n t s .  system t h a t both c r e a t e s  oppor-  In a remarkably u i t t y but p e r -  c e p t i v e account o f s t r a t e g i e s a v a i l a b l e the U. S. p o l i t i c a l g manager U i l d a v s k y  makes the t e l l i n g p o i n t given  by h i s informants  that: " i t ' s not uhat's i n your e s t i m a t e s , but hou good a p o l i t i c i a n you are t h a t m a t t e r s . Being a good p o l i t i c i a n r e q u i r e s c u l t i v a t i o n o f an a c t i v e c l i e n t e l e , the development o f confidence among other o f f i c i a l s , and s k i l l i n f o l l o u i n g s t r a t e g i e s t h a t e x p l o i t o p p o r t u n i t i e s t o the maximum."10 The  s t r a t e g y f o r implementation u i l l not be an a c r o s s t h e board  approach common t o a l l Departments, o r indeed D i v i s i o n s u i t h i n a Department.  The d i f f e r e n t age, backgrounds, e d u c a t i o n a l  training, etc.  o f the v a r i o u s p e r s o n n e l suggest t h a t a s i n g l e approach u i l l applicable to a l l s t a f f .  not be  There i s l i k e l y t o be more r e s i s t a n c e  from the more s e n i o r c i v i l s e r v a n t s through the ranks", as these u i l l  uho have "uorked t h e i r uay  be people uho have prospered i n  the e x i s t i n g system and may be l o a t h e t o see any change uhich d i s r u p t t h e i r uay o f o p e r a t i n g .  might  I t i s suggested t h a t a " s o f t s e l l "  approach u i l l be more l i k e l y t o succeed u i t h such p e r s o n n e l , and o p p o r t u n i t i e s should teach  be a v a i l a b l e f o r s e l f - e x t e n s i o n courses t o  any o f the neu techniques r e q u i r e d  recommendation 11 f o l l o u i n g ) .  (further discussed  under  -156-  The Department Df Environment  comprises a more s c i e n t i f i c  and t e c h n o l o g i c a l work f o r c e than many Departments, l i k e l y to be more r e c e p t i v e  and i s thus  t o the i n s t i g a t i o n o f a newer d e c i s i o n  technology and the upheaval i t might cause a t l e a s t i n i t s i n i t i a l phases. A g r a d u a l approach i s favoured, which to be the method, adopted  i n the event seems  (even i f i n a d v e r t a n t l y ) , with a g r a d u a l  permeation o f the system from the top down r a t h e r than a sudden change from the e x i s t i n g t o the new (and l a r g e l y unknown).  It i s  suggested t h a t PPBS can be a p p l i e d throughout the range o f F e d e r a l government a c t i v i t i e s at l e a s t as f a r as the o b j e c t i v e s and programme d e f i n i t i o n phase.  At t h i s stage the Treasury Board  should make a r e a l i s t i c a p p r a i s a l o f those Departments t h a t are l i k e l y t o b e n e f i t most from the system  ( f o r example those with p r o -  grammes more l i a b l e to y i e l d t o cost and b e n e f i t computation and a n a l y s i s such as P u b l i c Works and T r a n s p o r t ) where the next stage o f reform, namely a m a t r i x form o f budget as d e s c r i b e d  and a c c o u n t i n g s t r u c t u r e  above c o u l d be a p p l i e d t o a c o n t r o l s u b s e t .  In a  subset such as the Region i n v e s t i g a t e d by the author the t o t a l annual cost would be approximately $60,000 as o u t l i n e d below.  -157-  One PPBS A n a l y s t (versed i n g e n e r a l management and governmental a c c o u n t i n g ) One c l e r i c a l support s t a f f  $14,000 6,000  (temporary)  One Bookkeeping a s s i s t a n t (to a i d general accounting)  6,000 $26,000  T o t a l a d d i t i o n a l salary cost A d d i t i o n a l time r e q u i r e d by a l l s t a f f i n procedures ( i n the m a r g i n a l case may n e c e s s i t a t e a d d i t i o n a l s t a f f ) taken as 5 man days per year  5/ 250 x $1,300,00a M a t e r i a l s e t c . (taken  =  1  26,000  as $2240 per man y e a r )  6,720 $58,720  T o t a l a d d i t i o n a l cost  ^$1,300,000 i s the t o t a l s a l a r y b i l l  2  It  o f non s h i p  personnel  $2240 i s the average a d m i n i s t r a t i v e c o s t o f m a t e r i a l s per man year (see Table I I - I , pg. 181 )  i s important t o r e a l i s e t h a t although the t o t a l a d d i t i o n a l s a l a r y  bill  i s o f the order  o f $26,000 t h i s i s more than doubled by a  c o n s i d e r a t i o n o f overheads, u h i c h might be seen as a f r e e The  accounting  under a t r a d i t i o n a l budget system  resource. procedures should  s t a f f , although the neu system should  be c o n t r o l l e d by e x i s t i n g  be designed a f t e r c o n s u l t a t i o n  betueen the PPBS a n a l y s t and c h i e f accountant t o ensure t h a t a l l i n t e r e s t e d p a r t i e s ( i n c l u d i n g the o p e r a t i o n a l managers) r e c e i v e the required  information.  appropriate  As d i s c u s s e d  e a r l i e r a f u l l PPBS may not be  f o r every Department (e.g. J u s t i c e ) uhere the b e n e f i t s  cannot be r e a l i s t i c a l l y q u a n t i f i e d i n monetary terms. Treasury Board should general  Houever the  r e a l i s e t h a t there must be exceptions  t o the  approach and make due allowance f o r t h i s f a c t , perhaps  -158-  even r e t a i n i n g c e r t a i n f u n c t i o n s on a t r a d i t i o n a l budget system, w h i l s t s a t i s f y i n g themselves are r e a l i s t i c The  t h a t such  exceptions  ones.  Treasury Board should a l s o ensure  abused, f o r t h e r e i s always the temptation d i s c o v e r t h a t they cannot given c r i t e r i a , attempt  incremental  t h a t i f Departments  o b t a i n the funds they want by u s i n g the  then they may  to sabotage  t h a t a PPBS i s not  t w i s t the p r e v a i l i n g c r i t e r i a  the workings of the system.  Therefore  or the  Treasury Board must be seen to be f a i r and reasonable i n t h e i r c o n s i d e r a t i o n o f a l l funding r e q u e s t s whether based on PPBS or not  ( i n the case of any s p e c i a l e x c e p t i o n s ) .  11. PPBS and Management E d u c a t i o n At the h i g h e s t government l e v e l , the u s e f u l n e s s of PPBS as a method f o r a c h i e v i n g r a t i o n a l a l l o c a t i o n o f government penditures i s w e l l recognised — w i t n e s s r e f e r r e d to i n Chapter  3.  Mr.  Mr.  ex-  Trudeau's remarks  Davis, the M i n i s t e r r e s p o n s i b l e f o r  Marine S c i e n c e s has o u t l i n e d Departmental  o b j e c t i v e s , and the  Finance and A d m i n i s t r a t i o n , i n c o n j u n c t i o n w i t h the Treasury  ADM Board  has aided the D i r e c t o r General of Marine S c i e n c e s i n the f o r m u l a t i o n of Goals and T a r g e t s f o r the D i r e c t o r a t e . R e f e r r i n g to F i g .  which i s an attempt  to  illustrate  the v a r i o u s l e v e l s o f h i e r a r c h y w i t h i n the Department of the E n v i r o n ment, we  can see t h e r e f o r e t h a t the PPBS concept  at l e a s t from the Cabinet l e v e l  has  penetrated  (Mr. D a v i s ) t o the f i f t h  level  ( D i r e c t o r General o f Marine S c i e n c e s i n Ottawa). As f a r as the R e g i o n a l D i r e c t o r i s concerned,  i t is  -159-  1  Minister (Cabinet l e v e l )  2  Deputy Minister (Chief Executive)  3  Senior A.D.M.  k  ADM Uater Management Service  5  Director General Marine Sciences  6  Director ( P a c i f i c Region)  7  Deputy Director  8  D i v i s i o n a l Manager  9  (Department or Section Manager)  F i g . 4-IV.  I I  I  I  (Ottawa)  I  H i e r a r c h i a l Organisation Chart l i n k i n g Minister of the Environment to Regional D i v i s i o n a l Managers.  apparent from the fact that the costing exercise performed by the author (and forming the appendix to t h i s thesis) was the  first  study attempting to relate costs to anything other than l i n e objects, that the idea of monitoring expenditures and performance u t i l i s i n g PPBS concepts i s extremely new at t h i s l e v e l .  In fact the motivation  for the exercise arose from rumours regarding the p o s s i b i l i t y of transfer a  prices based on costs for certain items at present received  free goods to the Region ( e . g .  usage of weatherships).  ship time from DREP and incremental  In t h i s event, the Region would want to  make corresponding charges to users of Regional services example University of B r i t i s h Columbia ship usage).  (for  Certainly  at the D i v i s i o n a l Manager or Departmental Manager l e v e l within the  -ISO-  o r g a n i s a t i o n , the concept of PPBS i s f o r e i g n .  In f a c t the author  would suggest t h a t t e c h n i c a l competence commensurate with prof e s s i o n a l standards i s the e x i s t i n g of  the importance  goal  at t h i s l e v e l .  Because  of o b t a i n i n g r e l e v a n t data, i t i s at t h i s  managerial l e v e l where much o f the workload w i l l f a l l with the s u c c e s s i v e s t a g e s i n the implementation Government.  o f PPBS w i t h i n the F e d e r a l  The author t h e r e f o r e would suggest an e d u c a t i o n  programme, o f perhaps one week's d u r a t i o n as a s u i t a b l e medium to  e x p l a i n to these managers the reasons f o r , b a s i c concepts o f ,  and o p e r a t i o n a l requirements f o r the implementation of PPBS as i t a f f e c t s them.  T h i s programme, coupled with the s t r a t e g y  outlined  under recommendation 10 s h o u l d ensure a reasonable t r a n s i t i o n the t r a d i t i o n a l budget  12.  from  system to PPBS where a p p r o p r i a t e .  PPBS and P o l i t i c a l  C o n t r o l by  Legislature  t d i l d a v s k y ^ quotes D i e s i n g , s t a t i n g  that  " P o l i t i c a l r a t i o n a l i t y i s the fundamental k i n d o f reason, because i t d e a l s with the p r e s e r v a t i o n and improvement Df d e c i s i o n s t r u c t u r e s , ... and u n l e s s these e x i s t t h e r e can be no r e a s o n i n g and no dec i s i o n s are p a s s i b l e . ... In a p o l i t i c a l d e c i s i o n , a c t i o n i s never based on the m e r i t s o f a p r o p o s a l but always on who makes i t and who opposes i t . ... compromise i s always a r a t i o n a l procedure, even when the compromise i s between a good and a bad proposal." Given t h a t compromise i s an e s s e n t i a l p a r t o f the p a r l i a m e n t a r y democratic system of  i t i s u n l i k e l y t h a t a r a t i o n a l l y determined s e t  programmes o f any Cabinet w i l l proceed  without change —  through p a r l i a m e n t  indeed as s t a t e d throughout  t h i s t h e s i s , the  author does not contend t h a t PPBS i s an attempt by t e c h n o c r a t s to usurp the power g i v e n to e l e c t e d o f f i c i a l s , but i s an a i d to  -161-  enable more r a t i o n a l d e c i s i o n making by them. is  t h a t PPBS does not become a numbers game.  importance u i l l  be attached  The v i t a l Although  concern  great  t o the d e f i n i t i o n and content o f ob-  j e c t i v e s and programmes, the i m p l i c a t i o n s o f PPBS go f a r beyond specific  policies. 12 Uildavsky  suggests t h a t i t i s u s e f u l t o d i s t i n g u i s h  betueen p o l i c y p o l i t i c s politics uill  (uhich p o l i c y u i l l be adapted), p a r t i s a n  (uhich p a r t y u i l l u i n o f f i c e ? ) , and system p o l i t i c s (hou  d e c i s i o n s t r u c t u r e s be s e t up?).  u i t h the l a s t mentioned and c o n t a i n s concept, being  disaggregative  PPBS i s v i t a l l y  an i m p l i c i t c e n t r a l i s a t i o n  r a t h e r than aggregative  Although Uidavsky remarks on the l a c k o f s c i e n t i f i c t h a t d e c i s i o n s should  concerned  i n nature. evidence  be made c e n t r a l l y , the author f e e l s t h a t i t i s  a fundamental t o the p a r l i a m e n t a r y  system t h a t the e s s e n t i a l p o l i c y  d e c i s i o n s ARE made c e n t r a l l y by our e l e c t e d  representatives.  Summary  The  foregoing  s u g g e s t i o n s are thought by the author t o  o u t l i n e some o f the techniques and concepts uorthy o f study by the Region and Department o f Environment, i n order effectively uill  implemented.  necessarily increase  the A d m i n i s t r a t i v e  t h a t a PPBS can be  U h i l s t i t i s r e a l i s e d that such a system the o p e r a t i o n a l u o r k l o a d ,  especially of  department, the t o t a l expected b e n e f i t s from PPBS  summarised i n Chapter 2 o f t h i s t h e s i s should e f f e c t i s an i n c r e a s e  ensure t h a t the net  i n t o t a l u e l f a r e because o f i n c r e a s e d  e f f e c t i v e n e s s o f d e c i s i o n making.  -162-  E.  References  1.  A. Wildavsky, "The P o l i t i c a l Economy of E f f i c i e n c y : CostB e n e f i t A n a l y s i s , Systems A n a l y s i s , and Programme Budgeting" P u b l i c A d m i n i s t r a t i o n Review XXVI, 4 (Dec. 1966) p. 292.  2.  A. Llildavsky, The P o l i t i c s of the Budgetary L i t t l e , Brown & Co. 1960) p. 31.  3.  G. S h i l l i n g l a w . Cost Accounting, A n a l y s i s and C o n t r o l (Homewood 111: I r w i n , 197 , pp. 593-609.  4.  J . H i r s c h l e i f e r , "On the Economics o f T r a n s f e r P r i c i n g " . J o u r n a l o f Business 29.3 J u l y 1956, pp. 172-184.  5.  Marine S c i e n c e s D i r e c t o r a t e : Ottawa, 1972), p. 26.  6.  Canadian p. 86.  7.  A. R. Ferguson, e t a l . The Economic Value of the U.S. Merchant Marine (Evanston: T r a n s p o r t a t i o n Centre at Northwestern U n i v e r s i t y , 1961) p. 134.  8.  A. LJildavsky.  9.  I b i d , pp. 63-126.  10.  I b i d , pp 60-65.  11.  A. Uildavskjj, "The  12.  I b i d . , p.  Process,  (Boston:  »t  Programme A n a l y s i s (Unpublished:  S t a t i s t i c a l Review (Ottawa:  304.  S t a t i s t i c s Canada,  The P o l i t i c s of the Budgetary  1972)  Process, op.cit..p.63  P o l i t i c a l Economy of E f f i c i e n c y " op. c i t . , p.  307.  -163  CHAPTER  5  SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS UITH SUGGESTIONS FOR FURTHER RESEARCH  A.  Summary The j u s t i f i c a t i o n for t h i s study as outlined i n Chapter 1  uas the growing size of the federal government sector u i t h i n the economy, uhich although generally overstated (due to the inclusion of non-»B»te4ag4itfe=tran3QcMsBs) comprises approximately one tenth of the c i v i l i a n a c t i v i t i e s u i t h i n the nation's GNPo The rationale for the existence of a government sector, and the budgetary system t r a d i t i o n a l l y adopted u i t h i n i t uas examined, together uith i t s ueaknesses, before o u t l i n i n g PPBS aims, procedure uith i t s probable impact and problem areas u i t h i n a large bureauc r a t i c frameuork.. In Chapter 3, the Federal Government uas discussed i n i t s operational setting, detailing the key role of the Treasury Board in the fund a l l o c a t i o n process based on p o l i c i e s outlined by the government, before examining the Federal Department of the Environment, which as a neuer Department  (being i n s t i t u t e d only i n 1970)  might be expected to be r e l a t i v e l y free of many o f the t r a d i t i o n a l i n s t i t u t i o n a l constraints.  A subset of t h i s Department, the Marine  Sciences Directorate was studied i n greater depth to investigate th progress being made towards the implementation o f PPBS.  -164-  Chapter  4 c o n s i d e r e d one o f the three Regions u i t h i n Marine  S c i e n c e s D i r e c t o r a t e , o u t l i n i n g the budgetary  and c a s t i n g process  f o l l o w e d , b e f o r e c o n s i d e r i n g the p r o j e c t c o s t i n g study by the author  performed  (and presented as the appendix to t h i s t h e s i s ) .  It i s  evident- t h a t the t r a d i t i o n a l budget with i t s i n c r e m e n t a l approach to funding, and emphasis on l i n e o b j e c t expenditure still  control i s  being f o l l o w e d a t t h i s l e v e l d e s p i t e an attempt by the  D i r e c t o r General t o apply some o f the major concepts  o f the PPBS  approach t o the o v e r a l l programme. F i n a l l y s e v e r a l recommendations have been made to enable the aims o f PPBS to be achieved w i t h i n the Region, which i s c o n s i d e r e d by the author  t o r e p r e s e n t a reasonable model f o r many o f the more  t e c h n i c a l l y o r i e n t e d departments w i t h i n the F e d e r a l Government  organ-  isation. B.  C o n c l u s i o n s and Recommendations i.  Conclusions The  two g e n e r a l c o n c l u s i o n s are a) t h a t PPBS r e p r e s e n t s a  worthwhile attempt t o improve the a l l o c a t i v e e f f i c i e n c y o f the v a s t funding w i t h i n the government s e c t o r , f o r i t i s o n l y by an i n t e g r a t e d budgeting  system t h a t funds may be a l l o c a t e d t o p r o j e c t s o r pro-  grammes based on the e f f i c i e n t achievement o f p r e - d e f i n e d o b j e c t i v e s . A second requirement  i s one o f e f f e c t i v e n e s s , t o ensure t h a t the  funding DDES i n f a c t provide progress towards the achievement o f these o b j e c t i v e s which under the t r a d i t i o n a l system was l a r g e l y presupposed.  T h i s w i l l t y p i c a l l y take the form o f measuring OUTPUTS  -165-  of the funding  to enable achievement to be  y a r d s t i c k or t a r g e t f o r the r e s o u r c e s o u t l i n e d i n Chapter 2 should  assessed a g a i n s t some  utilised.  The  problems as  not be minimised, but u i t h  thoughtful  a p p l i c a t i o n of the system i t i s suggested t h a t they are by means insurmountable, and  b) t h a t although many papers on  t o p i c of PPBS suggest t h a t the system i s being  no the  extensively  used  u i t h i n the F e d e r a l Government as an a l l o c a t i v e t o o l , t h i s i s not yet to be seen at the o p e r a t i o n a l l e v e l u i t h i n the government departments, uhere many o f the managers are u n f a m i l i a r u i t h the concept o f PPBS, or uorse are t o t a l l y o b l i v i o u s to the need f o r a more e f f i c i e n t  a l l o c a t i v e device.  the concept i s being penetrated present.  a p p l i e d , and  At the s e n i o r l e v e l o f Cabinet t h i s top doun approach  to the D i r e c t o r General l e v e l — The  remaining p e n e t r a t i o n  most d i f f i c u l t  to achieve,  uill  but no  has  f u r t h e r at  probably prove to be  the  i n v o l v i n g as i t does s e v e r a l thousand  managers at the o p e r a t i o n a l l e v e l .  But  achieved  i t must be i f the  PPBS i s to y i e l d maximum b e n e f i t i n the n a t i o n a l a l l o c a t i o n o f scarce  resources  government ii.  among the many competing programmes u i t h i n  the  sector.  Recommendations 1.  The  use  u t i l i s i n g a longer  of t o t a l systems c o s t s f o r v a r i o u s budget p e r i o d o f say  f i v e years,  t h a t a l l RELEVANT e x p e n d i t u r e s are c o n s i d e r e d , "spend i t or l o s e i t " approach so p r e v a l e n t 2.  I n v e s t i g a t i o n i n t o the use  at  and  programmes,  thus  ensuring  obviating  the  present.  of t r a n s f e r p r i c i n g betueen  the v a r i o u s government departments, to stop the  " f r e e good concept"  -166-  from p r e v e n t i n g  optimum resource  use being  achieved  because o f  the p o s s i b l e w a s t e f u l usage o f goods seen as f r e e by the u s e r . 3. one)  The g r a d u a l s h i f t (which w i l l be o f n e c e s s i t y a slow  away from l i n e o b j e c t expenditure  collators,  to a r e d e f i n i t i o n  o f c o s t c e n t r e s by p r o j e c t s . ( o r  p r o j e c t a r e a s ) r a t h e r than simply 4.  c l a s s i f i c a t i o n within  functional sections.  The i n s t a l l a t i o n o f an i n v e n t o r y system to enable a  r e a l i s t i c estimate  to be made o f c o s t s o f u s i n g the major  capital  a s s e t s c o n s i s t e n t with the use o f t o t a l systems c o s t (as o u t l i n e d i n 1 above). 5. assess  The r e a l i s t i c a p p r a i s a l o f a l l c a p i t a l a c q u i s i t i o n s t o  i f a cheaper t o t a l c o s t c o u l d be achieved  l e a s e agreements.  by r e n t i n g o r  T h i s w i l l r e q u i r e the use o f an " o p p o r t u n i t y  c o s t o f c a p i t a l " and f o r the Region i t i s suggested t h a t a market based r a t h e r than c o n c e p t u a l 6.  The r a t i o n a l  " s o c i a l v a l u e " would be a p p r o p r i a t e .  allocation  of costs of resources  utilised  by more than one p r o j e c t , o r p r o j e c t area, based on an i n t e l l i g e n t use o f s u r r o g a t e s .  T h i s w i l l again a i d i n the a p p l i c a t i o n o f t o t a l  systems c o s t s as d e s c r i b e d under 1 above. 7.  The use o f data generated by the improved  i n f o r m a t i o n system f o r s p e c i f i c a n a l y s e s ,  Regional  t a k i n g care t h a t only the  r e l e v a n t data i s u t i l i s e d . 8.  The c o m p i l a t i o n o f b e n e f i t measures t o enable  to be measured i n terms o f achievement towards g o a l s .  outputs  (See a l s o  section C following). 9.  The r a t i o n a l  s e l e c t i o n o f r e s e a r c h p r o j e c t s to be  undertaken, r a t h e r than a simple  f o l l o w i n g of s c i e n t i s t s *  whims and  -167-  fanciea.  Idhilst f u r t h e r work needs to be undertaken i n t h i s  an e x c e l l e n t s t a r t i n g p o i n t i s Science discussed  Research Report IMo.  area,  18,  above.  10.  The  importance of s e l e c t i n g an a p p r o p r i a t e  f o r the implementation of PPBS, b e a r i n g s t a f f composition, and  The  i n mind d i f f e r e n c e s i n  programme a n a l y s i s problems across  wide range of government 11.  of management i n PPBS concepts  procedures to a l l e v i a t e p a s s i b l e adverse r e a c t i o n (and to the a d d i t i o n a l workload i t r e q u i r e s , and achieved  of the o p e r a t i o n a l 12.  the  activities.  education  congruence to be  strategy  and  even sabotage)  to enable a b e t t e r  between the C a b i n e t ' s goals  and  goal  those  l e v e l managers.  I t i s suggested t h a t PPBS w i l l help to put  i n t o the hands of the e l e c t e d r e p r e s e n t a t i v e s at Departmental o b j e c t i v e s , p o l i c i e s and  power back  v i a an a b j e c t i v e  programmes, and  s t i g a t i o n of s e l e c t i o n c r i t e r i a t h a t favours  look  the i n -  those p r o j e c t s  that  most c l o s e l y meet them.  C.  Suggestions f o r F u r t h e r 1.  Research  Research i n t o the  p r o j e c t s to enable ALL  r e l e v a n t i n t e r e s t r a t e s f o r government  competing programmes to be c o n s i d e r e d  on  an equal f o o t i n g . 2.  The  i s at present  measurement o f the b e n e f i t s of government programmes  generally l i t t l e  more than a guessing game.  r e q u i r e to i d e n t i f y the r e c i p i e n t s , and  Analysts  perhaps even weight  accrued b e n e f i t s f o r socio-economic goals  to be achieved,  their  and  -168-  much research i s necessary to make this task a p r a c t i c a l one. 3.  Concomitant with the above, i s the treatment of those  items which are generally termed the " i n t a n g i b l e s " .  These .may  form either benefits or costs, and t h e i r equitable treatment i s necessary to enable r a t i o n a l choice to be made between a l t e r n atives.  0.  Closing Comment U h i l s t the author does not wish to state that PPBS (or  any system) can ever give us the "best" set of programmes, i f i t cuts out some of the "worst" then i t w i l l have proved worthwhile, as t h i s i n i t s e l f i s no mean feat.  -169-  LITERATURE CITED  A.  Books  B i r d , R. M. 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Washington D.C: Brookings I n s t i t u t i o n , S t u d i e s o f Government F i n a n c e , 1965. Schick,  R.  A. "Multipurpose Budget Systems" Programme Budgeting and and B e n e f i t - C o s t A n a l y s i s . E d i t e d by H. H. H i n r i c h s and G. M. T a y l o r . P a c i f i c Palisades: Goodyear P u b l i s h i n g , 1969. "Systems P o l i t i c s and Systems Budgeting" Planning, Programming, Budgeting, E d i t e d by F. J . Lyden and E. G. M i l l e r , Chicago: Markham, 1972." f  '  , "The Road to PPB: The Stages of Budget Reform". P l a n n i n g , Programming, Budgeting . E d i t e d by F. J . Lyden E. G. M i l l e r . Chicago: Markham 1972.  and  S c h u l t z e , G.L. "Why B e n e f i t - C o s t A n a l y s i s ? " Programme Budgeting and B e n e f i t - C o s t A n a l y s i s . E d i t e d by H. H. H i n r i c h s and G. M. Taylor. Pacific Palisades: Goodyear P u b l i s h i n g , 1969.  -173-  S t a a t s , E . B. "Survey o f Use by F e d e r a l Agencies Df D i s c o u n t i n g Techniques i n E v a l u a t i n g Future Programmes". Programme Budgeting and B e n e f i t - C o s t A n a l y s i s . E d i t e d by H. H. H i n r i c h s and G. M. T a y l o r . P a c i f i c P a l i s a d e s : Goodyear P u b l i s h i n g , 1929. S t o c k f i s h , J.A. "The I n t e r e s t Rate A p p l i c a b l e t o Government ment P r o j e c t s " , Programme Budgeting and B e n e f i t Cost A n a l y s i s , E d i t e d by H. H. H i n r i c h s and G. M. T a y l o r . Palisades: Goodyear P u b l i s h i n g , 1969.  InvestPacific  T a y l o r , G.M. "Designing the Programme S t r u c t u r e " , Programme Budgeting and B e n e f i t - C o s t A n a l y s i s . E d i t e d by H. H. H i n r i c h s and G. M. T a y l o r . P a c i f i c P a l i s a d e s : Goodyear P u b l i s h i n g , 1969. U r i g h t , C. "The Concept o f a Programme Budget", Programme Budgeting and B e n e f i t - C o s t A n a l y s i s . E d i t e d by H. H. H i n r i c h s and G. M. T a y l o r . P a c i f i c Palisades: Goodyear P u b l i s h i n g , 1969. C.  Government P u b l i c a t i o n s  Canada.  B r i t i s h North America Act 1B67.  , Estimates f o r F i s c a l Year ending 31st March 1972.  Ottawa:  Information Canada, 1971. , Government O r g a n i s a t i o n  Act 1970.  Report o f Royal Commission on Government O r g a n i s a t i o n , V o l . I, Ottawa, 1962. , T r a n s c r i p t o f Prime M i n i s t e r ' s Press Conference. Ottawa, Aug. 13th, 1969. Department o f the Environment, Environment Canada, I t s O r g a n i s a t i o n and O b j e c t i v e s . Ottawa: Information Canada, 1972.  Report 1971.  ,  ,  Ottawa:  , Marine S c i e n c e s D i r e c t o r a t e Information Canada, 1972.  Annual  , Marine S c i e n c e s I n t e r n a l D r a f t Memorandum 1972.  D i r e c t o r a t e , Unpublished  , Marine S c i e n c e s A n a l y s i s Handbook, Ottawa, 1972.  D i r e c t o r a t e : Programme  , Marine S c i e n c e s D i r e c t o r a t e : A n a l y s i s Handbook ( R e v i s e d ) . Ottawa, 1973. Province  of Ontario,  Programme  E f f e c t i v e Management through PPBS. Toronto, 1969.  -174-  S c i e n c e C o u n c i l , Report Mo.  18.  Ottaua:  Information Canada,  S t a t i s t i c s Canada, Canada Year Book 1972. Canada, 1972.  Ottawa:  Information  Treasury Board, Memorandum f o r Cabinet Approval March 24th Ottaua, Unpublished, 1972. ;  Ottawa,  1972.  1972.  , News Release on T a b l i n g o f 1970-71 E s t i m a t e s . 1969. , News Release June 26th, 1972.  Ottaua,  1972.  , Programme F o r e c a s t and E s t i m a t e s Manual.  Ottaua,  1969.  , P l a n n i n g , Programming, Budgeting Guide, Ottaua, 1969. U n i t e d S t a t e s , Commission on O r g a n i s a t i o n o f the E x e c u t i v e Branch of the Government Budgeting and A c c o u n t i n g . Washington D.C.: U.S. Government P r i n t i n g O f f i c e , 1948. , Department o f Defence D i r e c t i v e Number 7045.1 (October 30th, 1964). Washington D.C. 1964. , News Release P r e s i d e n t i a l Address - I n t r o d u c t i o n o f Neu Government-wide P l a n n i n g and Budgeting System (August 25th, 1965) Washington, D.C. 1965. , Subcommittee on Economy i n Government o f the J o i n t Economic Committee,Congress o f U n i t e d S t a t e s . The P l a n n i n g , Programming, Budgeting System: Progress and P o t e n t i a l s . Washington D.C. 1969. , Task Force on Budget and A c c o u n t i n g . Report on Budgeting and Accounting i n the U.S. Government. Washington D . C : U.S. Government P r i n t i n g O f f i c e , 1955. D.  Journals  Posner, B. "Planning-Programming-Budgeting" (Summer 1966) pp. 9-21.  F e d e r a l Accountant,  15  Buchanan, J . M. " P o s i t i v e Economics, Welfare Economics, and P o l i t i c a l Economy" J o u r n a l o f Law and Economics 2(1959) pp.124-138. F o l e y , D.K. "Resource A l l o c a t i o n and the P u b l i c S e c t o r " . Y a l e Economic Essays 7 (1967) pp. 45-98. Hammond, R.J. "Convention and L i m i t a t i o n i n B e n e f i t - C o s t N a t u r a l Resources J o u r n a l 6(1966) pp. 195-222.  Analysis"  -175-  Hansard.  Commons Debates 27 January  1971.  H i r s c h l e i f e r , J . "On the Economics o f T r a n s f e r P r i c i n g " of B u s i n e s s 29.3 ( J u l y 1956) pp. 172-184. Key, V/.O. "The Lack o f a Budgetary Theory" Science Review 34(1940).  American  Journal  Political  M a r g l i n , S.A. "The S o c i a l Rate o f Discount and the Optimal Rate of Investment" The Q u a r t e r l y J o u r n a l o f Economics (Feb 1963) pp. 95-111). New  York Bureau o f M u n i c i p a l Research, "Next Steps i n the Development of a Budget Procedure f o r the C i t y o f New York", M u n i c i p a l Research (57) 1915.  Samuelson, P.A. "Aspects o f P u b l i c E x p e n d i t u r e T h e o r i e s " Economics and S t a t i s t i c s 50(1958) pp. 332-338.  Review of  S c h i n d l e r F. and Lanphier C M . " S o c i a l Research and P a r t i c i p a t o r y Democracy i n Canada" Canadian P u b l i c A d m i n i s t r a t i o n XII No. 4 (winter 1969). Ward, J . T. " C o s t - B e n e f i t A n a l y s i s " J o u r n a l o f P u b l i c (New Zealand) 29 (March 1967) pp. 18-30.  Administration  Weidenbaum, M.L. "Programme Budgeting: A p p l y i n g Economic A n a l y s i s to Government E x p e n d i t u r e D e c i s i o n s " B u s i n e s s and Government Review, 7 (July-August 1966) pp. 22-31. U i l d a v s k y , A. "The P o l i t i c a l Economy o f E f f i c i e n c y : Cost-Benefit A n a l y s i s Systems A n a l y s i s and Programme Budgeting" P u b l i c A d m i n i s t r a t i o n Review XXVI, 4(December 1966) pp. 292-310. E.  L e c t u r e s and Papers  Benson, E . J . Address given to O n t a r i o I n s t i t u t e o f Chartered Accountants, Waterloo, O n t a r i o , June 3rd, 1968. Doern, G. B. Recent Changes i n the P h i l o s o p h y o f P o l i c y Making i n Canada. Unpublished Paper 1971 (Mimeographed). Johnson A.W. PPB and D e c i s i o n Making i n the Government o f Canada. Address t o 50th A n n i v e r s a r y Conference o f S o c i e t y o f I n d u s t r i a l Accountants, June 18th, 1970. , The Treasury Board o f Canada and the Machinery o f Government o f the 1970's. Unpublished paper 1971 (Mimeographed).  -176-  IMovick, D. O r i g i n and H i s t o r y o f Programme B u d g e t i n g . P3427. Santa Monica, 1966, 11 pp.  RAIMD paper  Quade E.S. Systems A n a l y s i s Techniques f o r P l a n n i n g , Programming, B u d g e t i n g . RAND paper P3322. Santa Monica, 1966, 31 pp. Royce, P . J . Some P r a c t i c a l Problems o f C o s t - B e n e f i t A n a l y s i s f o r Major Highways P r o j e c t s ( u n p u b l i s h e d paper 1972). S m i t h i e s A. " O u t l i n e f o r D i s c u s s i o n " Seminar 1966 (mimeographed).  paper p r e s e n t e d a t PPB  Yeomans, D.R. "PPB in- the F e d e r a l Government o f Canada" Address g i v e n a t 26th Annual S p r i n g C o n f e r e n c e , The P e r s o n n e l A s s o c i a t i o n o f T o r o n t o , A p r i l 5 t h , 1968.  APPENDIX  PROJECT COSTING ANALYSIS (1971-72 DATA) MARINE SCIENCES DIRECTORATE PACIFIC REGION  Prepared by:  P. J . Royce  -178-  II.  S E R V I C E  U N I T S  A.  Administration  B.  Ship D i v i s i o n  -179A)  ADMINISTRATION (INCLUDING LIBRARY)  -  COLLATOR  3130  Administration, as a service u n i t , provides managerial administrative and c l e r i c a l support  to the whole organization.  It i s therefore reasonable  to  apply the costs incurred by the unit as an overhead to a l l other sections b e n e f i t t i n p from the services provided. I t was  thought that a blanket a l l o c a t i o n of these costs by a simple  pro-rating exercise based on such parameters as i ) t o t a l budget or i i ) t o t a l manpower would be rather o v e r s i m p l i f i e d , and no basic understanding of the costs of the various functions of the administrative e f f o r t would be  It was  therefore decided  forthcoming.  to examine the cost structure of the s e c t i o n ,  subsectionalize based on functions where appropriate, and apportion these costs on "proxy v a r i a b l e s " within each subsection.  Costs which could be allocated d i r e c t l y to various other cost centres ( c o l l a t o r s ) were not included i n the o v e r a l l apportionment, but extracted from the various cost categories and considered separately.  Examples of these are  l i b r a r y costs and telephone accounts, each of which were apportioned  to the cost  centres as the r e s u l t of a separate costing exercise (see Appendices I & II immediately following this section.)  After spending some time working within the Administration Section, i t was  decided  that the functions within the Section are f a i r l y represented  l i s t given below: i.  Procurement  ii.  Personnel  iii.  F i l i n g and Typing  iv.  Supervisor  v.  Director and  vi.  Deputy Director and  vii.  Finance  and  Services  Secretary  Secretary Secretary  by  the  -180The next task was to assign costs to these functions p r i o r to an apportionment of the costs to the various c o l l a t o r s .  The salary cost was apportioned from ledger t o t a l s based on the budgeted figures, and travel was allocated d i r e c t l y from ledger e n t r i e s .  a)  Salaries Total salary b i l l as per ledger Less:  Library a l l o c a t i o n (see appendix I) To be apportioned  b)  $189,500.32 (910.00) $188,590.32  Non Salary Expenditure  Total of non salary admin, expenditure = Less:  i .  $ 97,293.20  Actual library a l l o c a t i o n - not including casual c l e r i c a l a s s ' t , but including l i b r a r i a n (paid by contract)- see Appendix I  (11,354.02)  ii.  Travel warrants  (9,632.00)  iii.  Travel - non warrant  (7,991.29)  iv.  Telephones (see Appendix II) 'Total to be apportioned  (17,836.10) $ 50,479.79  The basis f o r this apportionment of cost of materials etc. was the number of man years spent by each of the functions.  Unfortunately, at the  time of preparing the analysis the "year end" figures were not available from the personnel s e c t i o n , but the small discrepancy i n the man year figures w i l l have a n e g l i g i b l e e f f e c t i n the apportionment.  -181-  TABLE I I - l  Salaries  i.  Procurement  ii.  Man Years  Cost Apportionment  $ 26,227.00  3.25  $ 8,400.00  Personnel  19,634.00  2.50  6,150.00  iii.  F i l i n g & Typing Services  27,363.00  4.25  10,169.79  iv.  Supervisor and Secretary  18,775.00  2.00  4.480.00  v.  Director and Secretary  32,381.32  2.00  4,480.00.  vi.  Deputy Director and Secretary  28,851.00  ,2.00  4,480.00  vii.  Finance  12,956.00  1.75  3,920.00  Secretary to Regional Hydrographer (3135)  6,895.00  1.00  2,240.00  Secretary to Frozen Sea Research Group (3150)  6,020.00  1.00  2,240.00  Secretary to W. Vancouver Group (3155)  5,378.00  1.00'  2,240.00  Administrative Assistant to S a i l i n g Directions Group (3135)  4,110.00  0.75  1,680.00  PLUS Direct A l l o c a t i o n s a. b. c. d.  TOTALS  $188,590.32  21.50*  * c f 21.25 given by Personnel Section i n year end summary.  $50,479.79  TABLE II.2  (i) Totals  Salaries  $188,590.32  Procurement  26,227.00  (iv)  (v)  Personnel  Filing & Typing  Supervisor & Secretary  Director & Secretary  (vi) Deputy Directors Secretary  19,634.00  27,363.00  18,775.00  32,381.32  28,851.00  961.00  5,357.00  3,030.00  (ii)  (iii)  (vii)  Direct Allocations  Finance  (a) (3135)  (b) (3150)  (c) (3155)  (d) (3135)  12,956.00  6,895.00  6,020.00  5,378.00  4,110.00  f  Travel (Warrant)  9,632.00  Travel (Non Warrant)  7,991.29  Telephones  3,019.32  Library  1,812.00  A l l Other Expenditures  TOTALS  284.00  568.74  220.30  67.36  1,679.62  2,665.21  2,150.80  1,208.00  203.10  280.35  387.30  930.88  459.75  189.20  604.00  604.00  604.00  50,479.79  8,400.00  6,150.00  10,169.79  4,480.00  4,480.00  4,480.00  3,920.00  2,240.00  2,240.00  2,240.00  1,680.00  $261,524.72  35,195.74  26,491.40  37,880.50  26,886.92  46,418.41  39,575.55  18,273.20  9,135.00  8,260.00  7,618.00  5,790.00  I (-• CD  ro  i  -183-  Function Cost Apportionment Rules And Analysis a)  Apportionment Rules i.  Procurement  -  Pro Rata to number of requisitions  ii.  Personnel  Pro Rata to total number of staff employed by section in year  iii.  Filing & Typing Services  Based on subjective apportionment (see Table II.3)  iv.  Supervisor & Secretary  v.  Director & Secretary  vi.  Deputy Director & Secretary -  Pro Rata to Personnel per Section but a l l Hydrographic personnel counted 0.6x  vii.  Finance  Pro Rata to number of ledger entries, including requisitioned & non-requisitioned expenditures.  b) Apportionment Analysis  See Table II.3 following.  -  Based on subjective estimate of workload on other functions (i) 20% ( i i ) 40% ( i i i ) 5% (iv) n/a ty) 5% (vi) 5% (vii) 25%  -  Pro Rata to total salary b i l l per section (excluding ship crews but not Admin.) but a l l Hydrographic salary dollars counted $0.25.  b)  Apportionment A n a l y s i s TABLE I I . 3  3130 Admin.  i.  11.  Procurement  Personnel  Requisitions  150  Z  5.2  Total Employees  Filing Typing  &  3136  3137  Hydrog.  Tidal  Charts  3150 Frozen Sea  3151 Offshore Oceanog.  3152 Ocean Mixing  3154 Ocean Chem.  3155 M.Van.  3160-9 Ships  Totals  322  228  93  173  134  25  105  129  1,527  2,886  11.1  7.9  3.2  6.0  4.6  0.9  3.6  4.5  53.0  100  26  42  18  31  14  14  5  10  11  7.3  11.8  5.1  8.7  3.9  3.9  1.4  2.8  3.1  60  10  5  2  1  5  3  2  2  Actual Salary  $190,000  407,000  155,000  163,000  143,000  88,000  35,000  59,000  143,000  160,000  Apportionable Salary  $190,000  102,000  39,000  41,000  143,000  88,000  35,000  59,000  143,000  160,000  X  ill.  .  3135  Subjective X  184 52.0  10  355 100  100  See T a b l e I I . 4 iv.  Supervisor & Secretary  v.  Director & Secretary  f o r s t e p down  1  vi.  vii.  Deputy Director & Secretary  Finance  3.9  4.1  14.3  36  14  19  10  21.6  8.4  11.4  3.6  4.8  19.0  10.2  Actual Number  19  Apportionable Number  19  X  8.1  Reqa. & Z  Claims  272 7.1  501 13.1  309 8.1  150 3.9  8.8  13  3.5  5.9  4  3  14.3  8  10  13  4  3  8  4.2  5.5  1.7  1..3  3.4  226 5.9  234 6.0  43 1.1  144 3.8  184 4.8  16.0  SIM 100  138 138  236.4  58.3  100.0  1,773 46.2  3,836 100  I <->  03 •c1  Primary Apportionment Of Administrative Costs TABLE II.4 (iv) Supervisor & Secretary  (i)  (ii)  Procurement  Personnel  (iii) Filing & Typing  $35,195.74  26,491.40  37,880.50  26,886.92  5,372.34  10,758.00  1,348.00  (26,886.92)  To Be Apportioned  40,568.08  37,249.40  39,228.50  3130  2,110.00  2,720.00  23,370.00  3135  4,500.00  4,400.00  3,912.00  3136  3,210.00  1,900.00  1,955.00  3137  1,300.00  3,240.00  782.00  3150  2,440.00  1,455.00  391.00  3151  1,870.00  1,455.00  1,955.00  3152  366.00  522.00  1,173.00  3154  1,460.00  1,043.00  782.00  3155  1,830.00  1,157.00  782.00  21,482.08  19,357.40  4,026.50  Collator  Step Down of (iv)  3160-9  -  \  V y y  \ \ \  (vi) Deputy Dir. & Secretary  Finance  Direct Allocations  Totals  46,418.41  39,575.55  18,273.20  30,803.00  261,524.72  1,348.00  1,348.00  6,712.58  47.766.41  40,923.55  24,985.78  9,047.35  3,318.00  1,775.00  4,880.00  3,720.00  3,280.00  1,865.00  . 1,470.00  2,025.00  -  12,425.00  1,960.00  1,964.00  975.00  -  10,221.00  6,850.00  1,720.00  1,475.00  4,260.00  2,250.00  1,500.00  1,675.00  695.00  275.00  2,825.00  531.00  950.00  6,850.00  1,390.00  1,200.00  7,554.06  23,865.55  11,530.78  (v) Director & Secretary  (vii)  30,803.00  _  14,925.00  8,260.00  7,618.00  -  261,524.72  42,340.35 39,617.00  22,591.00 13,290.00 4,706.00 7,591.00 20,827.00 87,816.37  I  CD I  -186Secondary A l l o c a t i o n Of A d m i n i s t r a t i o n  (3130) Costs - Pro Rated To Primary Apportionment - Includes D i r e c t A l l o c a t i o n From 3135 o f $10,342.69 (For Regional Hydrographer)see s e c t i o n on c o l l a t o r 3135 for d e t a i l s  TABLE  II.5  Collator  Primary Apportionment  Secondary Apportionment  Admin.  3130  $42,340.35  (42,340.35)  Hydrog.  3135  39,617.00  7,680.00  47,297.00  1,870.00  Tidal  3136  12,425.00  2,402.00  14,827.00  690.00  15,517.00  Charts  3137  10,221.00  1,975.00  12,196.00  485.00  12,681.00  Frozen Sea  3150  22,591.00  4,370.00  26,961.00  1,065.00  Offshore Oc.  3151  13,290.00  2,570.00  15,860.00  630.00  16,490.00  Ocean Mixing  3152  4,706.00  910.00  5,616.00  218.00  5.834.00  Ocean Chem.  3154  7,591.00  1,468.00  9,059.00  362.00  9,421.00  W. Van.  3155  20,827.00  4,030.00  24.857.00  983.00  25,840.00  3160-9  87,816.37  16,935.35  104,751.72  4,039.69  Section  Ships  Total  + D i r e c t Assignment From Final Total 3135  -  - . 49,167.00  28,026.00^  108,791.41  D i r e c t A l l o c a t i o n s Considered Separately Use (1) (2) (3)  $34,242.00 $19,766.00 $18,222.00  Although t h e . p r e c e d i n g a n a l y s i s p o r t r a y s a h o p e f u l l y t r u e r than a blanket a l l o c a t i o n  indication  of c o s t s i n c u r r e d i n p r o v i d i n g A d m i n i s t r a t i v e s e r v i c e s  to each S e c t i o n w i t h i n the Reglon i t (  i s r a t h e r cumbersome to apply on a c o n t i n u i n g  basis. It  ( 1 )  was decided t h e r e f o r e to check the apportionments as c a l c u l a t e d against  2)  ( 3 )  -187-  th e more simple approaches described e a r l i e r v i z i.  pro rata to budget a l l o c a t i o n  ii.  pro r a t a to t o t a l manpower.  The r e s u l t s are presented i n the table below:  TABLE II.6  Section  Collator  Rational Analysis Apportionment 3130 Only %  i. ii. Pro Rata To Budget Pro Rata To Manpower Budget  Staff  %  %  Hydrography  3135  $ 47,297  18.1  $ 575,659  13.6  36  14.6  Tidal  3136  14,827  5.7  378,848  9.1  14  5.6  Charts  3137  12,196  4.7  179,460  4.3  19  7.7  Frozen Sea  3150  26,961  10.3  223,712  6.4  11  4.4  Offshore Ocean.  3151  15,860  6.1  194,418  4.6  10  4.0  Ocean Mixing  3152  5,616  2.1  88,118  2.1  4  1.6  Ocean Chemistry  3154  9,059  3.5  85,765  2.1  4  1.6  W. Van.  3155  24,857  9.5  271,926  6.5  14  3160-9  104,752  40.0  2,120,026  51.3  136  Ships  100.0  100.0  It can be seen that neither of the simple approaches give  i 5.6 54.9  '  100.0  j  an accurate  portrayal of incurred costs, but i n the i n t e r e s t s of ease of c a l c u l a t i o n , and the r e l a t i v e l y small proportion of Administrative overhead as a t o t a l of cost per Section, either method could be adopted as a reasonable "proxy".  A l t e r n a t i v e l y , the percentages worked above f o r the r a t i o n a l analysis can be applied i f i t i s thought that there has been no material s h i f t i n the Administrative workload i n future years.  ;  -188APPEND1X  I  -  LIBRARY  EXPENDITURES  For financial year 1971/72 there was no identifiable collator code for the library, the necessary finances being provided largely by the collator and  Administration  in addition funds were allocated by other collators on a "what can  be afforded" basis. It has been decided that the library should be supported by the various sections in proportion to a usuage proxy.and accordingly total library costs were apportioned based on the number of "scientific and professional staff" as defined by the Pacific Forest Research Centre Library - see below. Pacific Forest Research Centre Library - Category Definition for Scientific and Professional Staff "The Scientific and Professional Category is composed of occupational groups engaged in the application of a comprehensive body of knowledge acquired through university graduation in fields specified in the group definitions, and of professional groups in which membership in Canada is generally controlled by legally established licensing bodies. Inclusions: Positions included in the category are those in which one or more of the following is of primary importance: - The application of knowledge, principles, or s k i l l s specific to the comprehensive body of knowledge or to the profession required in the  appropriate  occupational group. - The supervision or direction of programmes or activities performed primarily by employees included in the Scientific and Professional Category. Exclusions: Positions excluded from the category are those in which: - Qualifications for a group in the Scientific and Professional Category are not mandatory.  -189-  - The primary duties and r e s p o n s i b i l i t i e s are included i n the d e f i n i t i o n of any group i n another category. Minimum Q u a l i f i c a t i o n s :  Each of the group d e f i n i t i o n s i n the category includes a statement of "Minimum Q u a l i f i c a t i o n s " .  These requirements  a l l new entrants appointed to positions  are to apply without modification to  i n the category on or after July 1, 1967.  With respect to experienced public servants who may not possess the formal education prescribed i n the d e f i n i t i o n s but who are c e r t i f i e d or who are q u a l i f i e d for c e r t i f i c a t i o n i n t h e i r jobs on June 30, 1967, i n classes prescribed by the C i v i l Service Commission, the statements  are intended to indicate the norms against which the  q u a l i f i c a t i o n s of the i n d i v i d u a l may be assessed i n order to judge whether or not the combination of h i s education, t r a i n i n g and experience provides, for the p a r t i c u l a r job being f i l l e d , q u a l i f i c a t i o n s equal to or higher than those prescribed in  the "Minimum Q u a l i f i c a t i o n s " of the relevant occupational group."  Mrs. Stastny, the l i b r a r i a n , has prepared a l i s t of s t a f f who, i n her opinion, meet the above c r i t e r i a i n connection with the l i b r a r i a n ' s job s p e c i f i cation, and this has been used as a basis f o r the apportionment various Sections. This l i s t of s t a f f i s shown on page 18, Table 11-7  of costs to the  TABLE  Admin. (3130)  AS 3  Charts (3137)  EG ESS 11  PC 3  DD 8  EG ESS 10  Frozen Sea (3150)  Offshore Oceanog. (3151)  Ocean Mixing (3152)  Ocean Chemistry (3154)  W. Vancouver (3155)  SE RES 2  SE RES 1  SE RES 2  SE RES 1  SE RES 3  PC 2  SE RES 2  EG ESS 6  SE RES 1  -  SE RES 2  EG ESS 9  PC 2  PC 2  SE RES 3  SO 2  EG ESS 9  EG ESS  EG ESS 7  SE RES 1  EG ESS 8  Hydrography (3135)  SE REM 3 SE REM 2  Tides & Currents (3136)  -  II.7  6  EG ESS 9  EG ESS 7  EG ESS 9  EG ESS 6  Ship Admin. (3160)  EG ESS 8 EG ESS 8 GT  4  EG ESS 7 EG ESS 6 EG ESS 9  3  12  Total  4  -  37 No.  1  4  4  2  1  6  -  -191L i b r a r y Account 1971/72  Statement I Funds Expended On L i b r a r y M a t e r i a l And S e r v i c e s  A.  Library  Collators Actually Charged  Materials  1.  Books  2.  Journal  3.  J o u r n a l backruns  4.  Government P u b l i c a t i o n s  5.  Microforms (Other than Government Publications)  6.  1971-72  subscriptions  Library  (current  (hard  year)  copy)  $3,350.00  Various  4,150.00  Various  1,730.00  Various  250.00  Various  1,100.00  Various  210.00  supplies  (3130) $10,790.00  B.  C.  Library  $  150.00  1.  Printing  2.  Binding  150.00  3.  Travel  200.00  4.  Equipment s e r v i c i n g 500.00  (3130)  3,720.00  (3130)  L i b r a r y Equipment  1. 2.  D.  Services  M i c r o equipment  2,600.00 1,120.00  Furnishings  Salaries  1.  Professional  (by c o n t r a c t )  2.  C l e r i c a l - casual  part-time  6,160.00  (3130)  910.00  ( S a l s 3130) 7,070.00 $22,080.00  -192-  A detailed examination was made of the l i b r a r y accounts f i l e to determine the actual value of materials  Al-5 (see above) purchased under each  c o l l a t o r code.  From the analysis, the following actual a l l o c a t i o n schedule was obtained.  TABLE II.8 Total Allocation  No. of Professionals"  Total Apportionment  764.02  $12,264.02  3  $ 1,812.00  3135  859.77  859.77  12  7,264.40  3136  596.29  596.29  4  2,416.00  3137  11.44  11.44  1  604.00  3150  147.94  147.94  4  2,416.00  3151  2,005.72  2,005.72  4  2,416.00  3152  48.53  48.53  2  1,208.00  3154  2,887.79  2,887.79  1  604.00  3155  3,204.60  3,204.60  6  3,624.00  3160  53.90  53.90  —  —  22,080.00  37  22,364.40  Collator  3130  From Statement 1  $11,500  Total  From Analysis  $  Telephone Apportionment  284.40  Total To Be Apportioned  $22,364.40  NOTE: FOR ALL COST CENTRES, THE ALLOCATION (COLUMN 4) IS DEDUCTED FROM EXPENDITURE, AND THE APPORTIONMENT (COLUMN 6) IS SHOWN AS AN ADDITION INCLUDED IN PERSONNEL COSTS.  -193APPENDIX I I - TELEPHONE EXPENSES  The  t e l e p h o n e accounts f o r the D i r e c t o r a t e a r e p a i d under  A d m i n i s t r a t i o n account under l o c a l and l o n g d i s t a n c e  two c o s t c a t e g o r i e s , each f u r t h e r s e p a r a t e d i n t o  calls.  i.  BC T e l  ii.  Centrex  No charge i s made by BC T e l f o r l o c a l this  c o s t I s r e c o v e r e d under  allocated equally  the g e n e r a l  t o each  c a l l s , and i t was assumed t h a t  the g e n e r a l r e n t a l c h a r g e s , which was t h e r e f o r e  telephone i n s t a l l a t i o n w i t h i n the D i r e c t o r a t e .  Long  d i s t a n c e c a l l s , however, a r e m o n i t o r e d , and charges and i t e m i z e d g i v i n g d a t e , number d i a l l e d monthly  and time o f c a l l  data, a total  ascertained  ( i n minutes)  f o r each t e l e p h o n e .  From the  c o s t f o r l o n g d i s t a n c e c a l l s made from each t e l e p h o n e was  f o r the y e a r .  The Centrex system i s o p e r a t e d by the F e d e r a l Government and a monthly account i s s u b m i t t e d f o r b o t h s h o r t and l o n g d i s t a n c e c a l l s , b u t no i t e m i z a t i o n of  t h e charges i s made.  The method adopted  f o r apportionment was to c o n s i d e r the s h o r t  c a l l s as b e i n g a f u n c t i o n o f t h e number o f t e l e p h o n e s (and t h e r e f o r e  distance  equally  a p p o r t i o n a b l e t o each u n i t ) and the l o n g d i s t a n c e charges were a p p o r t i o n e d i n the same r a t i o  as the t o t a l BC T e l l o n g d i s t a n c e  Apportionment  BC T e l  Data  $ 5,840.32  R e n t a l charges Long d i s t a n c e  Centrex  charges.  Short d i s t a n c e Long d i s t a n c e  charges charges charges TOTAL  3,678.70 1,144.50 7,401.83 $18,065.35  -194-  Number of separate i n s t a l l a t i o n s Therefore standard cost per telephone =  32 5,840.32 + 1,144.50 32  =  $  218.00  BC Tel long distance calls allocated as per accounts  3,678.70  Centrex long distance charges  7,401.83  For ease of c a l c u l a t i o n ,  the following simple formula was adopted.  CHARGE PER PHONE = $200 + (3 X BC TEL LONG DISTANCE CHARGES) = $17,836.10 The t o t a l amount apportioned by this method i s ($18,065.35 - $17,836.10 = $229.25) less than the t o t a l account, but the discrepancy i s thought A schedule of cost apportionment  These cost apportionments  i s shown on page 23.  negligible.  (Table II.9).  are applied as appropriate to form part of the t o t a l  personnel costs i n the various analyses of cost centres found l a t e r i n this report.  -195-  Telephone Cost Apportionment Schedule TABLE II.9  j  Cost Apportionment  T e l . No.'  User(s)  Admin. (3130)  3383 3546 3188 3505 3301 3521 3659 3203 3204 3595 3698  Dr. Stewart Dr. English Mr. Bolton Mr. Gutfriend Mr. W i l l s Mr. Adair, Mr. Crouch Mr. Cotton, Mrs. Vinden Mrs. Buie Mr. Parsons Mrs. Stastny Mr. Gravel  Hydrog. (3135)  3239  3653 3523 3642 3638 3623  Mr. Sandilands, Mr. Huggett Messrs. Clarke, Coldham, Tamasi, Raymond, Eaton, Larkin Mr. Mcintosh Messrs. Lusk, O'Connor, Mortimer, Popejoy, Yee, H l i n a , Fujino Mr. Richardson, Mr. Woods Messrs. Anderson, Lee, P i e r c e , Vosburgh, Mr. Jones, Mr. Chivas Mr. Watt E l e c t r o n i c s Lab  3300 3354 3687 3130  Mr. Mr. Mr. Mr.  3584  Mr. Smithers Mr. Banyard Mr. Nast  275.10 248.85 315.45  Dr. Garrett Dr. Thomson Dr. Tabata Messrs. Abbott-Smith, Hansen, Smith, De Jong, Minkley, Luscombe  895.32 491.70 267.27  3286 3377  Dr. Nasmyth Dr. Gower  287.40 200.30  3886 3197  Mr. Geldart, Capt. Green Workshop Foreman  Department  3892  T i d a l (3136)  Charts (3137)  3830 Offshore Oceanog. (3151)  Ocean Mixing (3152) Ship Admin. (3160)  3345 3159 3331 3362  Wigen Rapatz Bath, Mr. Douglas Ages  $  930.88 459.75 344.22 387.30 729.12 366.99 203.10 280.35 200.00 284.40 201.75 408.00 334.65 321.21 249.90 217.50 2,283.90 235.35 1,184.25 604.32 756.45 893.34 377.16 431.49  549.33  1,251.99 368.01 $17,836.10  ,  -196-  B)  SHIP DIVISION - COLLATORS 3160-69  The ship budget for the Region t o t a l l e d some $2,600,000 or approximately 50% of the t o t a l Regional  expenditure.  In addition to the above costs, use was made of Canadian forces A u x i l i a r y Vessels  (CFAV) ships and Ministry of Transport weatherships without  charge, excepting  for CNAV Laymore, for which there i s an agreement under which  CFAV pays 25% of the operating costs only, and a l l other costs are met by the Marine Sciences Directorate.  The method adopted for the cost apportionment was f i r s t an assignment to the various ship cost centres as per the ledger, with the t o t a l s adjusted as necessary, and then an apportionment of these costs to the various c o l l a t o r s pro rated to usage. Although i t can be argued that i f external users eg. UBC, UVic, etc. did not u t i l i s e the ships, many of the expenditures  (eg. continuing crew costs)  would s t i l l be incurred, the method adopted i s a useful decision making t o o l , since the d a i l y cost would r i s e with decreasing usage,giving  an i n d i c a t i o n to  management of less e f f i c i e n t use of resources, and could form part of the input for a continuing operation versus charter decision.  Capital costs have been included i n t h i s a l l o c a t i o n , because with the exception of "Revisor", which was generally troublesome i n operation and required two new engines, the c a p i t a l expenditures  form less than 7% of the t o t a l expend-  i t u r e , but no attempt has been made to include any cost allowance for depreciation. Ship Administration crew personnel  (3160) includes H a  depot costs and r e l i e f  and launches (3168) includes the purchase of one new launch.  The Administration  (3130) overhead was added to Ship  Administration  (3160) and both were applied on a pro rata basis to enable a t o t a l cost per vessel to be determined.  -197-  Both the Marine S u p e r i n t e n d e n t ' s and to f i n d s h i p usage f o r the y e a r , and  a c o s t per  T o t a l Apportionable No. of Days a t Sea  The  days at sea c a t e g o r y i n c l u d e s l o a d i n g and  spent i n p o r t s  The and  other  than E s q u i m a l t and  c o s t per day  sections  day was  unloading,  report.  on  and  a l s o any  time  Victoria.  then a p p l i e d t o a l l u s e r s  section ascertained.  i n t o c o n t r i b u t i o n to p r o j e c t c o s t s under the  later in this  determined based  Cost  as determined above was  the t o t a l s h i p usage c o s t per  subdivided  DREP's r e c o r d s were examined  These " c h a r g e s " relevant  are  collator  Ship Costs - Ledger T o t a l s And Adjustments TABLE 11.10  Collator 3160 Admin.  Salaries  Other Op. & Mtce.  Capital  $159,535.09 (6,000.00)  159,762.68 (107,500.00)  24,573.43  153,535.09  52,262.68  24,573.43  Total 343,871.20 (113,500.00)  230,371.20 3161 Parizeau  338,452.35  338,452.35  3162 Wm. J . Stewart  465,993.37  3163 Vector  173,542.47  3164 Richardson 3165 Revisor  45,190.79  7,745.50  7,745.50  3166 Mackenzie Charter 3168 Launches  3169 Laymore  6,000.00  331,021.90 (27,034.54)  4,379.60 27,034.54  303,987.36  31,414.14  179,977.73  86,399.59  10,026.60  10,614.82 (9,156.01)  1,458.81  107,500.00  156,584.71  Mackenzie C h a r t e r - T r a n s f e r to 3166  To be apportioned  673,853.85 Repair & upkeep i n c l u d e s remote c o n t r o l system - T r a n s f e r to C a p i t a l  673,853.85  To be apportioned  658,040.54  To be apportioned  261,095.57  To be apportioned  55,868.47  To be apportioned  12,069.44  1,153.51  651.08  2,699.62 9,156.01  21,059.94  17,168.58  17,168.58  Repair & upkeep i n c l u d e s $9,156.01 f o r engine - T r a n s f e r to C a p i t a l T r a n s f e r r e d from 3168  38,228.52  To be apportioned  29,024.21  113,500.00  -  Remarks  42,217.76 (17,168.58)  41,206.20  25,049.18  41,206.20  215,336.39  18,536.29  83,423.96 (17,168.58)  T r a n s f e r r e d from 3160 To be apportioned Repair & upkeep i n c l u d e s engines f o r Revisor - T r a n s f e r to 3165 C a p i t a l  66,255.38  to be apportioned  390.457.39  To be apportioned U3 CO I  Ship Cost - T o t a l A l l o c a t i o n To V e s s e l s (Includes Admin. (3130) & Ship Admin. (3160) Overheads)  TABLE 11.11  3160 Ship Admin.  $230,371.20  3161 Parizeau  673,853.85  3162 Wm. J . Stewart  658,040.54  3163 Vector  261,095.57  3164 Richardson  55,868.47  3165 Revisor  38,228.52  3168  3166 Mackenzie Charter  Launches  113,500.00  66,255.38  3169 Laymore  390,457.39  1,620.00  Apportionable Costs  Telephones  108,791.Al  Add Admin.  340,782.61  T o t a l Overhead  (340.782.61) 100,412.92  98,200.00  39,000.00  8,340.00  5,700.00  16,900.00  9,890.00  62,339.69  774,266.77  756,240.54  300,095.57  64,208.47  43,928.52  130,400.00  76,145.38  452,797.08  $  (3130) Overhead  Step Down of 0/H  F i n a l Apportionable Costs  I  -200-  Ship Usage Summary Sheet 1971/72  Vessel:  (Foreign Port Load & Unload)  Use  "Parlreau" (3161)  Total Apportlonable Cost  - $774,266.77  No. of Days at Sea  -  212  .'. Approx. Cost Per Day  »  $3,650.00  1.  Total Days At Sea  2.  Conversions  TABLE 11.12  User  Date  Days  Use  UBC  19(3)  1  ' 15(2)  UVIC  DREP  FRB  3135  3136  3155  Other  -  -  -  -(l)Loadil ¥ for A r c t i c 28 Conv.  -  -  -  29(l)Arcti c  -  -  30 A r c t i c  -  -  -  -  -  -  -•  -  -  -  -  -  4(1)CM Albemi Inlet  A p r i l 1971 2  5  30  1  30  1  2  (1)  1  28  2  5  May  June  -  -  1 Conv.  for —  —  -  fnr  July  Aug.  Sept.  Oct.  Nov.  29(1)  1  -  -  -  -  -  -  Arrtlr  -  2 30  1  1  2  23(1) 4 6(1)  1  24  2  14(2)  1  3(1)  1  •  -  1  -  -  -  - .  -  • - •  8(2)  2  -  -  -  -  3(1)  -  -  -  1 2  -  23(l)Arcti c  4 6(1) 24 4 CM Baynes Channel -  2 12(1)  1  25 R e f i t . 3  6(1)  3CM Jua de Puca BaynesX h  Jon. 1972 2 13(2)  14 Refit  1  8(1)  5(1) Baynes Qi Trial Is, Race Rocks  Feb. 2 19(1)  1  1  l 8 ( l ) - ( 4 (1) Juanij 1(3151) ncajHaro Wave C ^Georgia Model lmate J ^VanHbr.  March 2  5 S.M.  Total Days  212  67  6  -  16  %  100  31.6  2.8  -•  7.6  -  58,900  $ Value  1 Sea Trials  ArrMr  2 Dtc.  S e l f Mtce. Refits T r i a l s etc  $244,796.77 21,700  85  37  -  1  40.1  17.4  -  0.5  -  3,870 .  310,500  134,500  •  Ship Usage Summary Sheet 1971/72  Vessel:  Total Apportionable Cost  -  No. of Days at Sea  -  .*. Approx. Cost Per Day  -  (Foreign Port Load & Unload)  Use  "Wm. J . Stewart" (3162)  $756,240.54  1.  T o t a l Days At Sea  2.  Conversion  214 $3,530.00 TABLE 11.13  User  Dt.te  Days  Use  20(1) ' 1 A p r i l 1971 5 20(11  2 1  May 2 26(4)  1  25(4)  2 1  June  UBC  UVIC  DREP  FRB  3135  3136  3155  Other  S e l f Mtce. Refits T r i a l s etc  20(1) 11 T eng. 9(1) Str. of Geprgia 5 20(11) 2000) Str.of Georgia „ 0(l)0aatsino Narrows  1  26(4) 19(4) Quateino Narr. 7 Pr. Rupert | 25(4) 23(4) Pr.Rupert  ^Georgia  July 2 21(2)  1  Aug. 2 21(9) Sept.  1  21(2) 20(2) Pr. Rupert 1 Georgia Str.l 1 21(9) MalaapinaStc Georgia S t r .  10(6) Oct.  1  "1  1  2  10(6) Geor gia Str.  2 1  Nov.  . 2  30 R e f i t  1  -  2  Jan. 1972  22  2  22 Prep. ! or 1972 Seasc n  i2(o: Feb.  11  1 2  12 Training 11 Prep, f o r 197.2 Season  22(o:  1  22 Trainlr g  Dec.  13 R e f i t  1  March  2  Total Days  214  214  Z  100  100  $ Value  756,240.54  "  -202S h i p Usage  Vessel:  Total  'IVector"  1971/72 (Foreign Port Load & U n l o a d )  DM  (3163)  Apportionable  No. o f Days  Summary Sheet  1.  Total  Days A t S e a  2.  Conversion  $300,095.57  Cost  a t Sea  206 $1,455.00  .'. A p p r o x . C o s t P e r Day  TABLE 11.14  User  Date  Days  Use  UBC  UVIC  15(3)  1  15(3)  -  DREP  -  FRB  -  3135  -  3136  -  3155  Other  -  S e l f Mtce. Refits T r i a l s etc  -  A p r i l 1971 1  13(3)  2  1  1  9(2)  -  -  -  -  16(3)  -  -  -  -  May  1  June  -  -  14(3)  1  -  8(2)  -  -  9  S.M.  6  S.M.  11  S.M.  -  2  July  S.M.  4 ( 1 ) CM A l b e r n i L In l e t -  2  1 16(3)  6  -  6 ( 1 ) P<i l l n . Geor]$i i Str.  2 21(4)  1  2 CM Bayn e s 6 ( l ) P o l h . Stu dy Ch.; Aide Georgia S t r . Bk.; Rosan <rio Str  13(3)  Aug. 2 17(1)  1.  -  10(1)  -  -  -  Sept.  1  7 CM 6 R o s a r i o S t r . 1 BaynesCh, i  1 1  2 14(2)  1  7(1)  2 CM Bay n e s _ C h  5(1)  Oct. 2 17(3)  1  13(2)  4(1)  -  -  -  -  -  -  —  —  -  -  11  S.M.  28  Refit  -  Nov. • 2 12(2)  -  9(2)  1  Dec.  3 CM Ra ce Res 7 Brotc h i e Ldg Bayne s Ch.  2 l(o)  1  —  1  • —  J a n . 1972 2 18(3)  1  1 CM Baynes Ch.  17(3)  Feb. 2 18(3) March  18(3)  2  Total Days  206  Z  100  $ Value  1  7 Repairs  161 78.2  *  234,695.57  _  5  6  2.4  2.9  _  _  8,700  -  -  7,200  20  14  9.7  6.8  29,100  20,400  Ship Usage Summary Sheet  Vessel:  ."Richardson" (3164)  Total Apportlonable Cost  -  No. of Days at Sea  «  147  .'. Approx. Cost Per Day  •  $436.00  -203-  1971/72 .. " 1.  (Foreign Port Load & Unload) Total Days At Sea  2.  Conversion  $64,208.47  TABLE 11.15  User  Days  Date  (30) A p r i l 1971  Use  UBC  UVIC  DREP  FRB  1  3135  3136  3155  Other  —tmrr  75Z  25Z  2  (31) Hay  1  -  -  -  -  -  -  -  -  -  -  -  -  75Z  -  -  25Z  75Z  -  -  25Z  75Z  -  -  25Z  75Z  -  -  25Z  2 (30)  June  1  -  2 1(30)  July  1 2  24(1)  1  Aug.  -  2 •  Sept.  Oct.  Nov.  Dec.  !  |  Jan. 1972  1  Feb.  March  Total Days  147  110  37  Z  100  75  25  48,100.00  16.108W  $ Value  S e l f Mtce. Refits T r i a l s etc  Ship Usage Summary Sheet 1971/72  Veaael:  Total Apportionable Cost  »  No. of Days at Sea  -  .'. Approx. Cost Per Day  •  (Foreign Port Load & Unload)  Use  "Revisor" (3165) - sole user 3135 Hydrography no records from Marine Supt. .•. use Hydrog Field Report data  1.  Total Days At Sea  2.  Conversion  $43,928.52 $246.00 TABLE  11.16 User  Date  Days  Use  UBC  UVIC  DREP  FRB  3135  3136  3155  Other  S e l f Mtce. Refits T r i a l s etc  A p r i l 1971  May  June  July  Aug.  Sept.  Oct.  Nov.  Dec.  Jan.  1972  Feb.  March  Total Days  178  178  Z  100  100  $ Value  43,928.52  63 dayc revision surveys 115 dayt Haro S t r a i t  Ship Usage Summary Sheet  Vessel:  1971/72  (Mackenzie Charter) (3166)  Total Apportionable Cost  -  No. of Days at Sea  »  .'. Approx. Cost Per Day  »  U«e  ^adTunload)  1.  Total Days At Sea  2.  Conversion  $130,400.00 108 $1,210.00 TABLE 11.17 User  Date  Days  Use  UBC  UVIC  DREP  FRB  3135  3136  3155  S e l f Mtce. Refits T r i a l s etc  Other  A p r i l 1971  May  1 June  July  ...  Aug.  Sept.  Oct.  Nov.  Dec.  Jan. 1972  Feb.  March  Total Days  108  108  Z  100  100  $ Value  130,400.00  -  -206SHIP USAGE SUMMARY SHEET 1971/72 Vessel:  Use 1. t o t a l days at sea 2. Conversion  CFAV LAYMORE  T o t a l apportionable cost: $390,457.39 (MSD costs only) No. of days at sea: 128 Approx. cost per day: $3,050.  CAF: EMR: FRB:  Canadian Armed Forces Energy, Mines & Resources Fisheries Research Board  TABLE 11.18 Date  Days  USER  Use  : April  7  DREP  EMR  1  1  FRB  MSD 3151  MSD 3155  6  2  1971 May  CAF  UVIC  UBC  11  1  2  4  5  9  2  2  4  1  1  2 June  17  1  3  1  2 July  20  1  14  2 Aug.  10  6  1  4  2 Sept.  12  1  3  9  2 Oct.-.  7  1  7  2 Nov.  1 !22 1  Dec.  2 Jan.  11  1972 Feb.  11 EOLlI  1 2  22  1  13 EOL I 9 Howe Snd.  2 -  Mar.  11  1  9  2 Howe Snd.  2 Total Days  Z $ Value  128  3  100  2.3 9,000.  24 18.7  :  33 26.0  :  8  1  6.2  0.8  73,100 101227.39 24,200  3,130  24 18.7  24  11  18.7  8.6  73,100 73,100  33,600  Self mtce Refits Trials, etc.  -207Ship Usage Summary Sheet 1971/72 Vessel:  "Endeavour" . CFAV  Use  Vessel  1.  Total Days At Sea  (Foreign Port Load & Unload)  2. Conversion  Total Apportionable Cost  »  not funded by MSD  No. of Days at Sea  -  No data  .'. Approx. Cost Per Day  -  CFAV Charge $2,000/day TABLE 11.19 User  Date  Days  Use  UBC  UVIC  DREP  FRB  3135  3136  3155  Other  S e l f Mtce. Refits T r i a l s etc  T3T51T A p r i l 1971  May  June  July  Aug.  Sept.  Oct.  3 Wave Height Measurement Off Tofino  Nov.  Dec.  Jan. 1972  Feb.  March  Total Days $ Value  6,000  COST SUMMARY FOR SHIP USAGE (MSD COST ONLY) TABLE 11.20  UBC  PARIZEAU  UVIC  $244,796.77  CAF  DREP  EMR  21,700.00  FRB  58,900.00  TIDAL 3136  310,500.00  134,500.00  234,695.57  7,200.00  8,700.00  RICHARDSON  48,100.00 43,928.52  MACKENZIE Charter  LAYMORE(CFAV)  TOTALS Z Of TOTAL  Note:  3,870.00  925.00  9,000.00  73,100.00  101,227.39  24,200.00  3,130.00  73,100.00  503,867.34  102,925.00  101,227.39  33,175.00  3,130.00  133,875.00  19.8  4.1  275.00  4.0  1.3  1,875.00  0.1  51,145.38  1,340,314.44  5.3 .  A d d i t i o n a l "cost" of $  6,000.00 for usage of CFAV ENDEAVOUR by 3151 not funded by MSD.  University of B r i t i s h Columbia University of V i c t o r i a Canadian Armed Forces Defence Research Establishment P a c i f i c . Energy, Mines 4 Resources (Dept. of) Fisheries Research Board  52.9  TOTALS  774,266.77 756,240.54 20,400.00  16,108.47  300,095.57 64,208.47 43,928.52  130,400.00 15,375.00  External usage costs: $878,199.73 (34.6Z)  UBC: UVIC: CAF: DREP: EMR: FRB:  W. VAN GR. 3155  29,100.00  REVISOR  LAUNCHES  OFFSHORE OCEANOG. 3151  756,240.54  WM.J.STEWART VECTOR  HYDROG. 3135  130,400.00 5,250.00  168,850.00  6.6  650.00  650.00  76,145.38  73,100.00  33,600.00  390,457.39  93,728.47  54,650.00  2,535,742.64  3.7  MSD Usage Costs: $1,657,542.91 (65,4Z)  2.2  100  -209-  III.  HYDROGRAPHIC  A.  Field Hydrography  B.  Tides & Currents  C.  Chart Construction  D I V I S I O N  HYDROGRAPHY - COLLATOR 3135  Including:  i . Field ii. iii. iv.  Hydrography  Hydrographic Research & Development Sailing  Directions  Survey E l e c t r o n i c s  -211-  A)  FIELD HYDROGRAPHY  Apportionment of Service Unit Costs. a)  Administration  (3130)  Library apportionment Telephones b)  Ship D i v i s i o n  c)  Other Direct apportionments -  (Total for 3135)  $34,242.00  (Total 3135) $7,264.40 (Total 3135) 5,839.08 $1,340,314.44  Administration  (3130)  $14,925.00  PROJECT IDENTIFICATION 1.  Supervisory and s p e c i a l projects.  2.  F i e l d party 'A' - WM. J . STEWART  3.  Project a) b) c) d) F i e l d party  S t r a i t of Georgia Quatsino Narrows Dixon Entrance, Brundige I n l e t , various testing assignments, Malaspina S t r a i t . 'B' - PARIZEAU  Project e) Western A r c t i c f) 4.  Baynes Sound, Lambert  Channel  F i e l d party 'C - PILOT I I Project g) Athabasca-Mackenzie Waterway  5.  F i e l d party 'D' - REVISOR  Project h) j) APPORTIONMENT RULES i. ii.  iii.  Revision surveys Haro S t r a i t , Juan de Fuca S t r a i t  A l l salary and ship charges pro-rated to TIME SPENT ON PROJECT taken from cruise reports, Other ledger categories assigned either by: i. d i r e c t assignement to F i e l d party following detailed analysis ii. pro^rating by R. W i l l s and author, C a p i t a l Acquisitions EXCLUDED - l i s t of major purchases i s appended.  -212-  TABLE III.: STAFF LIST FIELD PARTY A  FIELD PARTY B  FIELD PARTY C  FIELD PARTY D  SUPERVISION  WM.J.STEWART  PARIZEAU  PILOT II  REVISOR  M. BOLTON  McINTOSH  HUGGETT  RICHARDSON  LUSK .  SECRETARY  O'CONNOR  CLARKE  ROGERS  WOODS  R. WILLS Spec.  COLDHAM  LEE  GOODWILL * HIGHTON Sept. '71 on. LANDRY p r 0 ; j  NOTE;  POPEJOY YEE  JARVOS  HLINA  PIERCE  ROBITAILLE  ROBITAILLE  DOERING  RAYMOND  SEAMAN  EATON  BROWN  KANGRO  RAINKO  SCHRETLEN  SOUTAR  RYAN  WATT  Underlined personnel are survey electronics s t a f f .  NOTES  Sand Hands on loan to Centre Region u n t i l Aug/71.  -  -213-  TABLE III.2  1.  SUPERVISORY AND OTHER ASSIGNMENTS  PERSONNEL COSTS.  CLASSIFICATION  EG ESS 11  Total adjusted salary  TELEPHONE  $21,611.51  $344.22  TRAVEL  $3,166.56  LIBRARY  $620.40  ST5  $25,742.69 9,135.00  EG ESS 10  19,907.  EG ESS 9  17.042.  EG ESS 9 (from Sept. 1st 1971)  TOTAL COST  729.12  5,815.  1,897.45  477.10  604.00  23,137.57  604.00  17,646.00  604.00  6,896.10  TOTAL  TOTAL PERSONNEL COST:  $82,557.36  * A l l o c a t i o n from A d m i n i s t r a t i o n (3130) see T a b l e  II-2.  $82.557.36  *  FIELD PARTY ' A ' - WM.J. STEWART Project  a)  S t r a i t of Gerogia  b)  Quatslno Narrows  28  c)  Dixon Entrance, Brundige I n l e t , v a r i o u s t e s t i n g assignments  56  Malaspina S t r a i t  45  d)  No. of days i n f i e l d  38  TABLE I I I . 3  PERSONNEL COSTS. CLASSIFICATION  Total adjust, salary  EG ESS9  $19,136  38  $4,325  28  $3,220  56  $6,431  45  $5,160  EG ESS6  14,272  38  3,230  28  2,400  56  4,790  45  3,852  EG ESS6  11,910  38  2,690  28  2,000  56  4,000  45  3,220  EG ESS4  11,837  38  2,680  28  1,990  56  3,970  45  3,197  EG ESS4  11,837  28  2,440  28  2,440  56  4,877  24  2,080  EG ESS4  1,631  0  «•  27  722  34  909  0  1,870  56  3,709  45  d.  P r o j . (a)  P r o j . (b )  d.  d.  P r o j . (c)  d.  P r o j . (d)  &  EG ESS4  11,149  38  2,520  28  EG ESS4  2,747  38  2,747  0  EG ESS4  3,970  38  975  28  722  56  1,448  32  825  EG ESS6  2,865  0  27  722  56  1,502  24  641  STD ASST  1,645  0  27  555  53 ,  1,190  0  «-  STD ASST  1,443  0  22  460  47  983  0  e-  38  28  EL4  O-  138.00  103.00  Library  274.00 405.00 $22,424.00  (2(3  $604.00)  TOTAL PERSONNEL COSTS  O-  56  Telephones  Travel  0  0  3,050 «•  45  208.49  164.00  203.00  407.00  324.00  300.00  595.26  480.00  $17,707.00  $34,919.75  $22,993.00  -215-  3.  FIELD PARTY 'B' - PARIZEAU Project e)  No. days i n f i e l d  Western A r c t i c  f)  Baynes Sound, Lambert Channel  122 49  TABLE III.4  PERSONNEL COSTS Total CLASSIFICATION ad j us ted salary  d.  EG ESS9  $19,136  EG ESS6  Proj . (e)  d.  122  $19,136  0  Q-  12,410  122  8,875  49  3,535  EG ESS4  11,910  122  8,400  49  3,510  EG ESS4  11,910  122  8,400  49  3,510  EG ESS4  3,119  145  2,650  26  469  EG ESS4  2,370  117  2,370  0  «-  EG ESS4 Doering - paid by Central Region  8,160  117  8,160  0  O-  N.A.  40  N.A.  0  N.A.  EG ESS4  1,536  84  1,536  0  O-  EG ESS5  1,092  40  1,092  0  «•  EL4-Electrical  68  0  EL2-Electrical  68  0  EN ENG2-Electrical.  21  0  Telephones  616.00  Library (1@ 604.00)  604.00  Travel  P r o j . (f)  (d.:  days)  84.27  1,955,00  781.97  $63,794.00  $11,890.24  $75,684.24  -216-  4.  FIELD PARTY 'C - PILOT I I Project g)  Athabasca-Mackenzie waterway.  Days i n f i e l d  TABLE III.5  PERSONNEL COSTS  CLASSIFICATION* Total Adjusted salary  Days  EG ESS8  17,597  108  17,597  EG ESS6  12,924  108  12,924  Project.(g)  Telephones  108.75  Library  604.00  (1@ $604.00)  Travel Total Personnel Costs  3,292.84 $34,526.59  108  -217-  5.  FIELD PARTY 'D' - REVISOR Project h) j)  Revision surveys  No. of days i n f i e l d  Haro S t r a i t , Juan de Fuca S t r a i t  115  TABLE III.6  PERSONNEL COSTS Total CLASSIFICATION adjusted Salary  Days  Proj.(h)  Days  Proj . (j )  EG ESS8  $17,597  63  $6,230  115  $11,367  EG ESS4  10,464  63  3,700  115  6,764  Telephones  37.60  71.15  Library (1(3 604.00)  214.00  390.00  Travel  136.00  248.57  $10,317.60  $18,840.72  Total Personnel Costs  63  -218-  The above analysis for project costing of personnel costs i s appropriate because pro-rating to time spent on the various projects i s r e a d i l y a v a i l a b l e . However a l l other ledger categories are a l l o c a t e d to F i e l d Parties only because: i.  No r a t i o n a l apportionment rules could be suggested i n r e t r o s -  pect f o r the apportionment WITHIN FIELD PARTIES of the materials and services consumed. ii.  The "projects" by t h e i r very nature generally have extremely  a r b i t r a r y boundaries,  and many are named f o r convenience or reference only.  These costs are l a t e r "stepped down" i n the F i n a l apportionment table.  -219-  TABLE III.7  REMAINING LEDGER COSTS. 2. 1. Supervisory Party 'A'  Travel:  3. Party B* f  4. Party 'C'  5. Party 'D'  TOTALS  See Pers onnel Costs.  Freight  $100.00  2,270.50  1,570.53  100.00  4,041.03  Communications  Q-  10.00  100.00  50.20  50.00  210.20  Professional & Special Services  G-  371.00  1,160.26  621.00  711.00  2,863.26*  Rentals  0  195,71  8,380.86  1,095.71  1,295.72  10,968.00  Repair & Upkeep  3-  368.00  1,825.13  500.00  850.00  3,543.13  Materials & Supplies  3,469.76  6,514.49  1,348.70  4,672.50  16,005.45  Machinery & Equipment  5,841.86  15,841.22  1,917.30  2,164.49  25,764.87  28.00  28.00  9,871.71  63,423.94  Mis cellaneous  $10,356.33  36,092.46  7,103.44  Professional 4 special services ledger t o t a l : $4,192.22 - but reduced by $1,328.96 for roofing and wiring to e l e c t r o n i c s l a b . (See L i s t of C a p i t a l expenditures following.)  -220-  CAPITAL ACQUISITIONS (Not apportioned) - I d e n t i f i a b l e Purchases  (Major Items)  Side Scan Sonar  $30,088.93 2,956.00  Electronic Test Equipment Electronic  898.20  calculator  Computational Equipment  5,660.43  Tellurometer  7,000.00 517.40  Surveyors' coats Power supply unit  1,050.00  Converter  1,450.00  Radio  234.76  telephone  2,095.00  Sounder Office equipment  841.44  Office furniture (2 drawing tables)  358.40  "  "  (3 f i l i n g cabs.)  335.29  D i g i t i z e r (for PARIZEAU)  1,344.00  T r a i l e r f o r REVISOR  3,417.00  Reflecting projector  7,590.00  TOTAL - Other c a p i t a l expenditures  $65,836.85 8,785.58  LEDGER TOTAL  $74,622.43  ADDITIONAL NON-APPORTIONED ITEMS Roofing of E l e c t r i c a l Laboratory  568.00  (Prof. & Special services)  Wiring of  760.96  (  "  "  "  "  "  )  ii.  HYDROGRAPHIC RESEARCH & DEVELOPMENT  STAFF  EG ESS9  $14,353  EG ESS6  10,047  EG ESS7  8,385  EG ESS7  8,036 $40,821  10% to allow f o r OT, increases, e t c . 4,179 (say) SALARIES  $45,000.00  TELEPHONES  2,283.90  LIBRARY (1@ $604.00)  604.00  TRAVEL  3,836.44  FIELD ACCOUNT  1,432.55  COURSE FEES (OVERHEAD)  512.71  MATERIALS - f o r colour photography and photo mosaic TOTAL  3,572.25 $57,241.25  -222-  iii.  SAILING DIRECTIONS  STAFF  GT4  $12,127  EG ESS7  11,514  Casual Admin. Support  5,790 (including Materials) DIRECT APPORTIONMENT FROM (3130)  SALARIES  $27,751.00  TELEPHONES  235.35  LIBRARY (2@ $604.00)  1,208.00  TRAVEL  1,043.20  FIELD ACCOUNT  63.30 TOTAL  PROJECTS:  $31,980.85  i BC PILOT Volume 1, Southern BC Coast, 675 pp. i i BC PILOT Volume 2, Northern BC Coast, 435 pp.  COSTS pro-rated to page count: Project  i ) V o l . 1. ii)  V o l . 2.  675  :  60.8%  $19,435.00  435  :  39.2%  12,545.85  1110  $31,980.85  -223-  iv. STAFF  SURVEY ELECTRONICS EN ENG2  $10,066  EL4  10,358  EL4  7,186  ELS  11,807  EL4  8,803  EL2  7,186 $55,906  Apportionment  STAFF  EN ENG2  $10,066  $2000 R & D ,  "Rules"  Rest pro rata to projects.  F i e l d Party A.  EL 4  10,358  EL 4  7,186  EL 5  11,807  EL 4  8,803  $1000 R.& D, Rest pro rata to projects.  EL 2  7,186  $2860 party B, Project e, Rest pro rata to projects  $55,906  $2950 party B, Rest pro rata to projects. Pro rata to projects.  TABLE III.8 A l l supplies charged under Field Hydrography (Section i ) 1  Proj.(a) Strait of Georgia  EM ENG2 Sal.$ 900 Tel.  106  4 PARTY'C  3 PARTY 'B'  2 PARTY 'A'  Proj.(b) Quatslno Narrows  835 98  Proj.(c) Proj.(d) Dixon En- Malaspina trance,etc. Strait  1,630 190.25  Proj.(e) Western Arctic  Proj.(f) Baynes Sound  Proj.(g) AthabascaMackenzie  5 PARTY 'D*  Proj. (h) Proj. (j) Revision Haro Str. surveys Juan de F.  RAD  1,040  1,234  417  1,120  315  575  2,000  123  145  49  132  37  68  236  0-  O-  10,066 1,184.25 10.858  EL4  2,475  1,817  3,654  2,912  EL4  560  517  1,010  647  2,950  258  693  195  356  0-  7,186  EL5  1,100  1,020  1,971  1,275  3,480  510  1,365  384  702  *}  11,807  EL4  728  674  1,300  842  2,300  338  904  254  463  100  8,803  EL2  570  530  1,026  663  2,860  264  710  199  364  •}  7,186  57  52  101  65  SUB TOTAL  6,496.00  5,543.00  10,882.25  7,567.00  TRAVEL  191  LAB. TELEPH.  TOTAL  Travel Costs:  $6,687.00  163 5,706.00  322 11,204.25  223 7,790.00  «•  178.32 13,147.32 388.82 13,536.14  0-  O-  TOTALS  e-  26  70  19  36  604.32  1,862.00  4,994.00  1,403.00  2,564.00  3,236.00  57,694.57  55  147  41  76  96  1,702.82  1,917.00  5,141.00  1,444,00  2,640.00  3,332.00 $59,397.39  pro rated to sub-total of a l l other costs.  I  ro ro  i  -225-  SUMMARY  ADMINISTRATION OVERHEAD  34,242.00  EG ESS11  25,742.69  ST5  9,135.Q0  EG ESS10  23,137.00  EG ESS9  17,646.00  EG ESS9  6,896.10  DIRECT CHARGES PARTY A a. S t r a i t of Georgia  22,424.00  b. Quatsino Narrows  17,707.00  c. Dixon Entrance, Brundige Inlet  34,919.75  d. Malaspina S t r a i t  22,993.00  B e. Western A r c t i c f. Bayne Sound & Lambert Channel  63,794.00 11,890.24  C g. Athabasca-Mackenzie Waterway  34,526.59  D h. Revision Surveys  10,317.60  j . Haro S t r a i t and Juan de Fuca S t r a i t  18,840.72  REMAINING LEDGER CATEGORIES ' PARTY A  10.356.33  B  .  36,092.46  C  7,103.44  D  9,871.71  CAPITAL ACQUISITIONS (Additional Items)  74,622.43 1,328.96  HYDROGRAPHIC RESEARCH & DEVELOPMENT  57,241.85  SAILING DIRECTIONS  31,980.85  ELECTRONICS  59,397.39  Exclusive of a l l materials (included above)  -226-  SHIP USAGE CHARGES PARTY A WM. J . STEWART  Project a) S t r a i t of Georgia  $135,940.54  b) Quatsino Narrows  100,450.00  c) Dixon Entrance  200,900.00  d) Malaspina S t r a i t  161,100.00  Training Cruises A p r i l 1971  38,830.00  Feb.-March  1972  119,020.00 $756,240.54  PARTY B PARIZEAU  Project e) Western  Arctic  f) Baynes Sound  221,500.00 89,000.00 $310,500,00  PARTY C PILOT II PARTY D REVISOR  Project  g) Athabasca-Mackenzie  Project h) Revision Surveys  $130,400.00 15,670.00  j ) Haro-Juan de Fuca S t r t s . 28,258.52 $43,928.52 LAUNCHES COST - apply as pro rated 0/H to a l l projects see f i n a l apportionment chart.  $51,145.38  RICHARDSON  $48,100.00  TOTAL  - Western A r c t i c Program - used i n years 1967-70 (75% of cost of RICHARDSON 71-72)  $1,340,314.44  -227-  3  is  f l i 8  8  13:  in HI as s e.  :i  8  8  g  g  S.'  8 8  ill  = 12  8  8  |  s d :  8  "  8  S  : :  !  8  j  ; 2  8 8  3  « © o e> 3 *  8 a * 3  : « . a  1I3S  a a* a  8 8 8 = 8 S - s  E 8 3  3  ii 8 2  S  ii  3 2 « } i  2  3 8 =  3  a  ? ! * s  i £  3 3 a t a  3  a  i  ii  ii  5  J 4i 2 !I 3 I  ; s § § I S 3 5 3 -" -' a 8  S  i { { , t  i n itnmn  f1 I  c -  ll  5 s I  2  :  i t  ] i ?  i i -. 7 r i  PROJECT COST SUMMARY TRAINING CRUISES  $157,850.00  PROJECT a ) S t r a i t of Georgia  181,621.54  b) Quatsino Narrows  136,278.00  c) Dixon Entrance, Brundige Inlet  272,380.71  d) Malaspina S t r a i t  211,198.00  e) Western A r c t i c  406,844.75  f) Baynes Sound  117,889.20  g) Athabasca-Mackenzie  Waterway  191,631.03  h) Revision Surveys  33,118.60  j ) Haro S t r a i t - Juan de Fuca S t r a i t  60,078.95  RESEARCH & DEVELOPMENT  63,493.85  SAILING DIRECTIONS  a) V o l . 1 Southern BC Coast  20,303.00  b) V o l . 2 Northern BC Coast  13,175.85  OTHER PROJECTS  25,722.10  B.  TIDES & CURRENTS - COLLATOR 3136  Apportionment of Service Unit Costs. a) Administration (3130) Library apportionment $2,416.00 Telephones  2,458.44  b) Ship D i v i s i o n Other d i r e c t i o n apportionments Supervision (3135) Photographic  services (3137)  IDENTIFICATION OF SUBSECTIONS i. ii. iii. iv. v.  Supervisory Tides Data processing Current Survey Hydraulic Research  PROJECT IDENTIFICATION 1.  Quatsino Narrows  2.  Vancouver Harbour  3.  A l b e r n i Inlet  4.  Tsawwassen  5.  S t r a i t of Georgia  6.  Tsunami Warning Gauges  7.  Baynes Channel, Race Rocks, T r i a l Island  8.  Fraser Delta - F i e l d work & numerical  9.  V i c t o r i a Harbour Model  10.  O i l Spillage  11. "VANLENE" accident 12.  A r c t i c Coast, Gauging  13.  Eskimo Lakes  14.  Mackenzie River  15.  Tide Gauge Development  modelling  -230-  APP0RTI0NMENT "RULES" i. ii. iii.  Personnel costs assigned to subsections based on apportionment by S.O. Wigen. Other ledger categories assigned to subsections or projects as assigned by S.O. Wigen. Capital expenditures have been apportioned, since i t i s thought-that these items are directly identifiable with the project areas.  PERSONNEL COSTS TABLE III.10 i. Supervisory  ii.  $19,847.00  31,749.00  Telephones  756.45  893.34  Library (4@ $604.00)  604.00  604.00  4,163.97  6,986.30  Adjusted Salaries  Travel Education 0/H  Total Personnel Costs $25,371.42  Tides  iii. Data Processing  25,258.00  &  165.00  $40,397.64  iv. Current Survey  v. Hydraulic Research  TOTALS  36,623.12  28,476.00  141,953.12  188.58  620.07  2,458.44  604.00  604.00  2,416.00  494.74  1,317.67  12,962.68  0-  $25,258.00  $37,910.44  165.00  $31,017.74  $159,955.24  -231-  REMAINING LEDGER CATEGORIES:  have been assigned to. subsections  r direct  to projects as appropriate based on i d e n t i f i cation of materials or apportionment  "rules"  as given below.  LEDGER  CATEGORIES  FREIGHT  Relevant Totals $1,051.08  6) 50%, 12) 15%, 13) 10%,14) 25%  COMMUNICATIONS  1,954.77  Items i d e n t i f i e d  PROF. & SPECIAL SERVICES  8,367.75  15) $8,000.rest 1/3 each 3), 4), 5)  OTHER PROF. SERVICES RENTALS  33,714.30  '$7,237.36 v) rest 3) 25% 5) 40%, 8) 25%, 9) 10%  6,115.05  6) 100%  REPAIR & UPKEEP OF BUILDINGS & WORKS  490.00  5) 100%  REPAIR & UPKEEP OF KACHINERY & EQUIPMENT  4,926.74  UTILITIES  8.09  i i ) 20%, i v ) 50%, v) 30% 5) 100%  MATERIALS & SUPPLIES  23,688.09  2) 20%. 3) 30%, 4) 5%, 5) 40% , 7) 5%  MACHINERY & EQUIPMENT  17,508.40  Items i d e n t i f i e d  CAPITAL ACQUISITIONS  70,337.33  Items i d e n t i f i e d  SHIP USAGE CHARGES TABLE III.11 d = days PROJECT  LAUNCHES  TOTAL.  d.  PARIZEAU  14  $50,900.00  $7,275.00  5  18,200.00  820.00  26,295.00  5,092.00  7  25,450.00  975.00  31,517.00  7  10,185.00  11  39,950.00  1,610.00  51,745.00  1  1,455.00  47.00  1,502.00  34  5,093.00  163.00  5,256.00  d.  VECTOR  1. Quatsino Narrows 2. Vancouver Harb. 3. Alberni Inlet  5  $1,635.00 $52,535.00  4. Tsawwassen 5. S t r a i t of Georgi,i 3* 6. Tsunami Warning Gauges 7. Baynes Channel Race Rocks, T r i a l Island 8. Fraser Delta 9. V i c t o r i a Harbour Model 10. O i l Spillage 11. VANLENE Accid. 12. A r c t i c Coast Gauging 13. Eskimo Lakes 14. Mackenzie River 15. Tide Gauge Development  TOTALS  :20  $29,100.00  37  134,500.00  5,250.00 168,850.00  -233-  APPORTIONMENT OF SUBSECTION COSTS TABLE III.12 SUBSECTION REF.  i. ii. iii. iv. v.  APPORTIONMENT RULES  Supervisory  "stepped down" i i ) 40%, i v ) 40%, v) 20%  Tides  1) 12.5%, 3) 12.5%, 4) 6.25%, 5) 18.75%, 6) 6.25%, 12)12.5%, 13) 6.25%, 14) 25%  Data Proc.  3) 25%, 5) 50%, 12) 10%, 13) 5%, 14) 10%  Current Sur- 2) 17.6%, 3) 23.5%, 4) 5.9%, 5) 35.3%, 7) 11.8%, 10) 5.9% vey Hydraulic Research 3) 10%, 5) 15%, 7) 6%, 8) 42%, 9) 15%, 10) 6%, 11) 6%  -23k-  i  1  H  3! 3  n  Jl  11  i  I  |1  M 131  J! J Ji  ' I  .ii  »  I  11 M  I  f  I  1  l  31'!  i  1  !  Jl ! .!  Jill 1!  ?  31  \m  M  mi  .1! • •  Ji  ? u  s  i  n  i n  s  H 3'  1 I  I  i! I j S3 n I I  Mil 'JI  i  1 13 ! A 13 1'  '  l. M  3'  illi  !  in  !  1  III 5  it I  1111 JiliiliUi'lMiii [jJ  1  c ft 111  3  8  11  ,i  i ,  I  i j  ! 1  ii i r  IS  • d a\i .•. I 1 I  8  1 31  i  i J  JJ  ii Jl 3  J  i J i s  j  I i  PROJECT COST SUMMARY 1  Quatsino Narrows  $7,688.00  2  Vancouver Harbour  78,407.94  3  A l b e m i Inlet  83,409.14  4  Tsawwassen  11,753.41  5  S t r a i t of Georgia  6  Tsunami Warning Gauges  11,924.26  7  Baynes Channel  69,450.23  8  Fraser Delta  37,182.93  9  V i c t o r i a Harbour  12,568.70  10  Oil  13,581.00  11  "VANLENE" Accident  12  A r c t i c Coast Gauging  13  Eskimo Lakes  14  Mackenzie River  18,498.86  15  Tide Gauge Development  32,358.33  Spillage  121,237.07  3,264.00 10,782.46 5,417.51  -236-  CHART CONSTRUCTION - COLLATOR 3137  C.  Apportionment of Service Unit Costs. $12,681.00  a) Administration (3130) Library apportionment  $604.00 839.40  Telephones  NIL  b) Ship D i v i s i o n Other Direct Apportionments  5,100.00  Supervision (3135)  IDENTIFICATION OF SUBSECTIONS i. ii. iii. iv. v. vi. vii. viii.  Supervisory Checking Chart Corrections Chart  Sales  Chart Revision Chart  Compiling  Special Projects Photographic  PROJECT IDENTIFICATION Because of the nature of work of the section i t was not possible to define specific projects. APPORTIONMENT "RULES" i. Ii.  A l l personnel costs apportioned  to subsections.  Where possible, subsections further divided i n t o project  areas  although t h i s i s not possible i n a l l instances because of d i f f i c u l t y of project d e f i n i t i o n within c e r t a i n of the subsections. iii.  Photographic  accounts and "Professional Services" costs have been  separately i d e n t i f i e d and charged as appropriate, but remaining been apportioned based on man year u t i l i z a t i o n per subsection.  costs have  PERSONNEL COSTS TABLE III.14 1  Adjusted Salaries  i . Supervisory  $15,419.86  Telephones  275.10  Library <1@ $604.)  604.00  Travel  ii. Checking  9,529.00  iii. Chart Corrections  iv. Chart Sales  v. Chart Revision  vi. Chart Compiling  36,057,00  14,766.00  31,420.00  36,733.00  315.45  vii. Special Projects  9,334.00  viii. Photographic  10,010.00  248.85  TOTALS  163,268.86 839.40 604.00  1,123.60  445.15  131.60  160.44  306.60  1,498.00  17,422.56  9,974.15  36,188.60  15,241.89  31,726.60  38,231.00  2,105.00  2,104.83  3,665.39 9,582.85  10,010.00  168,377.65  REMAINING LEI3GER CATEGOR]EES Prof. & Special Ser. Other Costs TOTAL Subsection Unit  4,209.83  525.00  525.00  2,622.78  1,055.00  2,100.00  2,100.00  525.00  6,576.36  16,029.14  17,947.56  10,499.15  38,811.38  16,296.89  35,931.60  42.435.83  9,859.00  16,835.21  188,616.62  TABLE III.15 SUBSECTION REF.  APPORTIONMENT RULES  Supervision  "Stepped down" i i ) 23.8%, i i i ) 4.75%, i v ) 9.5%, v) 14.3%, v i ) 14.3%, v i ) v i i i ) 4.75%.  Checking  v) 50% v i ) 50%  Chart Correction  NONE  Chart Sales  NONE  Chart Revision  Pro rata to t o t a l number of revisions  Chart Compilation  Pro rata to chart time sheets  vii.  Special Projects  See F i n a l Apportionment  'iii.  Photographic  3135 Hydrography  i. ii. iii. iv. v. vi.  3136  Tidal  3137  i)  14.3%, v i i ) 28.65  10% 7%  i i ) 2%, i i i ) 5%, i v ) 1%, v) 15%, v i ) 28%, v i i ) 10%  61%  3150 Frozen Sea  8%  3151 Oceanography  6%  3152 Ocean Mixing  1%  External UBC, SFU, Post O f f i c e , MOT, DPW  7%  Note:  Step down of supervision charges to ( v i i i ) pro rated to 3137 apportionment as above.  FINAL APPORTIONMENT - see below f o r i t e m l s a t i o n w i t h i n subsections as a p p r o p r i a t e  TABLE III.16  i. Supervisory  ii. Checking  iii. Chart Corrections  iv. Chart Sales  v. Chart Revision  vi. Chart Compiling  T o t a l Subsection c o s t s  $17,947.56  10,499.15  38,811.38  16,296.89  35,931.60  42.435.83  Step down of ( i )  (17,947.56)  4,269.00  852.00  1,705.00  2,567.00  2,567.00  337.00  843.00  168.35  2,525.00  4,703.66  1,683.50  (10,260.51)  27.00  67.60  13.20  202.00  407.20  135.00  (852.00)  7,566.07  7,566.08  P a r t i a l Step down of (viii) ( v i i i ) supervision Step  (15,132.15)  down of ( i i )  0-  Subtotal T o t a l overhead $17,781.0C  T o t a l t o be apportioned  $  «•  O-  vii. Special Projects  9,859.00 5,135.56  40,585.42  18,183.44  48,791.67  57,679.77  3,980.00  1,740.00  4,760.00  5,651.00  1,650.00  44,565.42  19,923.44  53.551.67  63,330.77  18,463.06  16, 813.06  viii. Photographic  16,835.21 852.00  6,574.70 06,574.70  -ZkQ-  FINAL PROJECT APPORTIONMENT AND CgST SUMMARY iii.  Chart corrections - no i d e n t i f i a b l e projects  iv.  Chart Sales  $44,565.42  - no i d e n t i f i a b l e projects  19,923.44  Vancouver Boat Show v.  Chart Revision - contribution to cost  $1,345.20  vi.  Chart compiling- contribution to cost  $2,160.90  from accounts  $1,279.50  travel  , $3,506.10  917.60  salaries  1,009.00 (3 men f o r 2 weeks)  supervision  300.00  $3,506.10 e s t .  TABLE III.17 v.  CHART REVISION - TOTAL TO BE APPORTIONED Area  No. of Revisions  % Allocation  $52,206.47 Apportionment  St. of Georgia  6  38  19,796.47  Johnstone & Q. Charlotte St.  1  6  3,130.00  West Coast Van. Island  3  19  9,950.00  Northern BC Mainland  5  31  16,200.00  Small scale - Offshore navigation  1  6  3,130.00  16  100  $52,206.47  TOTALS  vi.  $61,169.87  CHART COMPILATION - Total to be apportioned  3,196 hours  t o t a l man hours a l l o c a t e d cost per hour (including  0/H)  $19.20  TABLE III.18 /1 Completion 1971-72  hours spent 1971-72  cost  apportionment 1971-72  CHART No.  Area  3710  Prince Rupert  80  320  6,117.00  3703  Prince Rupert  100  455  8,700.00  3969  Meyers Passage  25  75  1,410.00  3400  St.of Georgia  50  200  3,850.00  100  1400  26,763.87  50  225  4,290.00  3310 (4 sheets)  St. of Georgia Gulf Islands St. of Georgia  3454  North Nanaimo  3687  Quatsino Narr.  100  310  5,940.00  3980  Brundige Inlet  10  21  429.00  3509  C o l l e c t i o n of plans St. of Georgia.  50  190  3,670.00  3196  $61,169.87  vii.  SPECIAL PROJECTS - T o t a l to be apportioned Total man months to be a l l o c a t e d a)  $18,463.06 12  S t r a i t of Georgia bathymetric contours 7 man months  10,823.06  Reports f o r oceanography - d i r e c t charge to 3151 4 man months Samll d r a f t i n g jobs - 1 man month  6,100.00 1,540.00 $18,463.06  -2^2-  viii.  PHOTOGRAPHIC - Non chart usage - t o t a l to be apportioned Direct charges  3135 F i e l d hydrography  1,685.35  3136 Tides & Currents  1,180.00  3150 Frozen Sea  1,350.00  3151 Offshore Ocean.  1,011.00  3152 Ocean Mixing External  $6,574.70  168.35 1,180.00  $6,574.70  IV.  RESEARCH  A.  Ocean Physics Division i) ii) iii) iv)  B.  DIVISIONS  Frozen Sea Research Offshore Oceanography Ocean Mixing Oceanographic Section - West Vancouver  Ocean Chemistry Division  A) OCEAN PHYSICS DIVISION i)  FROZEN SEA RESEARCH  -  COLLATOR 3150  APPORTIONMENT OF SERVICE UNIT COSTS a)  b)  Administration (3130)  $19,766.00  Library Apportionment  2,416.00  Telephones  2,180.22  Ship Division  NIL  OTHER DIRECT APPORTIONMENTS Ocean Physics - Supervision (3152)  2,140.57  Photographic Services (3137)  1,350.00  Administration (Direct Assignment of Total Secretarial Cost)  8,260.00  Property Rental - paid by Ministry of Public Works 1971-72 825 Devonshire Road - Rental (3388 square feet) Cleaning Fuel Furnace Repairs Water, etc. (  $4080.00 2976.00 510.00 400.00 7,966.00 44,078.79  PROJECT IDENTIFICATION Upon advice from Dr. Lewis, i t was decided NOT to identify any individual projects, since i t was held that any project identification would be arbitrary, and a l l are concerned with the prime objective of the section viz. Frozen Sea research.  -245-  LEDGER CATEGORIES S a l a r i e s , etc - 3150 only  $142,976.55  Travel  11,235.15  Freight  11,159.66  Communications (not including telephones) Prof, and Special  Services  Rentals Repair and Upkeep of Equipment Materials and supplies *Machinery and equipment Miscellaneous  228.72 3,233.16 211.10 2,896.79 10,121.50 4,565.62 26.00  C a p i t a l Expenditures  35,926.23  Overheads (including r e n t a l payments)  44,078.79 266,659.27  *N0TE: $147.94 deducted from category 'Material and Supplies" represents Library A l l o c a t i o n .  -2U6-  ii)  OFFSHORE OCEANOGRAPHY  -  COLLATOR 3151  APPORTIONMENT OF SERVICE UNIT COSTS a)  $ 16,490.00  Administration (3130)  $2416.00  Library Apportionment  2203.62  Telephones b)  Ship Division  OTHER DIRECT APPORTIONMENTS  93,728.47 (MSD funds 6,000.00 (non MSD f und s)  Ocean Physics - Supervision (3152)  2.140.57  Photographic Services (3137)  1,011.00  Special Projects (3137)  6,100.00  PROJECT IDENTIFICATION 1.  Weathership Oceanography  2.  EOLE Buoy Project  3.  Strait of Georgia  4.  Theoretical Studies  5.  Advisory and Administrative  Currents  APPORTIONMENT RULES i)  Direct apportionments have been made where possible.  In other  cases the assignment of costs has been made after analysis by Dr. J. Garrett and the author. ii)  Capital equipment costs HAVE been apportioned, since the items are  to be used specifically or the projects for which they were requisitioned.  PERSONNEL COSTS TABLE IV-I TOTAL Adjusted Salaries  $ 98,702.05  SE RES 1  2,203.62  895.32  Library (4@$604.00)  2,416.00  604.00  Travel  9,546.27  1,473.55  $112,867.94  EG ESS 6  EG ESS 4  14,062.05 9,375.00 10,750-00 9,815.00  Telephones  Total Personnel Costs  CSA 2  CR 5  EG ESS 3  9,705.00 8,050.00  549.33 604.00  13.50  19.50  170.34  1,649.85  17,034.32 9,388.50 11,373.50 9,985.34 11,904.18 8,050.00  Remaining Ledger Categories assigned as per final apportionment table.  SE RES 3 13,010.00  SE RES 1  STD. ASST  11,030.00 3,462.00  EG ESS 3 4,135.00  267.27  491.70  604.00  604.00  4,223.47  1,929.66  48.40  18.00  18,104.74  14,055.36  3,510.40  4,153.00  CR 2  CS 1  CR 2  2,880.00  1,435.00  993.00  2,880.00  1,435.00  993.00  Personnel Cost Apportionment Table  TABLE  TOTALS  1. Weathership Oceanogr.  IV-2  2. EOLE Buoy Project  3. S t r . of 4. T h e o r e t i c a l Georgia Studies  5.Advisory & Admin.  33 1/3%  33 1/3%  0  0  33 1/3%  9,388.50  75%  25%  0  0  0  EG ESS 6  11,373.50  100%  0  0  0  0  EG ESS 4  9,985.34  100%  0  0  0  0 •  11,904.18  100%  0  0  0  0  EG ESS 3  8,050.00  100%  0  0  0  0  SE RES 3  18,104.74  0  0  SE RES 1  14,055.36  0  0  STD ASST  3,510.40  EG ESS 3  4,513.00  100%  0  CR 2  2,880.00  25%  0  CS 1  1,435.00  100%  0  CR 2  943.00  SE RES 1 CSA 2  CR 5  $17,034.32  .  50%  0. 100%  0  0  0 50%  0 100%  0 75%  50% 25%  0  0  0  0  25%  0  0  0  0  0  -249-  Ship Usage Charges  PARIZEAU  - Wave Climate Model - Project 5  $  RICHARDSON - Western Arctic Programme - used i n Arctic years 1967-70 (25% of cost of Richardson 1971-72) Apply as overhead to Project Area 5. LAUNCHES  - Pro rated to MSD usage ( a l l to "Parizeau")  LAYMORE  - E0LE Buoy Project 2 - Wave Climate Model - Project 5  650.00  $93,728.47 6,000.00 *  TOTAL  *N0TE:  16,108.47  73,100.00 TOTAL  ENDEAVOUR  3,870.00  Endeavour not funded by Marine Sciences Directorate  $93,728.47  -250Final Apportionment TABLE IV-3 Project 1 Weathership  TOTAL  Project 2 EOLE Buov  Project 4 Project 3 Georgia Str. Theoretical Studies Currents  Project Area 5 Advisory and Admin.  Personnel Costs SE RES 1 CSA 2 EG ESS 6 EG ESS 4 CR 5 EG ESS 3 SE RES 3 SE RES 1 STD ASST EG ESS 3 CR 2 CS 1 CR 2  $ 17,034.92 $ 5,678.31 $ 7,041.40 9,388.50 11,373.50 11,373.50 9,985.34 9,985.34 11,904.18 11,904.18 8,050.00 8,050.00 0 18,104.74 0 14,055.36 0 3,510.40 4^153.00 4,153.00 2,880.00 720.00 1,435.00 1,435.00 993.00 0  5,678.31 2,347.10 0 0 0 0 0 0 0 0 0 0. 0  0 0 0 0 0 0 $ 9,052.37 0 3,510.40 0 1,440.00 0 993.00  0 0 0 0 0 0 0 $10,541.51 0 0 720.00 0 0  $  5,678.30 0 0 0 0 0 9,052.37 3,513.85 0 0 0 0 0  Ledger Categories 1,227.69  1,227.69  0  0  0  Communications  100.00  100.00  0  0  0  Prof & Special Services  8,649.02  8,449.02  0  0  0  Freight  0 0 200.00  50.00  50.00  0  0  0  0  Repair & Upkeep of Equip.  27,519.44  27,006.94  437.50  0  0  75.00  Materials & Supplies  11,186.62  8,801.82  1,684.80  Machinery & Equip.  23,483.27  23,483.27  0  0  0  0  Acquisitions (Capital)  17,906.20  17,906.20  0  0  0  0  Rentals  •ff 100.00  0  600.00  Ship Usage Costs "Parlzeau" "Richardson"0/1 Launches "LaymoreV "Endeavour" Project Cost Sub Totals O/H to be Apportioned  3,870.00  3,870.00  16,108.47  16,108.47  650.00  650.00  73,100.00  73,100.00  6,000.00  6,000.00  302,718.65  147,365.67  83,747.71  15.095.77  11,861.51  45,147.99  25,741.57  11,859.57  8,100.00  1,210.00  952.00  3,620.00  12.813.51  48.767.99  91,347. 7 i 16,305.77 Final Project 328,460.22 159', 225.24 Cost Secondary Stepi oun of Proj •ct Area 5 P :o rated to •roject Costs 17,900.00  2,640.00  2,150.00  (48,767.99:  $185,303.23 109,247.71 1 1  18.945.77  14,963.51  0  26.077.99 Revised Projeci Costs  *N0TE: Library Allocation $2005.72 deducted from category "materials and supplies."  (1) $6,000.00 ship costs for "Endeavour" not funded by MSD.  PROJECT COST SUMMARY PROJECT 1 - Weathership Oceanography 2 - EOLE Buoy Project  $185,303.23 109,247.71  3 - Strait of Georgia Currents  18,945.77  4 - Theoretical Studies  14,963.51  -252-  iii)  OCEAN MIXING  -  COLLATOR 3152  APPORTIONMENT OF SERVICE UNIT COSTS a) Administration (3130) Library Apportionment Telephones (Total 3152) b)  $5,834.00 $1,208.00 487.70  Ship Division  NIL  OTHER DIRECT APPORTIONMENTS Photographic Services (3137)  168.35 $6,002.35  PROJECT IDENTIFICATION It was not possible to identify specific projects, as the whole departmental effort was the study of the mixing of oceans.  PERSONNEL COSTS Adjusted Salaries  $28,329.69  Telephones  287.40  Library (2 @ $604.00)  1,208.00  Travel  1,292.21  NOTE: *Dr. Nasmyth's Personnel Cost Allocation 3152-0cean Mixing (included i s Sals. above) DIRECT CHARGES  3150 Frozen Sea  60% - 12,843.43 10%  2,140.57  3151 Offshore Oceanography 10%  2,140.57  3155 W. Vancouver Group  10%  2,140.57  Dr. Gower  10%  2,140.57 $21,405.71  $31,117.30  -253-  REMAINING COSTS Professional Services  $  38.88  + $10,OOO  1  Repair and upkeep  177.04  Materials and supplies  $4,111.89* + $12,000  2  Machinery and equipment C a p i t a l expenditure  $10,038.88 16,160.42 3,241.60  $4,173.27  + $15,OOO  3  19,173.27  FINANCIAL ENCUMBRANCES 1.  Professional Services $5,000 National Research Council $5,000 Defence Research Establishment  2.  Materials and Supplies $12,000  DREP  3.  C a p i t a l Expenditure  DREP  *N0TE:  $15,000  Pacific  Deduction of $43.53 Library A l l o c a t i o n  CONTRACT - Dr. Gower Supervision from Dr. Nasmyth Telephone expenses A l l other costs paid by headquarters (Ottawa)  2,140.57 200.30 • $51,132.08  SUMMARY Overheads  6,002.35  Personnel Costs  31,117.30  Remaining Costs  51,132.08 TOTAL  $88,251.73  -255-  iv)  OCEANOGRAPHIC SECTION WEST VANCOUVER  - COLLATOR 3155  APPORTIONMENT OF SERVICE UNIT COSTS a)  Administration (3130) Library Apportionment  $18,220.00 $3,624.00  Telephones - paid by Fisheries Research Board r.. . . (W. Vancouver)  v\  n..  b)  Ship Division  c /  ,. cr  n n  54,650.00  OTHER DIRECT APPORTIONMENTS Administration - (Direct Assignment of total Secretarial cost) Ocean Physics - Supervision from 3152  7,618.00 2,140.57  PROJECT IDENTIFICATION 1.  Howe Sound  2.  Strait of Georgia  3.  Babine Lake  4.  Arctic Project  5.  Review of Effects of Thermal Pollution  6.  Lighthouse Programme  7.  Support Services.  APPORTIONMENT RULES i)  Some ledger categories have been apportioned to personnel, since  this was thought by A. Dodimead to be the most practical basis, although where a direct assignment could be made the costs have been assigned directly to projects. ii)  Capital acquisitions HAVE been apportioned excepting computer expen-  ditures, since the items are to be used specifically on the projects for which they were requisitioned.  Personnel Costs  TABLE  Adjusted Salaries  Library  Travel  TOTALS  SE RES 2  EG ESS 7  EG ESS 5  $152,548.97  20,319.97  12 713.00  10.599.0C  3,624.00  604.00  604.00  11,657.39  1,297.02  $167,830.36  22,220.99  13 ,317.00  10,599.0(  EG ESS 5  10,599.00  10,599.00  IV-4  GL MAN 3  EN ENG 4  SO 2  EG ESS 4  EG ESS 8  EG ESS 5  SE RES 1  SE RES 3  SE RES 3  10,347.00  14,338.00  14,587.00  9,102.00  13,003.00  13 003.00  1,114.00  16,152.00  6,672.00  604.00  604.00  604.00  604.00  3,221.44  413.68  3,000.00  529.71  3,058.74  13,347.00  14,867.71  18,249.74  9,706.00  16,828.44  13 003.00  1,114.00  17,169.68  136.80 6,808.80  ining Ledger Categories assigned part to Personnel and part by Direct Assignment - see F i n a l Apportionment Table f o r detail;  I  ro cn i  Personnel Cost Apportionment Table  TABLE 1. TOTALS  Howe Sound  IV-5  2. S t r a i t of Georgia  3. Babine Lake  4. Arctic Project  5. E f f e c t s of Thermal Pollution  6. Lighthouse Programme  7. Support Services  80%  0  0  0  0  0  0  0  0  0  SE RES 2  $20,923.97  20%  EG ESS 7  13,317.00  25%  60%  15%  EG ESS 5  10,599.00  40%  20%  0  10%  0  0  30%  EG ESS 5  10,599.00  25%  60%  15%  0  0  0  0  GL MAN 9  13,347.00  25%  25%  25%  15%  0  0  10%  EN ENG 4  14,867.71  70%  0•  0  •0  30%  0  0  SO 2 Education Leave  18,249.74  0  100%(O/H)  0  .0  0  0  1  '  50% .  50%  0  0  0  0  0  16,828.44  0  0  0  100%  0  0  0  EG ESS 5  13,003.00  0  0  0  0  0  100%  0  SE RES 1  1,114.00  0  0  100%  0  0  0  0  SE RES 3  17,169.68  0  0  0  100%  0  0  0  6,808.80  0  0  0  0  0  0  EG ESS 6  9,706.00  EG ESS 8  SE RES 3.  100%  I ro  >j  i  -258-  Ledger Category Apportionment Table  TABLE IV-6 Category  Relevant Total  Freight  $ 2,359.63  Prof, and Special Services  15,869.43  Rentals  1,676.37  Repair and upkeep of equipment  4,489.99  Materials and supplies Repair and upkeep Capital acquisitions  21,281.23 5,916.47 39,182.49  Apportionment 100% Position GL MAN 9 Direct assignments to Personnel and Projects $1,000 Position GL MAN 9 $676.37 to computer Direct assignments to Personnel Direct assignments to Personnel and Projects Direct assignments to Personnel Direct assignments to Personnel and Projects  *NOTE: Ledger total reduced part Library Allocation Total Allocation - $3,204.60 Computer Costs (Non-capital)  7,518.28  1) 35% 2) 10% 3) 35% 5) 20%  Ship Usuage Charges  TABLE IV-7 1  PROJECTS 1.  Howe Sound  2.  Strait of Georgia -Pollution Study  Days  14  "VECTOR"  Days  "LAYM0RE"  11  33,600.00  $20,400.00 $20,400.00  $33,600.00  LAUNCHES  TOTAL 33.600.00  $650.00  $21,050.00  $650.00  $54,650.00  n i A L AProcriomotT TAJLC Prolaet*  Cta.or,  Total  SE EES 2  EC I S S 7  EC ESS 5  EC I S S 5  CL K M 9  D  21,120.99  13,117.00  10.399.00  10,599.00  11,147.00  14,867.71  DK 4  SE EES 3  EC 888 *  E0 ISS 8  ES ISS 3  S I BIS 1  SE U S 3  18,249.74 9 , 7 0 6 . 0 0  16,818.44  13,003. K  1.114.00  17,169.68  6,808.80  273.71  609.75  SO 2  Coaputar Sarvlcaa  1 How* Sound  2 Strait of Caorfl*  3 Bablna Laka  4 Arctic Proj.  5 Tharaal Polio.  Llghtbowa*  7 Support Sarvlcaa  jVriaada 1 16,120.00 2.1*0.57  Adsls. t i t r a t i o n Oeaao P h v a t c a Total  10,160.57  Ovarhaad  Ptnnail  Coat*  167,830.36  ••••laIni U d n r C a t a t o rlaa Pralcht P r o f . 6 Spac. Sar». Inula l a p . 6 Upkaap o f Kqulpaarat Rata, 4 Supplla* •a*. 6 Dpa-Mp- T o o l a • ran* C a p i t a l Exp.  2,359.6) 13.869.4) 1.676.37  1.932.08  4,489.99 21,281.23  123.39 820.86  3,916.47  2,958.23  t o t a l C o a t a To la appoTtlonad Aa Far r a r a o o o a l Coot A p p o r t l o a a a t a t Tab l a  (tap SI EC EC EC CL  1,912.08 1,000.00  28,233.35  3,000.00  382.26 820.90 2,956.24 460.03  13,117.00  10.399.00  10.668.00  21,706.63  21,421.24  3,593.92 3,611.80  188.42  460.03  •18,249.74 9,706.00  698.06  1.440.00  13,701.06 2.742.42  17,288.49  17.441.40  16,626.27  3.192.00  5,860.80 676.37 961.11  4,661.93  19.104.00  9.119.49  483.34  2,617.12  193.00  88.93  1.059.90  J.179.70  7.700.84  26,622.26  Down Of P a r a o o o a l Coata US ESS ESS ESS MAX  anc EC EC EC U SE SE  1.139.63 69.00  ESS CSS US US US US  I 7 3 S 9  (28,253.55)  3,403.12 3.330.00 4,239.60 2,670.00 5,426.66 14,991.24 4,633.00  (13,317.00) 10,399.00] (10.668.00) (21,706.63)  t  [21.421.24) 9,706.00)  4  4,853.00  (13.701.06  5 1 J }  2,742.42)  (17,443.40  33,600.00  .  19,104.00 20.360.37  (18,249.74  Projoct Coat* Secondary S t o p Down Of Pr ojact Araa 7-Fro Ratod F I l A L PaOJECr COSTS  * E d u c a t i o n Laava-Aaaaaaad Aa Ova rha ad  2.170.60  3,236.05 6.430.00  1  13,701.06 2,742.42  (16,626.27)  (7.316.28)  Ovarfcaada  1,600.00 3,426.66  17.U3.40  S h i p Coata  T o t a l P r o j a c t Coata W i t h o u t Owarfaaad  2,000.00  17 . 1 8 8 . 4 9  17,288.49)  1  21.612.43 7,987.00 2,119.80 6.398.00 5,426.66  16,626.27 21.030.00 1.503.60  2.611.44  751.80  2.631.44  91.126.SO  92,302.30  24,716.68  19,240.84  7,933.60  11,701.06  1 3 . 3 6 0 - 31  12.700.00  3.460.00  3.360.00  1.090.00  1.940.00  700.00  104.486,81  103.202.30  18.178.68  44.600.84  9.023.60  15.641.06  6.139.23  2.198.25  2.040.00  546.00  870.00  172.00  313.00  106.685.06  107.242.30  28.724.68  43.470.84  9.193.60  13.954.04  3,439.25  6.139.25)  PROJECT COST SUMMARY  PROJECT  1 - Howe Sound 2 - Strait of Georgia 3 - Babine Lake 4 - Arctic Project 5 - Review of Effects  of  $106,685.06 107,242.30 28,724.68 45,470.84 9,195.60  Programme  15,954.06  Thermal Pollution  6 - Lighthouse  -261-  A)  OCEAN CHEMISTRY -  COLLATOR 3154  APPORTIONMENT OF SERVICE UNIT COSTS a)  $9,421.00  Administration (3130) Library Apportionment  $604.00  Telephones - paid by Fisheries Research Board NIL  b) OTHER DIRECT APPORTIONMENTS  NIL  PROJECT IDENTIFICATION 1.  Hydrocarbon Analysis  2.  Nutrient Analysis  3.  Station "p" Chemical Data  4.  C-14 Air Sea C0 Exchange  5.  Carbonate Chemistry  6.  Hudson-70  2  APPORTIONMENT RULES i)  Direct apportionments have been made where possible, eg. Field  Account, otherwise costs have been assigned as part of personnel costs for "stepping down" at a later stage. ii)  Capital equipment costs HAVE been apportioned, since the items are to  be used specifically on the project for which they were requisitioned.  Personnel Costs  TABLE IV-9 SE RES 1 Adj usted Salaries  $15,623.51  EG ESS 4  EG ESS 3  9,114.00 ,  8,186.00  SO 1  CR 2  2,532.00  5,320.00  ELE 3  EG ESS 3  EG ESS 3  1,975.00  721.00  2,157.00  Travel Total Personnel Costs  46,628.51 NIL  Telephones Library (1<?$604.00)  TOTAL  604.00 1,255.14  604.00 291.04  1,799.26  253.08 f  17,482.65  9,405.04  8,439.08  2,532.00  1,975.00  721.00  REPAIRS AND UPKEEP OF EQUIPMENT  MATERIALS AND SUPPLIES  MACHINERY AND EQUIPMENT  6,320.00  2,157.00  49,831.77  Remaining Ledger Categories (including Field Account)  TABLE IV-10 CATEGORY Field A/C Ledger Amounts  TRAVEL  FREIGHT  (2,000.00)  (500.00)  3,799.26  558.99  PROF. AND SPECIAL SERVICES  11,186.84  RENTALS  (911.30)  (500.00)  911.30  500.00  Library Allocation Totals for Apportionment  CAPITAL EXPENDITURES  8,911.30  (5,000.00) 32,139.60  TOTAL  5,796.23  61,625.94  5,796.23  61,625.94  (2,887.79)  1,799.26  58.99  11,186.84  0  0  24,251.81  cn ro  -263-  REMAINING LEDGER CATEGORIES:  have been assigned to projects or apportioned based on " r u l e s " given by Dr. C. S. Wong.  TABLE  IV-11  RELEVANT TOTALS  CATEGORY Freight  $  58.89  APPORTIONMENT . 3) 100%  Prof and Special Services  11,186.84  1) 20%  Materials and Supplies  24,251.81  Expenditures i d e n t i f i e d  Machinery and Equipment  5,796.23  C a p i t a l Expenditures  * 31,159.74  *N0TE: Furniture Costs  $30,466.20  2) 20%  3) 20%  4) 20%  5) 20%  Expenditures i d e n t i f i e d • Expenditures i d e n t i f i e d  Not apportioned  Personnel Cost Apportionment Table TABLE  TOTALS  1. HYDROCARBON ANALYSIS  IV-12  3MEASUREMENT AND NUTRIENT DATA PROANALYSIS CESSING 2.  4. 5. 6. C-14 AIRSEA C02 CARBONATE EXCHANGE CHEMISTRY HUDSON-70  SE RES 1  $17,482.65  10%  10%  10%  20%  30%  20%  EG ESS 4  9,405.04  5%  10%  35%  10%  40%  EG ESS 3  8,439.08  5%  35%  60%  0  0  0 0  CR 2  6,320.00  5%  5%  50%  5%  5%  30%  SO 1  2,532.00  60%  50%  0  50%  35%  35%  30%  35%  35%  0 0 0 0  20%  1,975.00  0 0  20%  ELE 3  0 0 0 0  0 0  EG ESS 3  72J..00  EG ESS 3  2,157.00  30%  Final  Apportionment  TABLE IV.13  Total  Project 1 Hydrocarbon Analysis  Project 2 Nutrient Analysis  Project 3 S t a t i o n 'P' Chemical Data  Project 4 C-14 A i r Sea CO2 Exchange  SE RES 1  $ 17,482.65  1,748.30  1,748.30  1,748.30  3,496.60  5,244.55  EG ESS 4  9,405.04  470.25  940.50  3,291.79  940.50  3,762.00  EG ESS 3  8,439.08  421.00  2,958.08  5,060.00  CR 2  6,320.00  '316.00  316.00  3,160.00  SO 1  2,532.00  ELE 3  1,975.00  Project 5 Carbonate Chemistry  Project 6 Hudson-70  Personnel Costs Step Down  Field  EG ESS 3  721.00  EG ESS 3  2,157.00  Account  8,911.30  Freight  58.89  -  -  -  -  316.00  506.40  -  987.50  -  252.35  252.35  754.95  754.95  -  7,000.00  -  -  -  58.89  -  -  3,496.60  -  316.00  1,896.00  506.40  1,519.20  -  987.50  647.10  -  1,911.30  -  216.30  -  -  P r o f . & S p e c i a l Serv.  11,186.84  2,237.37  2,237.37  2,237.37  2,273.37  2,237.36  M a t e r i a l s & Supplies  24,251.81  1,700.00  2,425.20  5,580.00  9,699.61  4,120.00  727.00  5,796.23  53.00  53.00  165.00  888.00  4,584.23  53.00  31,159.74  2,235.00  7,700.00  11,885.00  3,539.74  5.800.00  -  130,396.58  9,180.92  19,385.75  42,687.55  9,421.00  660.00  1,395.00  3,075.00  9,840.92  20,780.75  45,762.55  Machinery & Equip. C a p i t a l Equip. Sub  Total  O/H To Be Apportioned F i n a l Project Cost  $139,817.58  21,117.82 .  29,345.24  8,679.30  1,530.00  2,120.00  641.00  22,647.82  31,465.24  9,320.30  -265-  PROJECT COST SUMMARY PROJECT 1 - Hydrocarbon Analysis  $ 9,840.92  2 - Nutrient Analysis  20,780.75  3 - Station "P" Chemical Data  45,762.55  4 - C-14 Air-Sea C0 Exchange  22,647.82  5 - Carbonate Chemistry  31,465.24  2  6 - Hudson - 70  9,320.30  

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