Open Collections

UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

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

Your browser doesn't seem to have a PDF viewer, please download the PDF to view this item.

Item Metadata

Download

Media
831-UBC_1973_A4_5 R69_3.pdf [ 12.97MB ]
Metadata
JSON: 831-1.0093099.json
JSON-LD: 831-1.0093099-ld.json
RDF/XML (Pretty): 831-1.0093099-rdf.xml
RDF/JSON: 831-1.0093099-rdf.json
Turtle: 831-1.0093099-turtle.txt
N-Triples: 831-1.0093099-rdf-ntriples.txt
Original Record: 831-1.0093099-source.json
Full Text
831-1.0093099-fulltext.txt
Citation
831-1.0093099.ris

Full Text

THE APPLICATION OF PLANNING-PRDGRAMMING-SUDGETING-SYSTEMS (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 of Newcastle Upon Tyne 1969 Chartered C i v i l Engineer 1972 Chartered M u n i c i p a l Engineer 1970 A THESIS SUBMITTED IN PARTIAL FULFILMENT DF THE REQUIREMENTS FOR THE DEGREE DF MASTER OF BUSINESS ADMINISTRATION i n the F a c u l t y of Commerce and Business A d m i n i s t r a t i o n Lite accept t h i s t h e s i s as conforming to the re q u i r e d standard The U n i v e r s i t y of B r i t i s h Columbia May 1973 i i In presenting th i s thes i s in p a r t i a l fu l f i lment of the requirements far an advanced degree at the Univer s i ty of B r i t i s h Columbia, I agree that the L ibrary s h a l l make i t f r ee ly a v a i l -able for reference and study. I further agree that permission for extensive copying of t h i s thes i s for s cho la r ly purposes may be granted by the Head of my Department or by h i s repres-enta t ive s . It i s understood that copying or pub l i ca t ion of t h i s thes i s for f i n a n c i a l gain s h a l l not be a l loued without my wri t ten permiss ion. Department of Commerce and Business Adminis trat ion The Univer s i ty of B r i t i s h Columbia Vancouver 8, Canada, Date SQrA <UA^ 'gp? i i i ABSTRACT The objective of this study is to investigate planning-programming-budgeting systems (PPBS) as a method for rational-ising public expenditure decisions, and the evaluation of sub-sequent performance within the framework of the Canadian Federal Government. Based on a research of the literature, the rationale for such a system is presented, together with a detailed des-cription of i t s operational mechanics, impact and areas which might cause d i f f i c u l t y in i t s practical implementation throughout the Federal Government. An operational casting study from a small f i e l d organ-isation is presented to illustrate the data requirements and the problem of obtaining the relevant information with a traditional budgeting system. The thesis concludes that despite the commitment to PPBS at the Cabinet and Senior Executive level within the Canadian Federal Government, this has not yet penetrated to the operational managers in the f i e l d departments who w i l l be increasingly re-quired to think in these terms i f the approach is to be success-fully implemented throughout the sphere of government operations. Several recommendations are made to enable the approach to be installed at the operational level, not the least of which is a management education programme to outline the concepts, iv aims and requirements of PPBS as i t affects managers at this level. The measurement cf benefits and the problem of joint costs are mentioned as two v i t a l areas uhich have as yet not been fully considered uithin the government and are overdue far detailed study. In conclusion i t is hoped that this dissertation outlines the disparity between the allocation process as i t is outlined by senior government o f f i c i a l s , and the process as i t actually occurs uithin 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 organ-isation level. V ACKNOWLEDGEMENTS During the practical phase of this study I received much help and advice from the staff of Marine Sciences Directorate (Pacific 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 particularly fortunate to have such an able thesis committee, whose chairman Professor C. L. Mitchell 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 practical study as represented in this thesis is entirely my own, and I therefore remain solely responsible for any errors or omissions. I should like to extend thanks to my typist Mrs. Mildred Brown, who has responded uomanfully when faced with the heroic task of deciphering the hyroglyphics I laughingly c a l l writing. Finally this dissertation is respectfully dedicated to two very special people in my l i f e , my late father Syd Royce, and my mother Mrs. Constance Royce. v i TABLE DF CONTENTS Chapter # Page 1 INTRODUCTION . 1 A. J u s t i f i c a t i o n s for the Study 1 B. Objectives of the Study 6 C. General Approach of the Study 6 D. D e f i n i t i o n of hey Terms 8 E. References 9 2 THE THEORETICAL BACKGROUND - A REVIEW DF THE LITERATURE IQ A. Introduction 10 B. Why Federal Government Expenditures? H i . Some Aspects of Welfare Economics H i i . Government v Private Expenditures 14 i i i . Federal v P r o v i n c i a l Government 19 Expenditures C. The Achievement of Government Objectives 23 i . T r a d i t i o n a l Budgeting and Control Systems, and Weaknesses 23 i i . C o s t - U t i l i t y Analysis 3*» D. Planning-Programming-Budgeting-Systems (PPBS) t*6 i . H i s t o r i c a l Background ^6 i i . What i s a PPBS and what i s i t designed to achieve? 52 i i i . The Mechanics of a PPBS 56 i v . Impact of PPBS 61 v. Possible Problem Areas of PPBS 66 E. Summary 70 F. References 72 3 THE FEDERAL GOVERNMENT CONTEXT, HIGHLIGHTING THE DEPARTMENT OF ENVIRONMENT, WITH PARTICULAR REFERENCE TO MARINE SCIENCES DIRECTORATE 79 A. Introduction 79 B. The Canadian Federal Government and the Role of the Treasury Board 80 vii Chapter Page C. The Federal Department of the Environment 93 D. Marine Sciences Directorate 103 E. References 109 k A FIELD STUDY AT THE OPERATIONAL LEVEL DF THE FEDERAL GOVERNMENT-MARINE SCIENCES DIRECTOR-ATE (PACIFIC REGION) 111 A. Introduction 111 B. Marine Sciences Directorate (Pacific Region) 111 C. The Project Costing Exercise 121 D. Recommendations for PPBS at the Regional level 131 E. References 162 5 SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS WITH SUGGESTIONS FOR FURTHER RESEARCH 163 A. Summary 163 B. Conclusions and Recommendations 16^  C. Suggestions for Further Research 167 D. Closing Comment 168 LITERATURE CITED 169 APPENDIX 177 v i i i LIST OF TABLES Table Text Page 3-1 Target Area Codes Related to Directorate Goals 106 k-I Cost Centred Budget Responsibilities 118 Schedule of Cost Categories Utilised by Marine Sciences Directorate 119 Appendix Administration Department -II-I Salary Cost Apportionment 181 II-2 Functional Cost Apportionment 182 II-3 Apportionment Proxies 18*f Il-k Primary Cost Apportionment 185 II-5 Secondary Cost Apportionment 186 II-6 Simplified Cost Apportionment 187 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 III-2 Field Hydrography - Staff List Field Hydrography - Supervisory and Other Assignments 212 213 i x Table Appendix Page 111-3 Cost Summary - Hydrography F i e l d Party 'A' 214 III-4 Party 'B' 215 III-5 Party 'C» 216 III-6 Party 'D' 217 III-7 F i e l d Hydrography Regional Costs 219 III-8 Cost Summary - Hydrography F i e l d Parties 224 i n - g F i e l d Hydrography - F i n a l Cost Apportionment 227 111-10 Tides and Currents - Personnel Costs 230 i n - i i - Ship Usage Charges 232 111-12 - Subsection Cost Apportionment 233 111-13 Tides and Currents - F i n a l Cost Apportionment 234 111-14 Chart Construction - Personnel Costs 237 111-15 - Apportionment Proxies 238 111-16 - Subsection Cost Apportionment 239 111-17 - Chart Revision Costs 240 111-18 Chart Construction - Chart Compilation Costs 241 IV-1 Offshore Oceanography - Personnel Costs 247 IV-2 - Personnel Cost Apportionment 248 IV-3 Offshore Oceanography - F i n a l Cost Apportionment 250 IV-4 Oceanographic Section (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 Oceanographic Section (Id.Van)- F i n a l Cost Apportion-ment 259 iv-g Ocean Chemistry - Personnel Costs 262 IV-IO - Ledger Category Apportionment 262 I V - l l - Regional Cost Apportionment 263 IV-12 - Personnel Cost Apportionment 263 IV-13 Ocean Chemistry - F i n a l Cost Apportionment 264 X LIST OF ILLUSTRATIONS Figure Page 2-1 Production P o s s i b i l i t y Curve 11 2- II PPBS i s a Continuing Process 5g 3- 1 The Government of Canada - Organisation Chart 81 3-II The Department of the Environment - Organisation Chart 98 3-III Water Management Service - P a r t i a l Organisation Chart 100 U-I Marine Sciences Directorate ( P a c i f i c Region) - Organisation Chart 1H+ k-II Flou Chart of Cost A l l o c a t i o n Procedure 123 k-III Schematic for Numerical Model of V i c t o r i a Harbour, Gorge Waterway and Portage Inlet 152 H i e r a r c h i a l Organisation Chart, Linking Minister of the Environment to Marine Sciences Directorate Regional Managers 159 CHAPTER I INTRODUCTION A. J u s t i f i c a t i o n s for the Study The growth i n the s i z e and complexity of the public sector in both developed and underdeveloped countries i s undoubtedly one of the most important of recent p o l i t i c a l and economic changes. It i s a phenomenon that has slowly a l t e r e d the structures of econ-omic systems, and of course, the d i s t r i b u t i o n of economic power within these systems. In i t s report on Management of the Public Service, the Royal Commission on Government Organisation gives recognition to t h i s growing complexity: "... from the r e l a t i v e l y simple beginnings in the nine-teenth century, the government has become progress-i v e l y more involved i n an increasingly complex econ-omy — promoting, supporting, protecting, regulating, and c o n t r o l l i n g by a growing variety of means, d i r e c t and i n d i r e c t , general 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 of the condition and prospects of a l l segments of the economy to assess the impact of government programmes and plans on each segment, and to measure and adjust the increas-ingly complex interplay 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 signs of abatement. In the underdeveloped countries, private entrepreneurship i s often lacking, and nationalised enter-prise expands to take i t s place, whereas in the developed countries, the public sector continues to increase both r e l a t i v e l y and absol--2-utely, i n response to the forces of urbanisation, with i t s i n -creased s p e c i a l i s a t i o n and economic and physical interdependences. In Canada, the absolute l e v e l of public expenditure has ri s e n from $795 m i l l i o n (15.*t% of GIMP) i n 1926 to $12,938 m i l l i o n (32% of GNP) by 1962, 2 and i n the USA the national government alone disburses more than.$70,000 m i l l i o n per year (approximately 17% of GNP), with an in t e r e s t i n g comparison being made that i n the two years 1953-^, the expenditure equalled that of the IkO year period 1789-1929."' Bird, however, makes the point that absolute figures alone give a misleading impression of the si g n i f i c a n c e of these increases i n government spending, which are due at least i n part to factors such as i n f l a t i o n , papulation increase, and the r i s e i n l e v e l of r e a l per capita income. He goes on to say that the r a t i o of t o t a l government ex-penditure to GNP i s misleading, because substantial transfer expend-it u r e s (eg. the c o l l e c t i o n of taxes to pay welfare r e c i p i e n t s ) are included i n t h i s expenditure, whereas according to accepted national income accounting conventions these transfer items are not included i n GNP c a l c u l a t i o n s . The relevant measure of the goods and services consumed by the government i n the course of 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 expenditure" which comprised 20% of GNP in 1967, and i f m i l i t a r y and c a p i t a l account expenditures are de-ducted, the t o t a l federal government current c i v i l i a n expenditure was approximately 10% of GNP. Bird suggests that i t i s only these exhaustive expenditures that divert resources from the private sector, although both ex-haustive and non-exhaustive expenditures require financing and thus -3-a f f e c t the a l l o c a t i o n to some extent. Notwithstanding the foregoing reduction to the absolute government sector/GNP r a t i o , the importance of these exhaustive expenditures within the economy of the nation i s s e l f evident, and impose a correspondingly high duty to ensure that the monies are disbursed both e f f i c i e n t l y and e f f e c t i v e l y , since wastage i n the public sector needlessly diverts funds from more useful projects elsewhere i n the economy, preventing the general welfare from reach-ing i t s p o t e n t i a l l e v e l v i a a maximised GNP. The t r a d i t i o n a l means of monitoring government expenditure has been by the budget, com-pr i s i n g a s e r i e s of " l i n e objects" or various items of expenditure such as t r a v e l , f r e i g h t charges, e t c . Whilst t h i s type of budget i s useful as a p o l i c i n g device to prevent flagrant misuse of funds, i t does not consider the r e l a t i v e usefulness or otherwise of the programmes being pursued, and as such does not provide any measure of effectiveness of the various expenditures, e.g. purpose served. What i s required therefore i s a revised budget structure to stimulate an examination of the p o s s i b i l i t i e s and f e a s i b i l i t i e s of t r a n s l a t i n g into performance the general philosophical respons-i b i l i t i e s of a democratic government, v i z "to do those things that people need but cannot supply or do e f f e c t i v e l y f a r themselves", whilst ensuring that the programmes pursued complement one another to the extent that public and private expenditures taken j o i n t l y , enable the economy of the nation to a t t a i n i t s highest p o t e n t i a l l e v e l . The formulation of general p o l i c i e s i s part of the democratic p o l i t i c a l process. These p o l i c i e s must then be translated into meaningful programmes intended to achieve the s p e c i f i e d goals, by - t i -the senior management of the appropriate department (which may be only that e x i s t i n g department with a c a p a b i l i t y most closely aligned to that required 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 process, and in general there has been no systematic attempt to co-ordinate these agencies towards the common goals 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 safe-guard to prevent misappropriation of funds. Goals have not been outlined except i n very broad terms of reference, and t h i s hampers supervision because of the lack of observation and measurement c r i t e r i a . This i n turn helps to prevent o v e r a l l performance from being evaluated except i n terms of money spent (input oriented) rather than value of goods and services produced (output oriented). It i s therefore v i r t u a l l y impossible with the t r a d i t i o n a l budget structure to assess the economic impact of i n d i v i d u a l public expenditures on the economy, and to thus make decisions based on r a t i o n a l information. We should therefore seek better measurement techniques and pro-cedures, although t h e i r overuse may r e s u l t i n increased int e r e s t of these parameters to the detriment of the intangibles, e s p e c i a l l y i f government employee evaluations are based on such values. L i t t l e systematic work has been done to determine the work environment most conducive to forward planning etc., although i t i s known that the one favoured by senior management enables and encourages freedom to experiment and apply t h e i r own ideas without unnecessary con-7 s t r a i n t s . This may best be described as pa r t i c i p a t o r y management, and i t i s suggested that with able and understanding leadership, the -5-d i f f e r e n t motivational forces i n each member of the organisation may be coalesced into a strong force aimed at accomplishing the Q mutually established objectives of the organisation (goal 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 accomp-g l i s h e d with given resources. However there i s the danger that p a r t i c i p a t o r y management w i l l lead to piecemeal analysis via over dec e n t r a l i s a t i o n , i n that the c r i t e r i a adopted in the lower l e v e l problems ( f i e l d operations) may be unrelated to the higher l e v e l c r i t e r i a of government p o l i c i e s . Planning-Programming-Budgeting-System (PPBS) which i s des-cribed at length i n Chapter 2 i s an attempt to reconcile the econ-omic requirements of measuring the outputs of public expenditures i n order to determine t h e i r impact and hence optimum l e v e l s , whilst retaining the control aspects of operational budgeting. Stated b r i e f l y , i t represents the application of price and a l l o c a t i o n theory to decisions regarding public expenditures (goods and s e r v i c e s ) . By i t s nature i t w i l l force a detailed examination of s p e c i f i c ob-j e c t i v e s and programmes, whilst hopefully at the same time r e i n f o r c i n g motivation v i a p a r t i c i p a t i o n , and with judicious control may a l i g n the objectives of management to those of governmental policy makers. The intention i s that PPBS w i l l eventually enable the use-fulness of public expenditures to be o b j e c t i v e l y assessed, and, when aligned to applied economic theories, determine the optimum mix of public to private expenditures as well as r a t i o n a l i s e the choice of the most e f f i c i e n t of the competing opportunities within the govern-ment sector. -6-B. Objectives of the Study Stated b r i e f l y , the objectives of t h i s study are: "To investigate PPBS as a method for r a t i o n a l i s i n g public expenditure decisions and the evaluation of subsequent performance u i t h i n the framework of the Canadian Federal Government," In addition, the system w i l l be tested at an operational l e v e l to determine the problems of expenditure data c l a s s i f i c a t i o n required by i t s implementation within a f i e l d organisation. How-ever the i n v e s t i g a t i o n of benefit data i s s p e c i f i c a l l y excluded as being outside the scope of the empirical study. C. General Approach of the Study Chapter 2 provides 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, with a b r i e f look at s o c i a l welfare theory and the public vs private expenditure dichotomy in section B, i n an attempt to answer the question "why have public expenditures at a l l , why not leave the f i e l d c l ear for the market system of private enterprise?" Section C comprises an examination of the t r a d i t i o n a l budget process alluded to above, with a discussion i n more d e t a i l of i t s weaknesses i n the achievement of government objectives. There follows an examination of benefit-cost analysis, which has been i n -cluded as part of the t r a d i t i o n a l system because of the time since i t s inception (benefit-cost analysis was required for certain watershed treatment programmes under the USA Flood Control Act of 1936)^, although i n i t s more sophisticated u t i l i t y cost form i t i s a v i t a l component of PPBS. F i n a l l y i n section D PPBS i s studied i n d e t a i l , providing - 7 -i t s h i s t o r i c a l development, aims and mechanics,.the anticipated impact on government operations, including the problems and d i f f i -c u l t i e s forseen. Chapter 3 i s an attempt to narrow the focus from govern-ment operations i n general f i r s t to a s p e c i f i c department (Canadian Federal Department of the Environment), and then investigate i n greater d e t a i l a small subset of that department, namely the Marine Sciences Directorate which forms part of the Water Management Services branch of the Department of Environment (DOE). There i s a discussion of the aims, organisation and programmes etc. of the department together with a b r i e f look at Water Services Management, one of the f i v e operational units of the DOE. F i n a l l y the Marine Sciences Directorate i s examined, with p a r t i c u l a r reference to P a c i f i c Region i n V i c t o r i a , B.C. Chapter U considers the costing study within P a c i f i c Region of the Directorate forming the appendix to t h i s paper, and i s pro-vided i n an attempt to i l l u s t r a t e some of the p r a c t i c a l d i f f i c u l t i e s of obtaining the appropriate f i n a n c i a l information as input to the economic analyses required both by PPBS and operational decision making as an aid to improved e f f i c i e n c y within the public sector, with several recommendations given for guidance of the operational s t a f f . Chapter 5 provides a summary of the thesis and recommend-ations giving some suggestions for future research i n the area of the e f f e c t s of government expenditure. -8-D. D e f i n i t i o n of Hey Terms Planning-Programming-Budgeting-System (PPBS) - An integrated f i n -a n c i a l programme linked to prespecified objectives. Responsibility Centre - An organisation unit headed by a person r e -quired to perform some function (as output) making e f f i c i e n t use of given resources (input). Programme - An organised response to reduce or eliminate one or more problems. This response includes a) s p e c i f i c a t i o n of one or more objectives, b) s e l e c t i o n and performance of one or more a c t i v i t i e s , c) a c q u i s i t i o n and use of resources. Objective - A s i t u a t i o n or condition of people or environment which the responsible person considers desirable to a t t a i n . The d e f i n i t i o n s of other terms used within the body of the thesis are given with t h e i r f i r s t usage. 0 -9-E. References 1. Report of the Royal Commission on Government Organisation 1962 Vol. I Proceedings. Ottawa 1962, pp. 38-39. 2. H. R. B a l l s , " E f f i c i e n t Public Administration" i n Management  Information Systems and the Public Service, ed. by H. W i l l (New York: Simon and Schister 1970) 3294-1. 3. R. N. McKean, E f f i c i e n c y i n Government Through Systems Analysis (New York: Wiley & Sons, 1958) p. 13. 4. R. M. B i r d , The Growth of Government Spending in Canada (Toronto: Canadian Tax Foundation, 1970) p. 13. 5. Ibid., pp. 18-20. 6. M. Anshen, "The Federal Budget as an Instrument for Management and Analysis" in Programme Analysis and the Federal Budget ed. by D. Novick (Cambridge: Harvard University Press, 1965) p. 15. 7. E. P. Learned et a l . Business Policy - Text and Cases (Irwin Inc. 1969) p. 638. 8. R. L i k e r t "An overview of New Patterns of Management" i n Current  Perspectives i n S o c i a l Psychology ed by E. P. Hollander and R. G. Hunt (New York: Oxford University Press 1971) p. 613. 9. G. Black, The Application of Systems Analysis to ^ Government  Operations (Washington D.C.: National I n s t i t u t e of Public A f f a i r s , 1966) p. 32. 10. R. J . Hammond "Convention and Limitation i n Benefit-Cost Analysis," National Resources Journal 6, 1966, p. 197. - I D -CHAPTER 2 THE THEORETICAL BACKGROUND - A REVIEW OF THE LITERATURE A. Introduction This chapter provides both the conceptual and t h e o r e t i c a l background for PPBS in the public sector. It i s suggested that any i n v e s t i g a t i o n of 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 Federal Government should be preceded by a b r i e f look at the very concept of a public sector, and the reasons fo r i t s existence i n the f i r s t place. Section B therefore addresses the problem by attempting to answer the question "Why Federal Government Expenditures?", looking b r i e f l y at uelfare economics, the reasons behind the development of a public sector, and the l e g a l authority for the d i v i s i o n of r e -s p o n s i b i l i t y between.Federal and P r o v i n c i a l governments. Section C examines the t r a d i t i o n a l expenditure control method of " l i n e object" budgeting with i t s weaknesses, and also focusses upon c o s t - u t i l i t y analysis, which although has been used for many years i n both public and private sectors i n i t s Cost-Benefit form, i s only now beginning to be u t i l i s e d in i t s more widely a p p l i c -able C o s t - U t i l i t y format with consideration of non-quantifiable items. Section D comprises a review of the l i t e r a t u r e on PPBS i t s e l f , considering i t s h i s t o r i c a l background and development, i t s aims, mechanics, before looking at i t s expected impact and possible problem areas. -11-8. Why Federal Government Expenditures? i . Some Aspects of Welfare Economics Economists have long been interested i n i d e n t i f y i n g p o l -i c i e s that would promote economic welfare, 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 society uses i t s resources. The i n t e l l e c t u a l source of the "new" welfare economics i s Pareto, who introduced his t h e o r e t i c a l system late i n the nine-teenth century, although i t i s only i n the l a s t t h i r t y years that i t has been extensively developed.* - A b r i e f outline of the theory i s presented below. Q - A F i g . 2.1 Production Possib-i l i t y Curve The curve shown i n F i g . 2.1 repres-ents the maximum production p o s s i -b i l i t i e s — various combinations of the two commodities A and B that can be produced with the given r e -sources. If one such combination on t h i s curve of maximum e f f i c -iency (say P) was produced ( i . e . A of A and B of B) and d i s t r i b -P P uted among a group of i n d i v i d u a l s , these people would no doubt do some trading that would be mutually advantageous. That i s by free exchange the s a t i s f a c t i o n of same could be increased without decreasing that of others. When no further exchanges would be mutually advantageous, the group would have made the most of the p o s s i b i l i t i e s , given the combination P and the i n i t i a l d i s t r i b u t i o n within the group. -12-u However since the production p o s s i b i l i t y curve i s a continum, the i n i t i a l combination of A and B at point P need not be a given, P P as an i n f i n i t e number of points of maximum e f f i c i e n c y may be determined (for example p 1 with Ap 1 D f A and B^" of B being produced). This pos-s i b i l i t y of converting one product into another by r e a l l o c a t i n g the resources which produce them opens the way to further trade that i s mutually advantageous, u n t i l the only way to increase further 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 of others. Such a point of equilibrium i s c a l l e d an optimal point. Pareto's d e f i n i t i o n of the optimal point may be transferred into the rule which states that any s o c i a l change i s desirable 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 increased 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 . This Pareto rule i s i n i t s e l f an e t h i c a l proposition or value statement, but i s thought to command wide-spread approval. However, since the theory does not o f f e r a unique solution (an i n f i n i t e number of optimum production 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 o f f e r 0 other than a conceptual solution to the problem. The theory has been extended by Kaldor and Hicks to include a compensation p r i n c i p l e , i n which a change i s considered desirable i f i t leads to a s i t u a t i o n whereby the i n d i v i d u a l s gaining from the change could compensate those losing from i t and s t i l l r e t a i n a surplus. This extended d e f i n i t i o n i s more p r a c t i c a l for public works than Pareto's since i n general any change r e s u l t s i n some in d i v i d u a l s being worse o f f and some better o f f , rather than some people being better o f f and others being i n d i f f e r e n t to the change ( i . e . undergoing no change i n u t i l i t y ) . However u t i l i t y i t s e l f i s measurable only by i n d i v i d u a l -13-decision makers, being a subjectively quantifiable amount. While an economist may be able to make certain presumptions about u t i l i t y on the basis of behavioural observations, he i s nevertheless ignorant of the actual ranking of alternatives unless and u n t i l that ranking i s r e -vealed by overt choice, generally to be seen i n the market place. It must be acknowledged that by reason of market imperfections and d i s t o r t i o n of marginal conditions owing to government a c t i v i t i e s (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 financing of public expenditures) the Pareto optimum conditions are at best only approximated i n practice, and may be un 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 of a general welfare function for society 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 society decide on that product mix which w i l l maximise i t ? Given a set of i n d i v i d u a l indifference curves and the s o c i a l welfare function r e l a t i n g then, one could define a t h e o r e t i c a l maximum (although i n practice the sol u t i o n would be extremely tedious). In the absence of any generalised society welfare function d i s -cussions of " i d e a l output" and "maximisation of r e a l income" become v i r t u a l l y meaningless i f the economic process includes e f f i c i e n c y c r i t e r i a only through the decision maker's estimate of others value 5 s c a l e s . Rather than absolute, the term presumptive e f f i c i e n c y i s r e a l l y the appropriate concept for p o l i t i c a l economists. Given t h i s assumption of ignorance, Paretian e f f i c i e n c y cannot be employed i n aiding a group choosing from a set of possible s o c i a l p o l i cy changes. In diagnosing a s p e c i f i c proposal, the economist makes a judgement as to i t s e f f i c i e n c y based on HIS estimate of i n d i v i d u a l preferences as he thinks they e x i s t , but does not evaluate s o c i a l a l t e r n a t i v e s on the basis of i n d i v i d u a l preferences as he thinks they SHOULD be. Buchanan states: "The p o l i t i c a l economist i s often conceived as being able to recommend policy A aver p o l i c y B. If no objective 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 to recommend. Therefore any policy discussion on his part appears to take on normative implications. But there does e x i s t a pos i t i v e role for the economist i n the formation of p o l i c y . His task i s that of diagnosing s o c i a l s i t u a t i o n s and presenting to the choosing in d i v i d u a l s a set of POSSIBLE changes. He does not recommend pol i c y A over policy B, but presents them as hypoth-eses for tes t i n g i . e . the hypothesis i s that policy A w i l l prove to be Pareto optimal. L i t t l e however abandons in t e r e s t in a welfare maximum, regarding such an aspi r a t i o n as Utopian. Considering an e x i s t i n g d i s t r i b u t i o n as non optimal, he focusses on conditions s u f f i c i e n t for an improve-ment i n welfare, rather than on the s p e c i f i c conditions necessary 7 for a maximum. Although a general outline of welfare economics has been presented above, the scope of the thesis somewhat l i m i t s the space devoted to the t o p i c . However i t can be seen that the theory i s g not general to the extent that a programmed decision can be under-taken from available data. The role of the p o l i t i c a l economist i s l i m i t e d to that of an adviser i n general terms r a t h e r than an a n a l y t i c a l t o o l to be "plugged i n " to the decision making process. i i . Government v Private Expenditures An i n t e r e s t i n g s t a r t i n g point for the consideration of public versus private expenditures i s Adam Smith's 1776 discussion of t h e i r optimum mix where he suggests three d u t i e s of government: 'V-irotection against external aggressors, maintenance of order at home and erection of those public i n s t i t u t i o n s and works which though they may be i n the highest degree advantageous to a great society, - 1 5 -could never repay the expense to any i n d i v i d u a l , Mattley proposes that the generally accepted guideline i s that i t i s unsuitable for the government to engage i n an a c t i v i t y i f private enterprise could do i t better and i s w i l l i n g to do so.*"0 Dorfman suggests that i f a good or a service i s desirable, i t w i l l also be p r o f i t a b l e and thus w i l l be provided by private enter-p r i s e . " ^ However there are important exceptions to t h i s r u l e ^ r e -l a t i n g to conditions of production, conditions of consumption and also to external welfare considerations discussed above. Production considerations leading to government i n i t i a t i v e r e l a t e to economies of s c a l e . Certain a c t i v i t i e s such as u t i l i t i e s (e.g. telephone services, railways, etc.) can be performed economically only as such large units that there i s a tendency towards the formation of mon-opolies (the so c a l l e d natural monopolies). Based on the elimination of the monopoly p r o f i t s that would naturally accrue i f prices within these industries were l e f t s o l e l y to the market system of the private sector, the government may ele c t to r e t a i n these industries within the public sector as an altern a t i v e to regulating prices i n the market > although of course either method i s acceptable. The consumption conditions favouring provision by public expenditure are largely linked to the concept of u n c a l l e c t i b i l i t y of a charge for usage. In the usual economic transaction the user faces a charge for the goods or services consumed, and the amount co l l e c t e d i s a measure of the value of the commodity to him. How-ever t h i s analysis i s not s t r i c t l y v a l i d for any transaction (be-cause of side 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 available to a l l users without i n d i v i d u a l charges - 1 6 -being lev i e d (either because of i m p r a c t i c a b i l i t y of charging or involuntary use of the f a c i l i t y ) a user charge i s not available* For such public goods, non market i n s t i t u t i o n s , usually but not exclusively governmental, are used for determining how much should be provided } since such c o l l e c t i v e goods do not induce a flout of income to the provider. Important examples of such goods are 1 2 national defence, criminal j u s t i c e and parks. The dichotomy between public and private goods i s well i l l u s t r a t e d by F o l e y , ^ who considers them to be the two extremes of the spectrum. He suggests that private goods are a s p e c i a l subset of the larger class of public goods, as i n any society there are l i a b l e to be l o c a l public goods. Only a small part of a l o c a l population makes use of a l o c a l sewerage scheme or benefits from the draining of a swamp. Thus goods may be public over society as a whole (e.g. defence) or aver a subset (e.g. urban police protection) or, i n the l i m i t to one i n d i v i d u a l (e.g. a farm road). In t h i s l a t t e r case of a good which i s public only f o r a single i n d i v i d u a l the good i s termed a private good. Foley further argues that whilst people acting i n d i v i d u a l l y i n markets cannot purchase public goads, by acting c o l l e c t i v e l y as a government they can enforce payment by everyone through taxes, and t h i s i s one of the most obvious reasons for the existence of governments. A further class of a l l o c a t i v e decisions which cannot be entrusted completely to the competitive market pertains to external costs and benefits ( e x t e r n a l i t i e s ) . The c l a s s i c case of an external cost i s the discharge of pollutants into the atmosphere with r e s u l t i n g s o c i a l costs of i l l n e s s etc., whilst an external benefit may be conferred by ones property value being enhanced by the tearing down -17-of old buildings and the construction of a parkland in the neigh-bourhood. A private organisation u i l l be interested p r i n c i p a l l y i n the costs incurred by that organisation. From i t s point of view a cost s h i f t e d to some other party i s a cost reduction. However from the national welfare viewpoint, costs that are merely s h i f t e d are not avoided, and t h i s simple difference i s fundamental to the analysis of costing between the two areas of enterprise. The supposition that private investors may take an unduly short view of the consequences of t h e i r investments ( Pigou's defective myopic facu l t y ) i s an important j u s t i f i c a t i o n for a l l investments dealing with non renewable resources, e.g. mineral ex-t r a c t i o n , or i f the benefits from the a c t i v i t y are too long run to enable the benefits to be r e a l i s e d by those who invested i n the scheme i . e . a long lead time between investment and subsequent return. Certain government undertakings are stimulated by a desire to influence the d i s t r i b u t i o n of income, (socioeconomic r e d i s t r i b u t i o n plays a major rol e i n urban renewal programmes), and yet others desire to achieve very broad s o c i a l benefits, such as improving the quality of the a i r we breathe, for which no single company can, or i s w i l l i n g to, assume the r e s p o n s i b i l i t y . Lie thus have investigated a section of economic goods or services that cannot be e f f i c i e n t l y provided by the private sector for reasons given above. It i s l e f t to the public sector, with the government having an overview, to supply these items v i a some form of public enterprise. In the long run, governments must s t i l l react to consumer choice a l b e i t i n i t s crudest form due to a general lack of competitive p r i c i n g structure. - l a -Musgrave suggests that there are no a r b i t r a r y l i m i t s to the size of the public sector with respect to the t o t a l economy (uie have already seen in Chapter 1 that t h i s sector i s increasing). I f consumers prefer more public goods and feuer private ones, an e f f i c i e n t s o lution requires that t h e i r demands be s a t i s f i e d . There i s no economic reason for r e s t r i c t i n g the public sector to 20 per-cent, 25 percent or any other a r b i t r a r y proportion of the t o t a l . Public intervention to r e d i r e c t the use of resources w i l l necessarily involve costs. Assuming that the gross benefit achieved exceeds associated opportunity costs, and i n addition these oppor-tunity costs 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 that d i s t r i b u t i o n i s deemed to be i n some sense the "correct" one, then the intervention i s j u s t i f i a b l e since welfare w i l l be improved. Pigou's analysis given below gives a generalised concept of the doctrine of marginal u t i l i t y as applied to the s p e c i f i c d i s t r i b u t i o n of public 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 cost of optional government expenditure, i t i s clear that, just 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 his income by maintaining a certain balance between d i f f e r e n t sorts of expenditure, so also 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 provided by the postulate that resources 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 that the marginal return or sat-i s f a c t i o n i s the same for a l l of them. Expenditure should be d i s t r i b u t e d between battleships and poor r e l i e f i n such ways that the l a s t s h i l l i n g devoted to each of them y i e l d s the same return. We have here, so far as theory goes, a test 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 settled."16 This i n e f f e c t i s the concept of marginal u t i l i t y , which requires that the available resources are divided into increments, and -19-conaidBration given to which of the altern a t i v e uses of each increment y i e l d s the greatest return. The l a s t increment of resource added to each of the many competing uses should y i e l d the same i n -crease i n u t i l i t y per unit of resource cost. The derivation of incremental u t i l i t y and resource cost with a l l the inherent prob-lems are considered i n section C of t h i s chapter, but i t i s only by e f f i c i e n t use of the resources that r e a l i s t i c costs can be supplied to government decision makers for application to the test of long run consumer preferences. i i i . Federal v P r o v i n c i a l Government Expenditures Administration theory suggests that r e s p o n s i b i l i t y and commensurate authority should be delegated to the lowest l e v e l of competence. A s i m i l a r argument may be applied i n the sphere of government authority, with the l e v e l of competence d e f i n i t i o n being expanded to "the lowest l e v e l competent to see the t o t a l sphere of operations i n perspective", i . e . piecemeal decision making at too low a l e v e l of the organisation may well lead to c o n f l i c t i n g goals between those at the operational l e v e l and the senior policy makers. The usefulness of delegation and pa r t i c i p a t o r y management as an aid to motivation was discussed i n chapter 1 above, and thus we have a c o n f l i c t between delegation or decentralization to the "man on the spot" as an aid to par t i c i p a t o r y management with possible d i f f i c u l t y i n achieving goal congruence, and c e n t r a l i s a t i o n to ensure that a l l expenditures are seen i n proper perspective and aligned to the achievement of the c e n t r a l l y chosen objectives. The B r i t i s h North America Act 1867 provides the powers attr i b u t a b l e to both Federal and P r o v i n c i a l governments, and parts -20-of sections 91 ( r e f e r r i n g to Federal) and 92 ( r e f e r r i n g to Prov-i n c i a l ) powers are given i n the schedule below. S91 " L e g i s l a t i v e Authority of the Parliament of Canada extends to a l l matters hereinafter enumerated. IA. The Public Debt and Property. 2. The Regulation of Trade and Commerce. 2A. Unemployment Insurance. 3. The r a i s i n g of Money by any Mode or System of Taxation. k. The borrowing of Money on the Public C r e d i t . 5. Postal Service. 6. The Census and S t a t i s t i c s . 7. M i l i t i a , M i l i t a r y and Naval Service, and Defence. S. The f i x i n g of and providing for the S a l a r i e s and Allowances of C i v i l and other O f f i c e r s of the Government of Canada. 9. Beacons, Buoys, Lighthouses, and Sable Island. 10. Navigation and Shipping. 11. Quarantine and the Establishment and Maintenance of Marine Hospitals. 12. Sea Coast and Inland F i s h e r i e s . 13. F e r r i e s between a Province and any B r i t i s h or Foreign Country or between Two Provinces. Ik. Currency and Coinage. 15. Banking, Incorporation of Banks, and the Issue of Paper Money. 16. Savings Banks. 17. Weights and Measures. 18. B i l l s of Exchange and Promissory Notes. 19. Interest. 20. Legal Tender.. 21. Bankruptcy and Insolvency. 22. Patents of Invention and Discovery. 23. Copyrights. 2k. Indians and Lands reserved for the Indians. 25. Naturalization and A l i e n s . 26. Marriage and Divorce. 27. The Criminal Law, except the Constitution of Courts of Criminal J u r i s d i c t i o n , but including the Procedure i n Criminal Matters. -21-28. The Establishment,Maintenance, and Management of Peni-t e n t i a r i e s . 29. Such Classes of Subjects as are expressly excepted i n the Enumeration of the Classes of Subjects by t h i s Act assigned exclusively to the Legislatures of the Provinces. S92 "In each Province the l e g i s l a t u r e may exclusively make laws i n r e l a t i o n to Matters coming within the Classes Of Subjects next hereinafter enumerated; that i s to say,-1. The Amendment from time to time, notwithstanding anything i n t h i s Act, of the Constitution of the Province, except as regards the Office of Lieutenant-Governor. 2. Direct Taxation within the Province i n order to the Raising of a Revenue for P r o v i n c i a l Purposes. 3. The borrowing of Money on the sole Credit of the Province. 4. The Establishment and Tenure of P r o v i n c i a l Offices and the Appointment and Payment of P r o v i n c i a l O f f i c e r s . 5. The Management and Sale of the Public Lands belonging to the Province and of the Timber and wood thereon. 6. The Establishment, Maintenance, and Management of Public and Reformatory Prisons i n and for the Province. 7. The Establishment, Maintenance, and Management of Hospitals, 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 for the Province, other than Marine Hospitals. 8. Municipal I n s t i t u t i o n s i n the Province. 9. Shop, Saloon, Tavern, Auctioneer, and other Licences i n order to the r a i s i n g of a Revenue for P r o v i n c i a l , Local, or Municipal Purposes. 10. Local Works and Undertakings other than such as are of the following Classes:-(a) Lines of Steam and other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces, or extending beyond the Limits of the Province: (b) Lines of Steam Ships between the Province and any B r i t i s h or Foreign Country: (c) Such Works as, although wholly situ a t e within the Province, are before or a f t e r t h e i r Execution declared by the Parliament of Canada to be f o r the general Advantage of Canada or for the Advantage of Two or more of the Provinces. -22-11. The Incorporation of Companies with P r o v i n c i a l Objects. 12. The Solemnization of Marriage i n the Province. 13. Property and C i v i l Rights i n the Province. 14. The Administration of Justice i n the Province, including the Constitution, Maintenance, and Organization of P r o v i n c i a l Courts, both of C i v i l and of Criminal J u r i s -d i c t i o n , and including Procedure i n C i v i l Matters i n those Courts. 15. The Imposition of Punishment by Fine, Penalty, or Imprison-ment for enforcing any Law of the Province made in r e l a t i o n to any Matter coming u i t h i n any of the Classes of Subjects enumerated i n t h i s Section. 16. Generally a l l Matters of a merely l o c a l or private Nature i n the Province. Although the statute uas enacted over one hundred years ago, i t ad-heres to the general management p r i n c i p l e s outlined above, c e n t r a l -i s i n g under Federal Government j u r i s d i c t i o n those functions con-cerning the nation as a uhole e.g. defence (S91 para.7) u h i l s t those matters of purely p r o v i n c i a l i n t e r e s t e.g. a l l Matters of a merely l o c a l or private Nature i n the Province (592, para.16) i . e . i n t r a P r o v i n c i a l Matters are delegated to that l e v e l . However, t h i s tendency towards delegation i s , o f f s e t some-what by cl.29 of S91, where " a l l classes of subjects as are expressly excepted i n the Enumeration of the Classes of Subjects by t h i s Act assigned exclusively to the l e g i s l a t i v e s of the Provinces" are i n -cluded within Federal 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 vested i n the Federal government. Although i t i s d i f f i c u l t to understand the reasoning behind 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 that policy matters i n major new (or unforseen) areas of public concern should be investigated, at least i n the f i r s t instance, by the Federal Government with t h e i r wider sphere of influence. -23-From these two important sections of the Act, the j u r i s -d i c t i o n for various public expenditure categories may be ascertained, and thus the relevant organisation designed within the adminis-t r a t i v e framework. C. The Achievement of Government Objectives After our necessarily b r i e f look at the reasons for the existence of and d i v i s i o n of j u r i s d i c t i o n within the government sector, t h i s section examines the t r a d i t i o n a l tools used to manage the finances i n t h i s area to aid progress towards the achievement of o v e r a l l policy targets set by Parliament. i . T r a d i t i o n a l Budgeting and Control Systems and Weaknesses Peter Drucker, in his book "The Practice of Management" suggests that there are f i v e basic tasks which are performed by management. These f i v e tasks, which are common to a l l managers, yet uniquely managerial are: " i ) the s e t t i n g of objectives ' i i ) organisation i i i ) motivation and communication i v ) measurement of performance 17 v) development of future needs." It i s the author's contention that i n t h i s respect the government should perform the same function i n the overseeing of expenditures i n the public sector. Robert Anthony i d e n t i f i e s three d i s t i n c t administrative processes, s t r a t e g i c planning, and both management and operational c o n t r o l . " .... Strategic planning i s the process of deciding on objectives of the organisation, or changes in -2k-these objectives, on the resources used to a t t a i n these objectives, and on p o l i c i e s that 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 resources. Management control i s the process by uhich managers assure that resources 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 in the accomplishment of the organisation's objectives. Operational control i s the process of assuring that 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 for planning, management and control are implem-ented via a budget, and even the most rudimentary budget system comprises a l l three processes, even i f i n operation the three functions are i n d i v i s i b l e . H i s t o r i c a l l y , the major emphasis in the Federal budget i s on the c l a s s i f i c a t i o n or obligations (or commitment) and expenditures by "object c l a s s " i . e . such c l a s s -i f i c a t i o n s as t r a v e l , transportation, f r e i g h t , p r i n t i n g of brochures etc. and by the time of the 1913 appropriation acts there were , 1 q 3992 d i s t i n c t items of appropriation i n the New York budget; 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 i n cross section may point out gross i n e f f i c i e n c i e s in the carrying out of s p e c i f i c tasks. A Congressional subcommittee ( i n the U S A ) or any Member of Parliament ( i n Canada) may wish to inspect expenditure by object class to investigate any seeming i n e f f i c i e n c i e s , but the o v e r a l l method of expenditure recording does not r e a l l y aid i n the major sel e c t i o n of a c t i v i t y l e v e l s . It contributes l i t t l e to estimate the performance a t t r i b -utable to outlays for object classes, when we r e a l l y wish to as-certain the effectiveness of various conbinations of these ex-penditures. 20 Beard wrote that a budget system "bears the imprint of -25-the age i n which i t originated", and uhen personnel and purchasing controls mere unreliable, the f i r s t consideration was houi to prevent administrative impropriety. The role of the budget system underwent s i g n i f i c a n t change when i t was recognised that govern-ment expenditures had a s o c i a l value rather than being a "necessary e v i l " . Because the outputs were considered af n e g l i g i b l e and fixed value, i t made sense to use the budget as a control device aver inputs. However as the works became t D be regarded as b e n e f i c i a l , the task of budgeting was redefined as the e f f e c t i v e marshalling of 21 f i s c a l and organisational resources for the attainment of b e n e f i t s . These factors became increasingly recognised i n the USA during the New Deal years under President F.D. Roosevelt when federal expend-itu r e s rose from $4.2 b i l l i o n i n 1932 to $10.0 b i l l i o n by 1940. 22 In 1949 the Hoover Commission c a l l e d f o r a l t e r a t i o n s i n 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 . It recommended "that the whole budgetary concept af the Federal Government should be refashioned by the adoption of a,budget based upon functions, a c t i v i t i e s and projects". Possibly to create a sense of novelty, the term "performance budgeting" was coined to refer to what had long been known as functional or a c t i v i t y budgeting. 23 A second Hoover Commission i n 1955 made a comprehensive examination on U.S. Federal F i n a n c i a l management, and reported that operating budgets should coincide with the organisational pattern by which r e s p o n s i b i l i t y had been established within an agency. Oper-ating budgets were to disclose the projected programmes and work-loads, be based on r e l i a b l e cost information, and indicate the funds required to finance operations. It i s only since the advent of PPBS described at length i n -26-sectian D Df t h i s chapter, that the Keynsian r e l a t i o n s h i p between public spending and condition of the economy has been a l l i e d to budgeting to incorporate the suggestions made by the Second Hoover Commission. In the Canadian Federal Government there are a number of basic p r i n c i p l e s which underlie the system o f f i n a n c i a l adminis-t r a t i o n or management. Fundamental to a l l these i s the supremacy of Parliament, with the House of Commons being dominant i n f i n a n c i a l matters i n general, and having sole and exclusive r e s p o n s i b i l i t y 2k for i n i t i a t i n g a l l spending proposals. The system i s based on a budget concept, i n which.the budget i s regarded as a comprehensive and integrated f i n a n c i a l plan for r a i s i n g and spending public money. 25 Eaton has described the federal budget as a series of processes and documents whereby the government's f i n a n c i a l proposals for both revenue and expenditures are formulated, considered and ultimately l a i d before the House of Commons. * It i s designed not only to f a c i l i t a t e the planning and control of government a c t i v i t i e s , but also the planning and control of the national economy. The budget presents: " .... An accounting or f i n a n c i a l review of the govern-ment's own domestic economy, a statement of the govern-ment's expenditure programme for the next year with a forecast of revenues available to finance i t , and an analysis of the government's o v e r a l l cash and borrowing requirements."26 Administrative management and control i s exercised both on a ce n t r a l i s e d and decentralised basis. The central agencies of f i n -a n c i a l management and control are the Cabinet, and i t s formal s t a t -utory counterpart the Governor General i n Council, the Treasury - 2 7 -Board and other committees of the Cabinet or the Privy Council, 27 and the Minister and Department of Finance. Central control over expenditures i s exercised by two powerful agencies, the Treasury Board, and the Comptroller of the Treasury with independent checks being made by the Auditor General. The Treasury Board's prime function i s to ensure that departmental expenditure programmes are aligned to the broad p o l -i c i e s l a i d down by the Cabinet. This i s achieved by vetting a l l s i g n i f i c a n t variations i n departmental a c t i v i t i e s having p r i o r approval of the Board. A detailed review of departmental budgets, program s t a f f s i s made, together with the prescribing of regulations pertaining broad expenditure classes and periodic scrutiny Df the larger construction and purchasing contracts, proposals for i n t r a departmental fund transfers, number of and salary scales of em-ployees e t c . In the U.S. when the appropriations b i l l i s enacted, an appropriation warrant, drawn by the Treasury and countersigned by the General Accounting Office (GAQ) i s sent to the relevant agency. The agency i s subject to three major types of audits by the GAO. The most important i s the so c a l l e d comprehensive audit, which con-centrates on the accounting and reporting system used by a p a r t i c u l a r agency and checks transactions s e l e c t i v e l y . The general audit examines the accounts of agency disbursements to determine the l e g a l i t y of each transaction. If i l l e g a l or improper handling of receipts or expenditures i s discovered, then recovery procedures are i n s t i t u t e d against the offending o f f i c e r . The t h i r d audit, a commercial audit i s applied to government corporations and enter-prises (the U.S. equivalent of a Crown corporation). IMo recovery -23-i s passible 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 existing 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 that even governments i n democratic s o c i e t i e s are subject to constraints. 29 Hinrichs has categorised these in the following form: " i . Physical constraints: given technologies and production 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. i i . Legal constraints: laws, property r i g h t s , i n t e r n a t i o n a l convention, agency ru 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 . i i i . Administrative Constraints: programmes to be implemented require people to be hired, trained and put to the task. i v . D i s t r i b u t i o n a l Constraints: development programmes may be limi t e d by the d i s t r i b u t i o n of income generated; by regions, income classes, generations. v. P o l i t i c a l Constraints: The process of decision making i t s e l f i s c o s t l y , time consuming, and often f r u s -t r a t i n g ; solutions i n theory may not be r e a l i s a b l e in the p r a c t i c a l p o l i t i c s of the moment. v i . F i n a n c i a l Constraints: Resource s c a r c i t y i s translated into monetary and budget s c a r c i t y . Most problems thus devolve into suboptimisation where budget le v e l s get set for governments, departments and agencies, and one i s l i m i t e d to the less than optimal task of maximising benefits with a f i x e d budget. v i i . T r a d i t i o n a l , S o c i a l and Religious Constraints: S o c i a l customs, and values a l l tend to preclude certain options and possible action ..." Much of the following consideration of the weaknesses of the t r a d i t i o n a l system i s adopted from the work of Anshen"5^, B a l l s ' ^ , 32 and Currie , and presents i n the author's view an excellent summary of the t r a d i t i o n a l concept of governmental budgeting and accountancy practice with i t s inherent lack of usefulness for t r a n s l a t i n g into a t o o l for management decision making. The federal budget i s largely the product of a h i s t o r i c a l r e -sponse to the need to safeguard the i n t e g r i t y of appropriations against careless, i l l - i n f o r m e d , or m a l e f f i c i e n t administrators i n the executive departments. It i s an instrument fo r the control of spending, and was not designed to a s s i s t analysis, planning or decision making, and i t does not work well for that purpose. It i s a conventional comptroller's rather than a manager's budget, protecting against de-c e i t f u l but not poor management. The f a i r implementation of appropriations without deceit i s e s s e n t i a l , as i t i s the foundation of public confidence and t r u s t , but i t i s not enough, far without proper s t r a t e g i c and management controls, democracy cannot be e f f e c t i v e l y administered. The present system of c o n t r o l l i n g i n some d e t a i l the inputs or object classes without paying systematic attention to outputs can lead to undesirable economic con-sequences. The t r a d i t i o n a l structure does not provide a balanced viewpoint. Even i f t i g h t controls on inputs forces agencies to carry on t h e i r a c t i v i t i e s at minimum cost, agencies are never forced to ask themselves whether, they are pursuing the r i g h t a c t i v i t i e s . " 3 ' ' The functions of accounting i n government d i f f e r i n one im-portant respect from those applicable i n the private sector. Whilst commercial accounts recognize that while many transactions are taking place with varying 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 r e l a t i v e l y l i t t l e concern i f i n d i v i d u a l transactions turn out adversely, as long 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 i s achieved. However, in governmental accounting each transaction must be controlled and recorded so that any i n d i v i d u a l item, regardless of s i z e , may be defended and 34 the information given to Parliament. -30-The underlying concept Is that in business, there i s the p r o f i t and loss (income) statement as a guide for measuring r s s u l t s , with a corresponding ease of benefit measurement v i a market prices or both income and r e l a t e d expenses, but a s i m i l a r yardstick i s generally not available for the government sector. Therefore i f e f f i c i e n c y i n government i s to be encouraged and judged by r e s u l t s , some methods for stimulating e f f i c i e n c y ( i . e . providing an acceptable service with the least resource cost) and measuring i t i n terms of a t t a i n i n g pre-scribed goals i s necessary as there i s no price mechanism i n general 35 to point the way to high l e v e l e f f i c i e n c y . Currie suggests that government departments should be evaluated on the basis of service rather than costs of operation, and that i f a department does not operate e f f i c i e n t l y , an adequate service w i l l not be provided at least cost. The basic purpose of t r a d i t i o n a l governmental accounting systems, to control expenditures from government, i s therefore a weakness since they are not designed to f u l f i l a management r o l e . The Public Accounts do not provide the kind of information that i s available for decision making i n the private sector. Neither i n the United Kingdom nor i n Canada are the statutory l e g i s l a t i v e audits s p e c i f i c attempts to measure or assess e f f i c i e n c y , although by drawing attention to waste or weaknesses of the accounting systems they might i n d i r e c t l y play some small part i n reducing i n e f f i c i e n c i e s . " 5 ^ PPBS, by using a manage-ment approach to public expenditures may well play a role s i m i l a r to cost accounting i n the private sector, drawing management's attention to problem areas. 37 McKean notes "that the process of natural s e l e c t i o n i s only weak when applied to governments, since the Federal government competes only with the p o l i t i c a l parties 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 factors other than e f f i c i e n c y i n the use of resources." -31-To i d e n t i f y the budget as one primarily designed to ensure honesty in the executive departments i s to c i t e one important c h a r a c t e r i s t i c of a good budget structure, but equally i t highlights the amission of another — i t s contribution to informed and r a t i o n a l management. Rarely can the objects of expenditure be related i n any way to s p e c i f i c administrative programmes even i f (and t h i s i s by no means universal) they f a l l within the scope of a single department. Even i f the objectives are not vague, i f they are pursued i n more than one department i t i s only with the greatest d i f f i c u l t y that such a c t i v i t i e s can be compared. In the U.S. the t r a d i t i o n a l budget was prepared almost exclus-i v e l y from the "bottom up" ( i . e . operational managers requesting appropriations for t h e i r section, and the next senior l e v e l combining the requests of t h e i r subordinates and passing to the next l e v e l ) . The r e s u l t was that each sub agency continued i t s t r a d i t i o n a l a c t i v i t i e s undisturbed while seeking to extend i t s operations — the phenomenon often termed "Empire b u i l d i n g " . The budget tended to place too much emphasis on d e t a i l and too l i t t l e on any coordination, lacked quant-38 i t a t i v e goals, and'limited planning to a one year period , i . e . there was an inadequate consideration of the future implications of present decisions. The basic lack of objective such as " p r o f i t maximisation", or "to achieve an X% return on investment" i s a d i f f i c u l t y facing government decision makers, for not only are government goals generally mare q u a l i t a t i v e than quantitative in nature, but the public sector i s often concerned with measures of prevention rather than with affirmative gains to s o c i e t y . Supply and demand considerations are relevant only i n r e l a t i o n to s p e c i f i c price information, and because of apportionment d i f f i -c u l t i e s with both j o i n t and f i x e d costs, i t i s extremely d i f f i c u l t to f i n d the r e a l price af public goads. The fact i s that the t r a d i t i o n a l budget system does not provide r e l i a b l e cost information regarding s p e c i f i c goods. In many areas we chance the dangerous i l l u s i o n that we have good cost data when we do not. The problem of choice of quantity or mix of public goods i s also unaided by the t r a d i t i o n a l budget, since there are no formalised objectives to be appraised and f i n a l l y adopted because of a t o t a l separation of planning from the budgeting function. Responsible o f f i c i a l s therefore lack the basic tools to enable them to: "1. choose among altern a t i v e goals when available re-sources are i n s u f f i c i e n t to undertake the achieve-ment of a l l goals concurrently; 2 . measure the immediate cost of a c t i v i t i e s ; 3. currently i d e n t i f y the i m p l i c i t future costs of current decisions; 4. evaluate performance of ongoing programmes by comparing costs and achievements ... , , t f^ The foregoing discussion has outlined the theory of the t r a d i t i o n a l government budget and i t s inherent weaknesses, which may be summarised as 1. Vagueness of objectives. 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 projects. 4. Inadequate consideration of future implications of current costs; 5. Short (generally 1 year) decision horizon. 6 . Emphasis on expenditure (inputs) rather than per-formance (outputs). 7. Almost t o t a l lack of planning concept. - 3 3 -Anshen suggests that a good budget structure could con-tribute s i g n i f i c a n t l y to the development of a decision environment in uhich the government could meaningfully appraise the objectives of society and the a b i l i t y to a t t a i n them within the most e f f i c -i e n t l y balanced assortment of public and private e n t e r p r i s e . He l i s t s the requirements of such a budget structure and these are quoted below to highlight the shortcomings of the t r a d i t i o n a l budget, and also to provide a useful frame of reference for the discussion of P P B S i n section D of t h i s chapter. The budget design should f a c i l i t a t e meaningful measurement of the t o t a l money costs of accomplishing defined objectives ... moreover a package of current costs would not s u f f i c e . The statement should pro-j e c t the t o t a l cost stream through forecastable time ... .... The budget structure should f a c i l i t a t e the comparison of a l t e r n a t i v e ways to accomplish a given objective ... .... The budget presentation should c l e a r l y i d e n t i f y the future cost implications inherent i n near term f i n a n c i a l commitments. .... The budget design should f a c i l i t a t e comparison of cost inputs and achievement of outputs when re l a t e d segments of a single programme are administered by d i f f e r e n t management units ... .... The budget design should delineate the objectives of discrete spending commitments in such terms that s i g n i f i c a n t c o s t - u t i l i t y analysis can be c a r r i e d out, although i t i s recognised that there are obvious l i m i t -ations on our a b i l i t y to define measurable goals or even progress towards them i n certain areas of federal expenditure ... .... The budget design should make i t possible to aggregate related expenditure whenever they occur i n the government's sprawling administrative structure ... .... A budget that achieves the foregoing should also serve to generate economic data on federal inputs to the national economy by meaningful a c t i v i t y segments. This -34-mould help private analysts to understand and i n t e r -pret the d i r e c t i o n and influence of federal spending and thereby improve the e f f i c i e n c y of private invest-ment through a more r a t i o n a l administration of com-mitments in r e l a t i o n to present and future programmes.11 F i n a l l y Anshen remarks that a well designed budget i s a neutral t o o l , which w i l l serve with equal effectiveness those who would decrease or expand the scope of federal a c t i o n . i i . Cost U t i l i t y Analysis C o s t - u t i l i t y analysis i s an attempt to sharpen the i n t u i t i o n and judgement of the decision maker. It i s i n essence a system of s o c i a l accounting for evaluating projects that are not undertaken by the private sector for reasons explained e a r l i e r i n t h i s chapter. It i s u n r e a l i s t i c to assume that the analysis w i l l make the decision, since the problems facing decision makers include too many e f f e c t s of a p o l i t i c a l , psychological and s o c i o l o g i c a l nature, which cannot generally be taken into account i n a purely quantitative sense. 42 The author therefore suggests that decision making, which Dale describes as "the f o c a l creative psychic event where knowledge, thought, f e e l i n g and imagination are turned into action" w i l l be aided, but not resolved by the analysis because of the lack of 43 what Simon terms the "programmed decision" i . e . the type of de-c i s i o n which has a single calculable s o l u t i o n . Fisher describes the analysis i n terms of i t s c h a r a c t e r i s t i c s as: "1. A systematic examination of alt e r n a t i v e courses of action, including the design of ad d i t i o n a l ones i f those examined are found wanting ... 2. Assessment of the cost ( i n the sense of economic resource cost) and u t i l i t y (the benefits or gains) pertaining to each a l t e r n a t i v e ... 3. Consideration of future time periods... -35-4. Uncertainty is 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 is important . . . " Fisher goes on to describe the two principal conceptual approaches. "1. Fixed u t i l i t y approach: to determine the altern-ative (or combination) l ike ly to achieve the specified level of u t i l i t y at the lowest economic cost. 2. Fixed budget approach: to determine the altern-ative (or combination) l ike ly to produce the highest u t i l i t y for the given budget level . . . " Ward outlines a useful conceptual framework for such a study as being: "1. Recognition of the point of view from which the study is made. This dist inction is necessary because the incidence of benefits and costs do not necessarily coincide . . . 2. Definition of the proposed scheme, i t not being sufficient to make a vague statement of pol icy. 3. Consider a l l feasible alternatives, each assessed on the same basis. 4. A detailed economic evaluation, or appraisal, of the project, including a review of the intangibles. 5. Make a policy recommendation to the authority which has the ultimate responsibil ity for the decision."^5 As discussed ear l ier , the aim of the analysis is to aid •decision makers in the allocation of scarce resources to competing programmes. Lewis suggests that: "Public budgeting is only necessary because desires ex-ceed 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 in relation to our demands. Hence scarcity of resources in relation to demands confronts us at every l eve l . -36-McKean writes that we should do more than " l i s t things that i t would be nice to have. 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 preferredness". K r u t i l l a s u ccinctly char-acterises c o s t - u t i l i t y analysis as: "the c o l l e c t i o n and organisation of data relevant by some conceptually meaningful c r i t e r i a for determining the r e l a t i v e preferredness of a l t e r n -a t i v e s " . The applicable rule i s generally to maximise public benefits or general welfare within the area of r e s p o n s i b i l i t y . Now that we have an idea of what the analysis i s seeking to achieve, i t i s thought useful to discuss i t s o r i g i n s , mechanics, and some of the problem areas i n i t s application 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 in the U.S. date 49 from the Reclamation Act of 1902 , and i t was e x p l i c i t l y provided 50 for under the River and Harbour Act of 1920 . The computation of u t i l i t y - c o s t r a t i o s was intended to serve two purposes, f i r s t l y to e s t a b l i s h public projects which y i e l d p o s i t i v e returns, and secondly to act as a method for rationing,, by a l l o c a t i n g monies to those projects y i e l d i n g the highest returns. In e f f e c t therefore the analysis can perform the function of a budget cle a r i n g device by a l l o c a t i n g funds on a basis of rank u n t i l the available funds are exhausted. A proviso i n the Flood Control Act of 1936 allowed the Federal Government to p a r t i c i p a t e i n schemes of flood control " i f the benefits to whomsoever they may accrue are i n excess of the estimated costs", which represents an application of the Kaldor-Hicks p r i n c i p l e to the Pareto concept discussed i n section B of t h i s chapter. - 3 7 -Early i n 1946, the U.S. Federal Inter Agency River Basin Committee appointed a Sub Committee on Benefits and Costs, for the purpose of formulating mutually acceptable p r i n c i p l e s and pro-cedures. Their report, known as the "Green Book" published i n 1950 has shaped o f f i c i a l thinking, with amendments touching only d e t a i l rather than p r i n c i p l e s . Despite i t s avowed aim -"to develop a systematic, consistent, and theor-e t i c a l l y sound framework for the economic analysis of r i v e r basin projects and programmes, ir r e s p e c t i v e of current practices or l e g i s l a t i v e and adminis-t r a t i v e limitations"51 the authors did not penetrate very far beneath the surface of any of the t h e o r e t i c a l propositions, and unfortunately the procedures 52 themselves are rather i m p r a c t i c a l . One serious error i s that the stated decision rule i s to maximise net u t i l i t y rather than a u t i l i t y - c o s t r a t i o , and t h i s f a l l a c y may best be shown by the follow-ing simple example, applicable to the f i x e d budget case. Project A Cost $100 Returns $105 Project B Cost $1 Returns $2 The Green Book rule would accept project A (net u t i l i t y $5) i n preference to project B (net u t i l i t y $1), but i t i s obvious that i f the budget l i m i t a t i o n was $100, and there are 100 project B ' s , i t would be preferable to undertake these (giving a net u t i l i t y of $100) rather than the single project A. The i n c l u s i o n of so c a l l e d "secondary benefits" allowed by the document,(for example the r i s e in land values as a r e s u l t of easier access to a large urban area) in addition to a c a l c u l a t i o n of transportation savings in both time and f u e l costs i s incorrect as i t leads to "double counting". This occurs because the increase i n land prices already represents a subjective c a p i t a l i s a t i o n of the net u t i l i t y to be accrued over -38-the l i f e of the project. A simple analogy which refutes the method completely i s to pass a single d o l l a r b i l l around people s i t t i n g at a c i r c u l a r table, and count i t as an additional d o l l a r on each pass. This matter of double counting i s quite a serious one, e s p e c i a l l y when i t i s r e a l i s e d that the Bureau of Reclamation includes secondary benefits, whilst the Corps of Engineers and the Department of Agriculture do not. The document, even i n i t s revised form perpetuates over enthusiastic 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 neither by l o g i c nor experience." Hammond f i n a l l y argues that "one must never forget that though pure economics i s a matter of l o g i c , applied economics i s a matter of informed common sense". The mechanics of the analysis are centred on the premise that "public o f f i c i a l s ought to apply decision rules which tend to improve the general welfare rather than t h e i r ^ personal, or s p e c i a l l y interested c l i e n t e l e ' s welfare." This r e a l l y i s the crux of the problem, for we have already seen above that there i s some doubt regarding the very existence of the welfare we are trying to improve. We are therefore l i m i t e d to attempt to improve the decision maker's concept of general welfare vi a government spending. For any proposal i t i s f i r s t necessary to consider the costs of achieving the objectives. This i s not merely a costing exercise based on known cost data, but should be an objective summary of t o t a l resource costs. For example the U.S. Department of Defence acquires and uses several major resources at prices considerably below t h e i r f u l l value. The existence of a draft, by reducing the e x p l i c i t manpower cost and selecting personnel without regard for the indi v i d u a l ' s choice of altern a t i v e occupations -39-( i . e . opportunity "cost" concept) d i s t o r t s both the l e v e l and composition of m i l i t a r y manpower. Landholdings t o t a l about 30 m i l l i o n acres, over half of which has been transferred from other 55 public uses at no cost. Economists prefer to use the term "shadow p r i c e " when r e f e r r i n g to the opportunity cost idea. Sometimes i t i s suggested that i f the analyst works hard enough, everything can be put i n terms of the common unit (generally the d o l l a r ) . For instance the saving of a human l i f e can be priced (and indeed often i s with road safety features such as curve improvements, street l i g h t i n g , etc.) by consulting the implications of past decisions on the average court award for an accidental death. Whilst either of the above are useful pointers, t h e i r r e a l meaning, i n the absence of an organised market to which governments and i n d i v i d u a l s adjust t h e i r actions, i s hard to unravel. 57 Dr. Mises argues that bureaucrats have no means of c a l -culating costs 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 place, whilst i n private business the ultimate basis of economic c a l c u l a t i o n i s the valuation of a l l consumers* goods i n the market. If a public enterprise i s to be operated without regard to p r o f i t s , the behaviour of the public no longer provides a c r i t e r i o n of i t s usefulness, and the problem of bureau-c r a t i c management i s precisely the absence of such a method of c a l c u l a t i o n . Even when costs and benefits are r e a d i l y measurable i n terms of market prices, i t does not necessarily follow that these are the most appropriate values to use. For various reasons, market prices may not r e f l e c t r e a l s o c i a l values, so that adjustments have to be made. For example, where inputs are taxed, a factor cost -40-provides a better measure than market price,of the social cost of using such inputs, because the tax element in market price is 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. We must also consider the externalities i . e . those effects which do not directly affect the particular proposal being studied, but w i l l have implications else-where in the economy. These effects are outlined by Hinrichs as: "1. Production to production: an act ivi ty by one pro-ducer affecting the output of another e.g. water pumped from one mine has an effect on other nearby mines. 2. Production to consumption: an act ivity by one producer affects other consumers e.g. noise and pol lut ion. 3. Consumption to consumption: an act ivi ty by one consumer affects other consumers e.g. radio noise in a public park. 4. Consumption to production: an act ivity 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 internal costs/benefits is relat ively small, and that external benefits do not affect preferences for specific commodities. However, in the public sector the situation would appear to be reversed. Act iv i t ies come to be "affected with public interest" as the proportion of external benefits is large in re-lation to the internal benefits. The analyst should at least attempt to evaluate these values, or include a qualitative assessment of these affects. 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 i s arguably the most d i f f i c u l t technique to achieve within the current framework. Questions of scenic beauty, a r t i s t i c design, are considered to be s o c i a l l y desirable yet are not r e a d i l y susceptible to q u a n t i f i c a t i o n . It i s possible however to compare alternatives with and without these factors, and leave the decision maker to subjectively assess whether the desirable yet intangible items are "worth" the cost difference. The stream of costs and u t i l i t i e s (benefits) should be considered over the anticipated useful working l i f e of the asset, making due allowance for r e s i d u a l or scrap value i f thought approp-r i a t e . No general convention or rule of thumb, apart from the purpose of the analysis can specify t h i s period except a r b i t r a r i l y . When the stream of costs and u t i l i t i e s has been assessed over t h i s anticipated period, the net worth of the a l t e r n a t i v e projects must be ascertained. This i s achieved by discounting the future stream of c o s t s / u t i l i t i e s to ascertain the net present value (worth) of the project. The discount rate i s a c r i t i c a l datum for the evaluation of any proposed government project, as i t may make the difference between accepting or r e j e c t i n g the a l t e r n a t i v e when the various c o s t - u t i l i t y streams do not have i d e n t i c a l time patterns. This r e s u l t s from the favouring of projects with early benefits (or l a t e r costs) by higher discount rates and vice-versa with lower values, yet despite the c r i t i c a l nature of t h i s parameter, i n some calculations i t i s assigned a value with almost " c a v a l i e r " 59 fashion. The appropriate discount rate becomes that value which indicates when resources should be transferred from one use to another, and becomes of even greater importance in decisions between public and private uses. Baumol^ 0 states that i f the resources -42-produce a rate of return i n the private sector which society evaluates at r percent, then the resources should be transferred to the public sector i f that project y i e l d s a return greater than r percent. Precisely what t h i s discount rate should.be i s a highly contentious issue, and several "rates" have been proposed. Some writers believe that s o c i a l time preference attaches more weight to the future than a private time preference, and i t i s the former that i s relevant for determining the a l l o c a t i o n of society's current resources between consumption and investment. This i s the "defective telescopic f a c u l t y " referred to by Pigou and others, and suggests that one of 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 future operations. M a r g l i n ^ suggests that such a rate may be determined by choosing a growth rate for the economy, and c a l c u l a t i n g the rate of investment required by considering the marginal capital/output r a t i o . The s o c i a l rate of discount i s then equated with the marginal product-i v i t y of t h i s investment. The government bond rate i s held to represent the " r i s k free rate" for money by others, but although t h i s figure represents the f i n a n c i a l cost of government investments, i t i s not possible to state that the marginal e f f i c i e n c y of the investment i s equal to t h i s rate, or indeed that public investments are i n fact r i s k free, 62 63 a point to be considered l a t e r . Ward suggests that even the accuracy of the bond rate i s questionable, since i t i s l i a b l e to manipulation by governments pursuing short term monetory p o l i c i e s . Stockfish^** has argued that decision makers in government should project a discount rate that equals the opportunity return on investment in the private sector of the economy BEFORE corporate -43-taxes, but the author although agreeing i n p r i n c i p l e to the con-ceptual base, affirms the viewpoint taken e a r l i e r that government r e s p o n s i b i l i t y i s to ensure that projects which are not a t t r a c t i v e to private enterprise because of the c o l l e c t i v e good c r i t e r i o n are undertaken i f they can be shown to y i e l d a high s o c i a l rate 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, of quant-i f y i n g many of the desirable outcomes which may well preclude the Stockfish p r i n c i p l e being achieved on an objective basis. 65 Staats refers to a survey undertaken i n the U.S. by the General Accounting o f f i c e i n 1967, of twenty-three federal agencies.. It was found that, far from there being a standard rate, the d i s -count rate used varied from zero ( i . e . the costs/benefits were considered of equal value i r r e s p e c t i v e of when occurring) to twelve per cent. An i m p l i c i t rate was sometimes u t i l i s e d by a r b i t r a r i l y shortening the expected l i f e of the asset, for example the Veterans' Administration evaluates programmes on the basis of a f i v e year period, whilst the most probable l i f e of a ho s p i t a l i s say twenty f i v e years. The e f f e c t i v e discount rate i s thus approximately 20 percent even though no e x p l i c i t rate i s u t i l i s e d . Thus we have the doubly confusing picture of not r e a l l y knowing what the discount rate SHOULD be, and various agencies using t h e i r own estimate to promote t h e i r schemes which invalidates much of the a l l o c a t i o n pro-cedure based on r a t i o a n a l y s i s . The treatment of uncertainty i s also a source of d i f f i c u l t y . The estimates of costs and u t i l i t i e s represent the analyst's best judgment, but there i s always uncertainty regarding the outcome of -44-future events. The estimates thus became average or expected values, and two projects A and B whilst o f f e r i n g i d e n t i c a l average outcomes may d i f f e r greatly with respect to other possible outcomes. This might be of some importance i f A's r e s u l t s are nearly always the same as average, but B's range from fabulous success to utter d i s a s t e r . If p r a c t i c a l i t might be useful to consider a range of possible outcomes for which the same degree of confidence may be attached. Other solutions may be to load the rate of discount ( i . e . a higher discount rate favours projects with shorter payback periods) although t h i s i s not recommended by the author as i t may be misleading to external analysts, or to use conservative estimates of b e n e f i t s . One useful method i s to use s e n s i t i v i t y analysis, whereby various a l t e r n a t i v e s are subjected to d i f f e r i n g values of discount rate, expected l i f e and monetary data regarding input and outputs to assess the implications of these r e s u l t s on any ranking of the a l t e r n a t i v e s . Although, as mentioned previously t h i s choice of discount rate i s a highly contentious issue, the e x i s t i n g use of various rates as discussed above does not commend i t s e l f to the author as being sound, and i s one of the underlying reasons far much of the c r i t i c i s m l e v e l l e d against the analysis by Williams ( i n Journal of Public Economics Vol I, August 1972) and others. The author recog-nises the v a l i d i t y of the several approaches mentioned above, but favours the use of a conceptual approach u t i l i s i n g shadow prices (for example in areas of high unemployment, the e x i s t i n g welfare payments should be deducted from actual wages paid to give the - 4 5 -shadow labour rate) and discount rates uhich represent s o c i a l preference. It i s r e a l i s e d that such a rate i s impractical to determine with e x i s t i n g knowledge (lack of p r a c t i c a l data of u t i l i t y functions), although i t i s handled i m p l i c i t l y by the use of "loaded" useful economic l i f e for projects, and higher discount rates to favour short term returns i n more r i s k y ventures ( i n fact a cynic would suggest that to further p o l i t i c a l ends projects with short term benefits, being more " v i s i b l e " would generally be favoured by the elected representatives). Despite 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 assessment, the use of a single rate with allowance made for the intangibles and unknowns by varying the cost and benefit streams and u t i l i s i n g s e n s i t i v i t y analysis would obviate much of the e x i s t i n g confusion of t h i s form of a n a l y s i s . It i s not suggested, however, that t h i s i n i t s e l f would elevate what i s at best a crude analysis to the l e v e l of a sound t h e o r e t i c a l and p r a c t i c a l t o o l , but i t would at least remove one source of confusion and enable the costs, benefits and time streams to be investigated without the further variable of discount rate clouding the issue. The above has been a summary of the c o s t - u t i l i t y concept, with i t s procedural method being reviewed both as to i t s p r a c t i c a l i t y and problems i n achieving i t s objective of ranking projects at least on the objective c r i t e r i a that can be applied to a l l a l t e r n a t i v e s . Whilst the technique i s by no means perfected, i t at least serves to aid the decision maker, although care should be taken not to place overriding reliance on i t to the exclusion of good sound judgement, es p e c i a l l y where there are many unquantifiable factors present. This farm af analysis w i l l be used extensively within the framework of Planning-Pragramming-Budgeting-System, but as mentioned i n chapter 1 has been included within section C of t h i s chapter be-cause of the time since i t s inception as an aid to management decision making. D. Planninq-Programming-Budgeting-Systems (PPBS) Fallowing our inves t i g a t i o n of the framework of Government involvement i n the economy, and a discussion of the control functions of the t r a d i t i o n a l budget with i t s inherent weaknesses i n sections B and C of t h i s chapter we now examine PPBS which i s currently being i n s t i g a t e d within Canadian Federal 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 quality D f decision making and hence increase the e f f i c i e n c y of government spending. The h i s t o r i c a l development of PPBS i s discussed before o u t l i n i n g the aims and mechanics of the system. The probable impacts of PPBS are invest-igated together with some of the possible problem areas, which are of course as yet not known with certainty, but t h e i r discussion w i l l enable at least t a c i t solutions to be sought to minimise any detrimental e f f e c t s to the system. i . H i s t o r i c a l Background Budgeting has always been conceived as a process for systematically r e l a t i n g the expenditure of funds to accomplishment of objectives, even though as seen from the discussion of the t r a d i t i o n a l system i n section C far more emphasis has tended to be placed on input rather than output measures. -47-In the f i r s t stage of budget reform i n the United States, dating approximately from 1920 to 1935, the task of the budget was seen as developing an adequate system of expenditure control, and planning and management considerations were subservient to t h i s aim of providing a r e l i a b l e system of expenditure accounts. During the l a t e r 1930's the orientation of the. budget changed somewhat towards the reform of the appropriation structure, development of management improvement and toork measurement pro-grammes, and the focussing of budget preparation 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 inputs to outputs). PPBS traces i t s lineage to the attempts of welfare econ-omists to construct a science 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 . This i s intended to ensure the optimal a l l o c a t i o n of public expenditures among com-peting uses and hence maximise welfare. The search for such a welfare function i s highlighted 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 al l o c a t e d o l l a r s to a c t i v i t y A instead of a c t i v i t y B". 67 IMovick s p e c i f i c a l l y outlines the history of PPBS within the United States federal government, which began largely as a r e s u l t of President Roosevelt's National Defence Advisory Commission i n 1940, intended to a s s i s t U.S. "friends or a l l i e s to be i n f a c i l i t a t i n g t h e i r war e f f o r t s " . As there were a great many p r i o r i t i e s , and a s c a r c i t y of resources, a Production Requirements Plan was introduced i n 1941 with the intention of handling the p r i o r i t y and a l l o c a t i o n problem on a wide basis rather than the previous piecemeal a n a l y s i s . The plan was designed to i d e n t i f y - 4 8 -the material and component requirements for contracts that mere being placed by the m i l i t a r y , and also to measure the inventories and capacities of America's production i n d u s t r i e s . Shortly a f t e r the U.S.A. entry into World War II, the system was upgraded to a mandatory requirement for budgetary a l l o c a t i o n s . It was learned that i n practice i t was necessary to view the broad scope of requirements, and by 1942 the War Production Board was studying the t o t a l of m i l i t a r y and war-essential c i v i l i a n requirements in terms of a series of i d e n t i f i a b l e groupings subject 68 to study by a n a l y s i s . Indeed Schick reasonably argues that the main impetus for PPBS came from decision technology associated with economic and systems analysis rather than from public administration or p o l i t i c a l science. As a r e s u l t of marginal benefit analysis, the War Production Board r e a l i s e d the need for evaluation and weighting of proposals on an incremental basis, and t h i s led to the introduction of the 69 Controlled Materials Plan i n late 1942, which IMovick terms "the f i r s t programme budget used in the federal government, although usually t h i s i s not i d e n t i f i e d as such because the measurement was i n units of raw materials rather than dollars'*. This plan e f f e c t i v e l y c ontrolled the system of war pro-duction 1943-1945 and comprised the following broad features. " I . I d e n t i f i c a t i o n of major goals. I I . Each goal was subdivided into programme objectives. I I I . Programme objectives were further defined i n pro-gramme elements. IV. Programmes crossed service l i n e s . V. The use of an extended time horizon. VI. Examination of a l t e r n a t i v e of both supply and requirements."70 -49-The next steps in 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, act iv i t ies and projects". It was contended that such an approach would focus attention on the general character and relative 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 Air Staff which resulted in the publication of a proposal for the f i r s t programme budget to be applied to the Air 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 ia l s in the i n -coming Kennedy Administration who were in general agreement that the system might be an ideal way of f ac i l i t a t ing the treatment, analysis and study of the military component which comprised a large segment of the total U.S. federal budget. 72 Wright is therefore correct when he states that "Planning, Programming, Budgeting as a management system had i t s birth in the Department of Defence under the Secretary McNamara", although as 73 Hitch states "there was previously plenty of planning activity of a l l sorts in the department, short, intermediate, and long range both military 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 ca l planning, as these were performed by two different groups, not readily translatable for comparative purposes since the plans were not written in similar terms, (military planning was in terms -50-of d i v i s i o n s etc. and the f i s c a l planning i n terms of l i n e objects) and the lack of any f i s c a l plan extending beyond the next budget year. The Second Hoover Commission report, published i n 1963 74 contained the following recommendations as reported by Schick: "Economy in Government should be measured by the r e l a t i v e benefits and costs of each programme... Federal programmes aimed at supporting or improving the economic position of i n d i v i d u a l s or industry should be constantly re-evaluated i n the l i g h t of changing circumstances. The alternative-resource-use test should also be applied to Federal programmes which involve no s i g n i f i c a n t Federal expenditures. The budgetary process should show how the various a c t i v i t i e s of the Federal Government are re l a t e d „^ to each other on a programme basis (or as Smithies proposes, expenditure proposals should be considered i n the l i g h t of the objectives they are intended to further, and i n general, f i n a l expenditure decisions should not be made u n t i l a l l claims on the budget can be considered) and be based upon a clear recognition of the longer range prospects for govern-ment programmes in terms of costs and b e n e f i t s . S p e c i f i c a l l y the budget for each year should be presented i n the context of a longer run set of budgetary projections, probably covering a 5-year period...." This l a s t suggestion was s p e c i f i c a l l y adopted by the basic d i r e c t i v e governing the Defence programme as shown below: "The Five Year Force Structure and F i n a n c i a l Pro-gramme i s the o f f i c i a l programme for the Department of Defence (DoD.). The programming system, outlined herein, w i l l provide the means for submission, review, record keeping and decision making on the DoD- programme. The planning, programming, resource, material and f i n a n c i a l management system of a l l DoD. components w i l l be correlated with the programming system set fo r t h herein...."76 77 The major elements of the Defence system were as follows: "1. A DoD Five Year Force structure (as detailed above) with elements grouped into eight major programmes: s t r a t -egic r e t a l i a t o r y forces, continental defence forces, general-purpose forces, a i r l i f t and s e a l i f t , Reserve -51-and Guard Forces, research and development, general support, and military assistance.. . ' ." 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 Air Force, became the cost centres, with an extended time horizon of five years being u t i l i s e d . "2. A process for the review and approval by the Secretary of Defence and his military and c i v i l i a n advisers of programme change proposals by the military departments . . . 3. A method for reviewing and changing the five year programme prior to the annual budget formulation . . . 4. Submission of force and manpower level forecasts and cost projections by the military department after each calendar quarter . . . 5. Progress reporting by the military departments in both physical and f inancial terms as a basis for control o f actual performance in accordance with the programme . . . " Because D f the success of the PPBS concept in 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 co s t . . . " The adoption of the PPBS within the Canadian Federal Government 78 came later, with the Treasury Board publishing a "Planning Programming 79 Budgeting Guide" in September 1969 , and the approval of a new form of the Estimates on a PPBS basis far the f i s ca l year 1970-71, in which departmental estimates were prepared in terms of both programmes and ac t iv i t i e s , recording the objectives which they were intended to serve. -52-I t can therefore be seen that from i t s conceptual be-ginnings i n the a d m i n i s t r a t i o n of the U.S. war e f f o r t i n the 1940's, the concept and p r a c t i c e has been extended to cover the f e d e r a l government a c t i v i t i e s of both Canada and the United States -by i i . Uhat i s a Planning-Programming-Budgeting-System (PPBS) and Uhat i s i t Designed to Achieve? Having discussed 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 c o n t r o l process u i t h i t s weaknesses i n s e c t i o n C, i t i s now per-t i n e n t to formulate and appraise the concepts and mechanics of PPBS which as mentioned above has been i n s t i g a t e d as a planning t o o l f o r Federal governments i n both Canada and the USA. The remainder of t h i s chapter considers i n turn i t s aims, how i t works, i t s prob-able impact i n both the short and long run, and the problems forseen i n operating such a r e v o l u t i o n a r y a l b e i t systematic process. PPBS e s s e n t i a l l y undertakes to assess costs of achieving o b j e c t i v e s against the b e n e f i t s to 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 of resources by the BD p u b l i c s e c t o r . I t th e r e f o r e c a l l s f o r an expansion of focus from merely c o n s i d e r i n g inputs to the c o n s i d e r a t i o n of both inputs and t h e i r r e l a t e d outputs ( i . e . from purely expenditure c o n s i d e r a t i o n s as under the t r a d i t i o n a l budget c o n t r o l process to an assessment of goal r e l a t e d achievements) with the outputs c l e a r l y r e f l e c t i n g choices r e l a t e d to the g o a l s . P a r t i c i p a n t s are expected to consider a time-horizon consequence beyond the s i n g l e year which was almost i n v a r i a b l y the planning 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 of cont i n u i n g programmes under the t r a d i t i o n a l expenditure budget. -53-The actual budget choices are to be formulated as a r e s u l t of cost-benefit, c o s t - u t i l i t y , or cost effectiveness studies (uith the methodology described in section C of t h i s chapter) within a systems-analysis framework. 81 Black refers to PPBS as a programme-oriented method of f i n a n c i a l planning of government operations involving structuring governmental a c t i v i t i e s according to s i m i l a r i t y of objectives or r e s u l t s , and i s there-fore composed of elements which are comparable to the benefits sought ..." and draws the s i m i l a r i t y between the basic philosophies of PPBS and systems-analysis by remarking that "Being composed of a number of semi-autonomous parts which int e r a c t with each other ( s i c ) to achieve movement towards common objectives, PPBS i s properly c a l l e d a system. In the most formal sense, the de-sign abjective of PPBS i s a budget in which funds are allocated among major programmes and within the structure of each. The objective of PPBS is' to achieve an a l l o c a t i o n of funds that most e f f e c t i v e l y advances the broad mix of government objectives, 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 of the Budget i n i t i a l PPBS instructions to agency heads following President Johnson's announcement in August 1965 (reported above) i d e n t i f i e d a need for the existence i n each agency of: "An an 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 continuing i n depth analyses of the agency's objectives and i t s various programmes to meet these objectives. A multi-year planning and programming process which incorporates and uses an information system to present data i n meaningful categories e s s e n t i a l to the making of major decisions by agency heads and by the President. A budgeting process that can take broad programme decisions, translate them into more refined decisions in a budget context, and present the appropriate programme and f i n a n c i a l data for 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 is greater quantity or quality (higher level 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 identified in the Province of Ontario PPBS handbook as follows: "To define departmental objectives clearly and to relate them to defined needs and goals. To stimulate the in 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 effective system for the allocation and management of resources..." The essential aspects of PPBS are given by Rowen as: "A careful specification and a systematic analysis of objectives. A search for the relevant alternatives, the different ways of achieving these objectives. An estimate of the total costs of each alternative — both direct and indirect costs, i n i t i a l and con-tinuing, including an assessment of those costs that cannot be measured in dollar terms. An estimate of the effectiveness of each altern-ative, of how closely i t satisfies the objectives. A comparison and analysis of the alternatives, seeking that combination of alternatives that promises the greatest effectiveness for given resources in achieving the objectives."86 -55-Schultze outlines tuo misconceptions about the role of PPBS by r e f e r r i n g to c r i t i c i s m that i t might be seen as either a naive attempt to quantify and computerise intangible items to make every decision into the programmed decision, or as an arrogant e f f o r t on the part of l a t t e r day technocrats to usurp the decision making function i n a p o l i t i c a l democracy. 83 As Rouen suggests, PPBS i s not decision making by com-puter, since most decision making problems are simply not capable of s o l ution by even the most highly sophisticated mathematical or economic techniques, although these can contribute greatly i n certain areas of problems. Systematic analysis should not neglect a uide range of human factors, but i t should not be expected, or indeed attempt to, measure those factors uhich are r e a l l y un-measurable. There i s aluays a danger that over zealousness by operatives of the system u i l l t r y to quantify these intangibles or ignore the human fact o r s , bath of uhich u i l l r e s u l t i n the decision makers being misled or at least lead to him being misinformed. This danger u i l l have to be guarded against, and i t i s suggested that any analysis takes tuo forms, one being the r a t i o n a l , quantifiable analysis, the other being a subjective analysis of the possible i n -tangible consequences of the various a l t e r n a t i v e s . Neither i s PPBS an attempt to supplant the po l i t i c a l decision making process, as i t i s not, nor i s i t intended to be, a mechanical substitute for the goad judgement, p o l i t i c a l uisJdom or leadership of these o f f i c i a l s , and i t i s a fundamental requirement of the democratic system that the broad p o l i c i e s and guidance are i n i t i a t e d by the elected representatives. Houever to choose betueen competing claims on scarce resources, some idea of probable outcomes must be considered -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 least giving the decision maker an increased chance of implementing his p o l i c i e s through the various programme segments. It i s suggested that PPBS w i l l be able to f u l f i l l t h i s information role without being u t i l i s e d to the extent of a mechanical decision maker. In summary therefore the aims of PPBS arise from i t s perceived r o l e of being an e f f e c t i v e apparatus for i d e n t i f y i n g legitimate national objectives and for measuring progress towards B 9 t h e i r attainment. These objectives should be operational and reachable, founded on socioeconomic analysis yet r e l y i n g for im-petus and broad p o l i c i e s l a i d down by elected representatives. It i s not however decision making by computer i n an attempt to wrest power from the 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. i i i . The Mechanics of a PPBS This section i s an extension of the conceptual framework offered above to include some of the p r a c t i c a l considerations in the implementation of PPBS within a government agency. The i n i t i a l step i s the s p e c i f i c a t i o n and analysis of basic programme objectives in each major area of governmental a c t i v i t y . These objectives should be an output oriented aim of p a r t i c u l a r action but should not i d e n t i f y the means by which the end i s to be achieved, as i t i s intended to encourage rather than i n h i b i t the analysis of a l t e r n a t i v e means to achieve the objectives. The objectives should be r e a l i s t i c a l l y attainable and i t i s useful i f the wording of objectives suggests a measurement c r i t e r i a for -57-achievement. This procedure in i t s e l f should widen the frame of reference of government decision makers, since t r a d i t i o n a l l y very few Departments have a precise set of objectives far reference. Within each programme, s p e c i f i c goals should be estab-l i s h e d . The s p e c i f i c goals which are deemed appropriate for the federal government w i l l require s e l e c t i o n i n the l i g h t of a comp-rehensive evaluation of national needs and objectives by the democratic process. Smithies makes the following observations: "... National goals do not emerge f u l l y blown from the head of Minerva. They are the r e s u l t of de-cis i o n s reached during the p o l i t i c a l process. But in reaching decisions, p o l i t i c i a n s can be more or less informed by objective evidence, quantitative 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 of pursuing such goals. A fundamental assumption i s that they should be so informed."50 When these basic objectives are i d e n t i f i e d , at least ten-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 into a programme structure, which w i l l not necessarily r e f l e c t the organisational form. It w i l l be appropriate and desirable i n many cases to have the basic programme categories cut across the e x i s t i n g t r a d i t i o n a l Departmental l i n e s . The s t r u c t u r a l aspects of PPBS are therefore concerned with establishing a set of categories oriented primarily toward "end product" or "end objective" a c t i v i t i e s that are meaning-f u l from a long range planning viewpoint even i f these so c a l l e d "end products" are i n fact intermediate when viewed from a more senior p o s i t i o n . These programme categories are merely groupings of ,a Department's a c t i v i t i e s serving the same broad objective or "mission". -58-The second l e v e l of information comprises the Programme sub-categories, uhich combine a c t i v i t i e s on the basis of someuhat narrower objectives contributing 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 l e v e l being the Programme Element, the basic building block of the PPBS str u c -ture. The element may be a s p e c i f i c product that contributes to 91 the Programme's objectives. The objectives should i d e a l l y be oriented towards the elimination of the problem which gave r i s e to the programme, but constraints may necessitate -reduction of scope from focussing on the complete solution to a more modest objective 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 clear and objective present-ation of a l t e r n a t i v e s . Rawen makes the point that: "... a planning document that does not present and compare alter n a t i v e ways of achieving the objectives i s a document that merely t r i e s to make a case for a predetermined position..."92 A f u l l y implemented PPBS should therefore provide for the preparation of i n depth studies on these a l t e r n a t i v e s . T y p i c a l l y they take the form of c o s t - u t i l i t y studies described i n section C of t h i s chapter. As explained e a r l i e r these studies can only seldom provide complete answers, but are intended primarily to provide information to de-c i s i o n makers concerning the major trade o f f s and implications e x i s t i n g among the various a l t e r n a t i v e s . Although for major projects i t i s advisable to perform i n -depth studies, a considerable understanding of alternatives can be achieved by a less rigorous a n a l y s i s . When evaluating 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 included as far as possible i . e . the costs must be "systems costs, including in addition to current operating costs, such long range cost items as research and development, c a p i t a l outlays, 93 tr a i n i n g etc." A PPBS contemplates that each department w i l l revieu i t s objectives and conduct programme analyses on a continuing year round basis. This fact that the programme structure i s not a once and for a l l exercise, but a continuing process i s well i l l u s t r a t e d by the following diagram attributed to Quade. Selecting Objectives R e s i g n i n g Alternatives Formulating the Problem Opening new Alternatives \ Reexamining Objectives C o l l e c t i n g Data Building Models Weighing Cost Against Effectiveness / Questioning Assumptions Testing for S e n s i t i v i t y F i g . 2.II PPBS i s a Continuing Process Source: E.S.Quade Systems Analysis Techniques for PPB. Santa Monica, C a l i f . 1966, RAND Paper P3322, p. 10. -60-In order that r e su l t s of the programme may be evaluated and compared with budgeted r e s u l t s , various measurement c r i t e r i a must be u t i l i s e d . The Ontario Government handbook on PPBS out l ines four basic classes of evaluat ion c r i t e r i a . " i . Volume i n d i c a t o r s : s traightforward ind ica tor s of volume or s i z e . i i . Performance i n d i c a t o r s : measure volume against past r e s u l t s , planned performance and s i m i l a r operations elsewhere. i i i . Measures of e f fec t iveness : ind ica te achievement i n terms of cont r ibut ion to the programme o b j e c t i v e . i v . Measures of bene f i t : also ind ica te programme accomp-lishment but general ly i n monetary terms."94 The handbook remarks that whi l s t measures of benef i t and e f f e c t i v e -ness are useful i n the planning and programming stages, performance and volume ind ica tor s are capable of measurement over r e l a t i v e l y short time per iods , and are thus more useful as an operat ional con-t r o l dev ice . The two major planning outputs of a PPBS are described by Posner to be: " i . a mult i -year programme and f i n a n c i a l p l an , to be updated annual ly , which i s based on the programme structure and which pro jects programme output and costs for a period of years - usua l ly f i v e . i i . a programme memorandum for each programme category to be provided annual ly , providing a n a l y t i c a l data on the programmes described i n the programme and f i n a n c i a l plan."95 The purpose of these documents i s to permit a continuous planning procedure, and i t i s required that the information system should provide data appl icable to the progress report ing and c o n t r o l , and also provide the information required 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 that w i l l permit making estimates of u t i l i t y and cost of the a l t e r n a t i v e future ' courses of action. i v . Impact of PPBS 96 Rowen suggests that i f PPBS led to nothing more than a re-examination of i t s objectives by each government department, then PPBS would have s t i l l made a useful contribution, since the objectives under the t r a d i t i o n a l system were never more than v i r t u a l l y meaningless platitudes, (e.g. "to improve the quality of l i f e " ) . PPBS should become a valuable aid for managerial control as well as for decision making, producing more and better programme information for both p o l i t i c i a n s and managers. Systematic analysis w i l l play two important r o l e s , namely the evaluation of e x i s t i n g programmes, and i n the appraisal and integration of new proposals, including the adaption of e x i s t i n g programmes to complement additions. 97 However the author disagrees with Haldi when he takes the view that "... i n i t s f u l l y developed state PPB w i l l become a complete decision making and control system which includes systematic a n a l y s i s . . . " Since i t i s f e l t strongly that the analyst's task i s to PRESENT the information to the decision maker,not make the decision. It i s i n fact rather analagous to "making the b u l l e t s but being c a r e f u l not to f i r e the gun." 9 8 Novick sees the impact of PPBS as: "implementing the conclusions of a p o l i t i c a l p h i l -osophy through the assignment of resources to t h e i r -62-accomplishment, uiith the advantage of PPBS being that 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) providing a framework for c l e a r l y defining the alt e r n a t i v e s , and (2) creating an information system that w i l l a s s i s t in.measuring costs i n r e l a t i o n to results."59 Posner*^ states that by the simplest d e f i n i t i o n of a budget — a plan stated i n f i n a n c i a l terms — the formulation of budgets has always involved planning and programming, but the whole purpose of the PPBS i s that i t REQUIRES a systematic and r a t i o n a l r e l a t i o n -ship between the three elements v i z planning, programming and budgeting rather than merely ASSUMING that such a r e l a t i o n s h i p e x i s t s . Posner goes on to state "So far as the t r a d i t i o n a l budget function i s con-cerned, i t can be argued that the planning-programming-budgeting system does l i t t l e more than modify budget formulation as i t has been conceived in the past. But as programme managers become more deeply involved i n the decision making process they are less l i k e l y to permit budgeting to become a desultory mechanical p r i c i n g and compilation exercise."101 The i n s t i g a t i o n of a f u l l PPBS w i l l increase the budgeting workload, since departmental budgets may require preparation upon two bases, one for operational management control (the r e s p o n s i b i l i t y centre 102 concept), and the other for the PPBS approach. McGilvery has found that i n the U.S. e f f o r t s are being made to gather costs at operating l e v e l s d i r e c t l y against elements of the o v e r a l l programme budget. Except in rare instances, however, these elements do not coincide with the t r a d i t i o n a l organisational r e s p o n s i b i l i t y centred arrangements for accomplishing work and incurring costs. He presents the problem of designing a cast account s t r u c -ture as follows: "a) Should the cost structure be a di r e c t extension of a PPB structure down to the lowest l e v e l s af operation, or -63-b) Should the conventional concepts of respons-i b i l i t y accounting dictate the structure design?" It i s suggested that i f a department does bui ld 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 exist , resulting in duplication. 4. If element costing proves not to be viable i t may be abandoned or overhauled at great expense. 5. It- is 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 tradit ional patterns. These cannot be discarded because financial controls and accounting information w i l l continue to be required by organisational, l ine object and act ivity classif ications by pol i t ic ians , at least in the forseeable future unt 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 tor ica l f inancial depart-mental records. Posner suggests that cost summarisation w i l l have to be furnished in at least three major categories: "Traditional budget categories - by appropriation, ac t iv i t i e s , projects and object classes Organisational categories PPBS programme classif ications and sub c lass i f icat ions . " This does not mean a threefold increase i n workload since much of the data provided under the t r a d i t i o n a l system may be e a s i l y reallocated to organisational or programme budget categories, but i t should be noted that there i s always a problem of a l l o c a t i n g j o i n t costs to any other than the broadest cost sector. As reported by the U.S. Joint Economic Committee^^, i t was anticipated by the Hoover Commission that 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 equally useful for both budgetary and organisational structures, 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 i t i s s t r i c t l y applied, may diverge from the l i n e s of r e s p o n s i b i l i t y within the organisation, r e s u l t i n g i n lack of controls at the oper-ati o n a l l e v e l . Ultimately PPBS w i l l have an impact over the f u l l range of government management, not merely the f i n a n c i a l process, and indeed the i n i t i a l emphasis was on the need for a central pro-gramme and p o l i c y planning s t a f f to set up an e f f e c t i v e system for continuing studies and economic analyses of proposed programmes and t h e i r solution 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 . Referring to the composition of future government pro-107 grammes, Ueidenbaum suggests that there w i l l be a considerable s h i f t . He r e f e r s to the indications of preliminary work being that sophisticated tools such as c o s t - u t i l i t y and systems analysis i n general may increasingly show that certain government programmes y i e l d a greater economic return than do others. So c a l l e d invest-ments i n "human resources" e.g. education and health, are l i k e l y to y i e l d estimated benefits s u b s t a n t i a l l y i n excess of t o t a l costs, and by contrast, some of the more t r a d i t i o n a l public works schemes such as i r r i g a t i o n , power and multipurpose water resource projects seem l i k e l y to show up far less favourably. It i s therefore -65-suggeated that there w i l l be a s h i f t from physical to human c a p i t a l investment within the public sector, although t h i s w i l l be subject to marginal analysis to ensure that the economic balance of project types i s maintained at an optimal l e v e l . We have discussed the change in the role of budgeting with the advent of PPBS, with subsequent overhaul of the t r a d i t i o n a l accounting process. It i s suggested that accounting w i l l change from the merely passive record keeping of expenditures to a more dynamic information system, enabling decision makers to c a l l f o r economic studies i n order to enable them to make informed rather than merely i n t u i t i v e decisions. Black writes of U.S. experience "...The position of the Executive has probably been strengthened v i s - a - v i s Congress by the depth of planning structure provided by PPBS. To the extent that PPBS work i s well done, the r e s u l t may be a s h i f t i n power toward the Executive Branch."IGQ 109 LJeidenbaum comments that there i s l i k e l y to be a reduced tendency for decisions on authorising and financing i n d i v i d u a l government programmes to be made in i s o l a t i o n (the piece-meal approach) on the basis of subjective judgement. Shick concludes that "... the case for PPBS rests on the assumption that the form i n which information i s c l a s s i f i e d and used governs the actions of budget makers, and, conversely, that a l t e r a t i o n s i n form w i l l produce desired changes i n behaviour. Take away the assumption that behaviour follows form, and the movement for PPB i s reduced to a t r i v i a l manipulation of techniques — form for form's sake without any s i g n i f i c a n t bearing on the conduct of budgetary affairs."110 However, as mentioned e a r l i e r , care should be taken to ensure that the process of government by elected representatives does not d i s -integrate to being merely the rubber stamping of executive decisions, -66-although i f the policies of parliamentarians are followed explic-i t l y by the staffs of public offices this u i l l considerably simplify the range of alternatives offered for consideration. The impacts of PPBS are thus seen as rationalising 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 uith PPBS since i t i s only by consideration of possible problems (some of uhich are common to the implementation of AMY neu system uithin a large organisation) that tentative solutions can be formulated to ease the d i f f i cu l t ie s faced. One very real problem is a semantic one, since the term PPBS has not yet become standardised through general use. As McKean and AnBhen state: " . . . To some i t (PPBS) suggests no more than a restructuring of budget exhibits, accumulating costs in more meaningful categories. . . . . To others i t implies a longer time horizon than is commonly found in the tradit ional budget, uith 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 logical and measur-ing relation of inputs to outputs. . . . . To others (and the author is included here) i t implies a l l the foregoing plus arrangements for en-forcing the allocative 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 d i f f i cu l t task. Schick remarks that PPBS does not offer help in the area of ultimate goals for public policy or in any decision - 6 7 -between alternative goal9. 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 satisfaction ( i f indeed this is the ultimate end) for every problem. One is always involved in choosing a preultimate or prior end which is one of many means to a further end. The issue is 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 classic faux pas is not to consider a means an end when indeed i t i s . (An example is cited whereby effective law guarantees rights rather than maximises convictions per dollar spent.) 3. To measure is to know, but not necessarily the right thing: Quantification, i f improperly used may lead to distorted results 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 practical d i f f i c u l t i e s of making the programme elements independent (which is desirable when consider-ing costs and u t i l i t i e s associated with the separate elements). The analysis of alternatives is undoubtably an area where problems w i l l arise. Unquestionably i t i s easier to measure costs and benefits that are amenable to market place assessment than i t is to measure the true "social cost" or "shadow price" of the more intangible effects 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 in selecting the measurement of output or performance of a particular programme. Governments should be concerned with the quantity of benefit accruing to each group, since they w i l l be interested in broad social issues of the dispersion of u t i l i t y or income transfers within society as well as the total benefits. This may lead to a -68-use of "ueightings" to be applied to benefits to each p a r t i c u l a r group to achieve any desired socioeconomic goals. The problem of timing of future costs and benefits i s complex, as of course i s the formulation of the applicable discount rate to be applied, as discussed i n section C of t h i s chapter. In the case of most large new a c t i v i t i e s the common practice to date has been to estimate and request funding far only f i r s t year costs, with l i t t l e 115 more than guesses or vague projections for l a t e r time periods. Public administrators have limit e d experience of projecting costs or benefits over say a f i v e year period, and u i l l need to gather t h i s expertise i f meaningful analyses are to be prepared. An important factor i s that a l l analyses require data, and under the t r a d i t i o n a l budgeting systems using l i n e objects as items of expenditures, the information u i l l generally not be i n a form amenable to di r e c t u t i l i s a t i o n i n either the assessment of the need for or the costs of programmes. This becomes evident i n chapter 4, uhere a costing analysis i s discussed, and the problems of obtaining the relevant costs (uhich may vary for d i f f e r e n t studies) are seen in a p r a c t i c a l s e t t i n g . The use of a "zero base" budget, uhere every item i s j u s t i f i e d , rather than the " l a s t year's plus X%" concept uould be useful, but may be considered too expensive i n the short run, at least u n t i l PPBS have proved to be implementable.'''^ Many proponents have assumed that uhat i s structured i n PPBS u i l l automatically become translated into r e a l i t y . As Black goes on to say: "The complexity of government objectives i s obvious enough, as i s the organisational complexity inherent in the Federal structure. That extraordinary problems of achieving plan implementation arise from t h i s -69-structure uas the thrust of Harry S. Truman's famous remark, quoted by Richart Neustadt, "Poor Ike, h e ' l l say 'dD t h i s , do that', and nothing m i l l happen", suggesting that the implementation structure i n m i l i t a r y services was s u b s t a n t i a l l y more automatic..." This leads to the f i n a l problem area that i s considered here, namely the i n s t i t u t i o n a l problems. It i s inevitable that PPBS i s viewed throughout the organisational bureaucracy as a threat to e x i s t i n g , f a m i l i a r and manipulatable i n s t i t u t i o n a l arrangements. Ide should therefore anticipate some dissent within the administrative echelons, possibly as a r e s u l t of lack of goal congruence between those of the policy makers and i n d i v i d u a l admin-i s t r a t o r s . But McKean and Anshen state that " . . . t h i s i s i n no sense an argument for withdrawing the proposal (of PPBS). It does however urge the importance of frank assessment of future problems and imaginative design of p o l i t i c a l , organisational, and s o c i a l strategies to b u i l d support for the proposal 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 that i t i s considered necessary to c e n t r a l i s e the process to make more e f f e c t i v e use of the budgetary apparatus, i t w i l l become less costly to ignore dissent, since i f less "bargaining" i s necessary, neglecting c r i t i c i s m costs l e s s . With increasing c e n t r a l i s a t i o n , therefore, programmes are more neatly t a i l o r e d to one view of the future, and one u t i l i t y function. This may tend to make the f i e l d positions less rewarding than previously was the case, and also to underscore the depth of knowledge of the "man on the spot". The author believes, therefore, that i t i s far more desirable to u t i l i s e the expertise of the f i e l d operatives, within a well conceived, designed and implemented PPBS allowing for decentralisation and delegation rather than to c e n t r a l i s e the -70-t o t a l process,risking the a l i e n a t i o n of the f i e l d s t a f f . This section, uhich has discussed some of the problems of PPBS (some of uhich are applicable to ANY neu procedures i n a large diverse organisation, private as u e l l as governmental) concludes the author's discussion of the t h e o r e t i c a l background to PPBS. E. Summary This chapter has discussed the basic reasons underlying the very existence of a public sector, and has 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 input measurements (expenditures of c a p i t a l , manpouer etc.) rather than a proper analysis of r e l a t e d inputs and outputs. PPBS uas then described i n d e t a i l u i t h a consideration of i t s h i s t o r i c a l background dating from World War II through i t s implem-entation u i t h i n the U.S. Department of Defence i n the early 1960's to i t s inception u i t h i n the Canadian Federal 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 forsee i t s impact not only on the federal government structure and procedures, but also a passible s h i f t i n the type af 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 these in advance, and minimise t h e i r e f f e c t on the implementation and operation of a PPBS i n p r a c t i c e . -71-Chapter 3 following w i l l consider the structural frame-work and budgeting procedures within the Canadian Federal* Govern-ment in order to link the material presented in this chapter to a study within a f i e ld organisation of a Federal Department comprising chapter k and the appendix of this paper. -72-F. References 1. M. J. Brennan, Theory of Economic S t a t i c s (Prentice H a l l , 1970) p. 401. 2. J . M. Buchanan, "Positive Economics, Welfare Economics, and P o l i t i c a l Economy", Journal of Lam and Economics 2, 1959, pp. 124-138. 3. J . V. K r u t i l l a , "Welfare Aspects of Benefit-Cost Analysis", Journal of P o l i t i c a l Economy, 69, 1961, p. 231. 4. P. A. Samuelson, "Aspects of Public Expenditure Theories", Review of Economics and S t a t i s t i c s 50, 1958, p. 336. 5. Buchanan, op. c i t . , p. 126. 6. Ibid., p. 127. 7. I. M. D. L i t t l e , A Critique of Welfare Economics (Oxford: Cloverdon Press, 1950) pp. 115-116. 8. A. H. Simon, The New Science of Management Decision, (New York: Harper, 1960) pp. 14-20. 9. Reported by Samuelson, op. c i t . , p. 333. 10. C. M. Mottley, "Strategic Planning" i n Planning, Programming, Budgeting ed. F. J . Lyden and E. G. M i l l e r (Chicago: Markham, 1972) p. 136. 11. R. Dorfman ed. "Measuring Benefits of Government Investments" (Brookings I n s t i t u t i o n Studies of Government Finance 1965) p. 4. 12. Ibid., p. 4. 13. D. K. Foley, "Resource A l l o c a t i o n and the Public Sector", Yale  Economic Essays 7-1, 1967, p. 49. 14. P. D. Henderson "Investment C r i t e r i a for Public Enterprises", in Public Enterprise ed R. Turvey (1968) pp. 86-167. 15. R. Musgrave, The Theory of Public Finance (New York: McGraw-H i l l ) . 16. As quoted by V. B. Lewis, "Toward a Theory of Budgeting" i n Planning, Programming, Budgeting, ed. F. J . Lyden and E. G. M i l l e r (Chicago: Markham, 1972) p. 225. 17. P. Drucker, The Practice of Management (New York: Harper and Bros., 1954) pp. 343-344. -73-18. R. N. Anthony, Planning and Control Systems - A Framework for  Analysis, (Boston: 1965) pp. 16-18). 19. New York Bureau of Municipal Research "Next Steps in the Development of a Budget Procedure for the City of New York", Municipal Research 57, 1915, p. 39. 20. C. A. Beard, Prefatory Note to The Need for a National Budget (Washington, 1921) p. v i i . 21. A. Schick, "The Road to PPB: The Stages of Budget Reform" i n Planning, Programming, Budgeting (Chicago: Markham, 1972) p. 25. 22. U. S. Commission on Organisation of the Executive Branch of  the Government Budgeting and Accounting (Washington: 1948) p.8. 23. Task Force Dn Budgeting and Accounting - Report on Budgeting  and Accounting i n the U.S. Government, June 1955. 24. H. R. B a l l s "Financial Management in Government", i n Management  Information Systems and the Public Services ed. H. W i l l (New York: Simon and Schuster, 1970) p. 3296-1. 25. A. K. Eaton ed. Essays on Taxation (Toronto: Canadian Tax Foundation, 1966) p. 19f. 26. H. R. B a l l s , "The Budget and i t s Function!', i n Management  Information Systems and the Public Services ed H. W i l l (New York: Simon and Schuster, 1970) p. 3302-3. 27. H. R. B a l l s , "Financial Management in Government" i n Ibid., p. 3296-2. 28. A.F.Ott and-D. J . Dtt, "The Budget Process" i n Planning, Programming, Budgeting, ed. F. J . Lyden and E. G. Miller (Chicago: Markham, 1972) p. 57. 29. H.H. Hinrichs, "Government Decision Making and the Theory of Benefit-Cost Analysis" i n Programme Budgeting and Benefit-Cost Analysis ed. H.H. Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 14. 30. M. Anshen, "The Federal Budget as an Instrument for Management and Analysis", i n Programme Analysis and the Federal Budget (Cambridge: Harvard University Press, 1965) pp. 12-17. 31. H. R. B a l l s , "Financial Management in Government" i n Management  Information Systems and the Public Services, ed. H. W i l l (New York: Simon and Schuster, 1970) pp. 3296-1-7. 32. G. N. M. Currie, " E f f i c i e n c y versus Service i n Public Admin-i s t r a t i o n " , i n Management Information Systems and the Public  Services, ed. H. W i l l (New York: Simon and Schuster, 1970) pp. 3295-1-3. -74-33. J . Haldi, "Programme Monitoring, Evaluation and Control" i n Programme Budgeting and Benefit-Cost Analysis ( P a c i f i c Palisades: Goodyear, 1969) p. 345. 34. H. R. B a l l s , op. c i t . , p. 3296-4. 35. . G. IM. M. Currie, op. c i t . , p. 3295-1. 36. H. R. B a l l s " E f f i c i e n t Public Administration" i n Management  Information Systems and the Public Services, ed. H . U i l l (New York: Simon and Schuster, 197G) p. 3294-6. 37. R. N. McKean, E f f i c i e n c y in Government through Systems Analysis, with Emphasis on Water Resource Development (fMeu York: Ldiley, 1958) p. 11. 38. P. L. L i t t l e and C. L. M i t c h e l l , "The Programme Budget:Planning and Control for the Public Sector" i n Management Information  Systems and the Public Service,' ed. H. W i l l (New York: Simon and Schuster, 1970) p. 3308-2. 39. C. Wright, "The Concept of a Programme Budget" i n Programme  Budgeting and Benefit-Cost Analysis ( P a c i f i c Palisades: Goodyear 1969) p. 26. 40. M. Anshen, "The Federal Budget as an Instrument for Management and Analysis", i n Programme Analysis and the Federal Budget, ed. D. IMovick (Cambridge: Harvard University Press, 1965, p. 14. 41. Ibid., pp. 10-11. 42. E. Dale, Management-Theory and Practice (1965) p. 524. 43. A. H. Simon, The New Science of Management Decision (New York: Harper, 1960) pp. 14-20. 44. G. H. Fisher "The Role of Cost U t i l i t y Analysis i n Programme Budgeting" in Programme Analysis and the Federal Budget, ed. D. IMovick (Cambridge: Harvard University Press, 1965) pp.66-69. 45. J . T. Ward, "Cost Benefit Analysis", Journal of Public Admin-i s t r a t i o n (New Zealand) 29, March 1967, pp. 19-20. 46. V. B. Lewis, "Toward A Theory of Budgeting" in Planning, Pro-gramming, Budgeting ed F. J . Lyden and E.G. M i l l e r (Chicago: Markham, 1972) p. 224. 47. R. N. McKean, E f f i c i e n c y in Government Through Systems Analysis  with Emphasis on Water Resource Development (New York: Wiley, 1958) p. 27. 48. J . V. K r u t i l l a , "Welfare Aspects of Benefit-Cost Analysis", Journal of P o l i t i c a l Economy 69, 1961, p. 226. 49. R. N . McKean, op. c i t . , p. 18. -75-50. R. J . Hammond, "Convention and Limitation in Benefit-Cost Analysis" Natural Resources Journal 6, 1966, p. 195. 51. As quoted Ibid., p. 199. 52. Loc. c i t . 53. Ibid., p. 218. 54. J . V. K r u t i l l a , op. c i t . , pp. 226-227. 55. UI. A. Nikasen, "The Defence Rserouce A l l o c a t i o n Process" i n Defence Management ed. S. Enke (Neu Jersey: Prentice-Hall, 1967) pp. 20-21. 56. R. N. McHean, op. c i t . , p. 62. 57. L.vanMises, Bureacracy (Neu Haven Press, 1944) p. 47. 58. H. H. Hinrichs, "Government Decision Making and the Theory of Benefit-Cost Analysis", in Programme Budgeting and Benefit-Cost  Analysis ed. H.H. Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 16. 59. U). J . Baumol, "On the Appropriate Discount Rate for the Evalu-ation of Public Projects", i n Ibid., p. 202. 60. Ibid., p. 203. 61. S. A. Marglin, "The S o c i a l Rate of Discount and the Optimal Rate of Investment", The Quarterly Journal of Economics, Feb.1963, pp. 95-111. 62. P. D. Henderson, "Investment C r i t e r i a for Public Enterprises", in Public Enterprise ed. R. Turvey (1968) pp. 86-167. 63. J . T. Ward, "Cost Benefit Analysis", Journal of Public Admin- i s t r a t i o n (Neu Zealand) 29, March 1967, pp. 23-24. 64. J . A. Stockfish, "The Interest Rate Applicable to Government Investment Projects", in Programme Budgeting and Benefit-Cost  Analysis, ed. H. H. Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 187. 65. E. B. Staats, "Survey of use by Federal Agencies of Discounting Technique in Evaluating Future Programmes" i n Ibid., p. 221. 66. V. O.Key "The Lack of a Budgetary Theory", American P o l i t i c a l  Science Revieu, 34(1940) p. 1138. 67. D. Novick, Origin and History of Programme Budgeting, (Santa Monica: RAND Paper P3427, 1966) p. 2. 68. A. Schick, "Systems P o l i t i c s and Systems Budgeting" i n Planning  Programming Budgeting ed. F. J . Lyden and E. G. M i l l e r (Chicago: Markham, 1972) p. 86. -76-69. D. IMovick, op. c i t . , p. 4. 70. Ibid., pp. 4-5. 71. Task Force on Budget and Accounting, Report on Budgeting and  Accounting in the U.5.Government, June 1955. 72. C. LJright, "The Concept of a Programme Budget", in Programme  Budgeting and Benefit-Cost Analysis ed. H.H. Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 23. 73. C. J . Hitch, "Programme Budgeting", in Management Information  Systems and the Public Services, ed. H. W i l l (Neu York: Simon and Schuster, 1970) p. 3307-2. 74. A. Schick, "Multipurpose Budget Systems", in Programme Budgeting  and Benefit-Cost Analysis ed. H. H. Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) pp. 358-367. 75. A. Smithies, The Budgetary Process i n the United States' (IMeu York, 1955) p. 16. 76. Department of Defence Directive Number 7045-1, October 30, 1964. 77. R. N. Grosse and A. Proschan, "The Annual Cycle: Planning-Pragramming-Budgeting" in Defence Management ed. S. Enke (Neu Jersey: Prentice-Hall, 1967) pp. 32-34. 78. The White House, Introduction of New Government-Wide Planning  and Budgeting System, August 25, 1965, p. 3. 79. Planning, Programming, Budgeting Guide, 1969 (Ottaua: Govt, of Canada, 1969) 113 pp. 80. Subcommittee on Economy i n Government of Joint Economic Com-mittee, U.S, Congress, "The Planning-Programming-Budgeting System: Progress and Potentials", i n Programme Budgeting and  Benefit-Cost Analysis ed. H.H. Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 372. 81. G. Black, The Application of Systems Analysis to Government  Operations (Washington D.C.: National Ins t i t u t e of Public A f f a i r s , 1966, p. 153. 82. As quoted by B. Posner, "Planning-Programming-Budgeting", Federal  Accountant 15, Summer 1966, pp. 10-11. 83. J . Haldi, "Programme Monitoring, Evaluation and Control" i n Programme Budgeting and Benefit-Cost Analysis ed. H.H.Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 339. 84. B. Mosher, Programme Budgeting: Theory and Practice with  P a r t i c u l a r Reference to the U.S.Department of the Army, p. 237. 85. E f f e c t i v e Management through PPBS (Province of Ontario, 1969) p.3, -77-86. H. Rouen, "Objectives, Alternatives, Cost and Effectiveness", in Programme Budgeting and Benefit-Cost Analysis ed. H.H. Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 83. 87. C. L. Schultze, "why Benefit Cost Analysis?" i n Ibid., p. 6. 88. H. Rouen, op c i t . , pp. 83-84. 89. A. Schick, "Systems P o l i t i c s and Systems Budgeting" i n Planning Programming Budgeting ed. F. J . Lyden and E.G. M i l l e r Chicago: Markham, 1972) pp. 78-99. 90. A. Smithies, "Outline for Discussion", (unpublished paper prepared for PPB seminar, 1966). 91. M. L. Weidenbaum, "Programme Budgeting: Applying Economic Analysis to Government Expenditure Decisions", Business and  Government Review 7, July-August 1966, p. 27. 92. H. Rowen, op. c i t . , p. 85. 93. B. Posner, op. c i t . , p. 13. 94. E f f e c t i v e Management through PPBS (Province of Ontario, 1969) pp. 25-28. 95. B. Posner, op. c i t . , p. 13. 96. H. Rowen, op. c i t . , p. 84. 97. J . Haldi, "Programme Monitoring, Evaluation and Control" i n Programme Budgeting and Benefit-Cost Analysis, H.H. Hinrichs and G. M. Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 339. 98. P. J . Royce "Some P r a c t i c a l Problems of Cost Benefit Analysis for Major Highway Projects" (unpublished paper, 1972) p. 2. 99. M. Anshen "The Federal Budget as an Instrument for Management and Analysis", i n Programme Analysis and the Federal Budget ed. D. IMovick (Cambridge: Harvard University Press, 1965) p.18. 100. B. Posner, op. c i t . , p. 14. 101. Loc. c i t . 102. F. E. McGilvery, "Programme and Responsibility Cost Accounting", Planning, Programming, Budgeting, ed. F. J . Lyden and E.G. M i l l e r (Chicago: Markham, 1972) p. 336. 103. Ibid., pp. 336-337. 104. B. Posner, op. c i t . , p. 17. 105. Ibid., p. 18. -78-106. Subcommittee on Economy in Government of Joint Economic Committee U.S.Congress, "The Planning Programming-Budgeting System: Progress and Potentials", in Programme Budgeting  and Benefit-Cost Analysis ed. H.H.Hinrichs and G.M.Taylor ( P a c i f i c Palisades: Goodyear 1969) pp. 372-374. 107. M. L. Ueidenbaum, op. c i t . , p. 29. 108. G. Black, The Application of Systems Analysis to Government  Operations (Washington D.C.: National Institute of Public A f f a i r s , 1966) p. 160. 109. M. L. kleidenbaum, op. c i t . , p. 29. 110. A. Schick, "The Road to PPB: The Stages of Budget Reform", in Planning, 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 "Limitations, Risks, and Problems (of Programme Budgeting)" i n Programme Analysis and the  Federal Budget, ed. D. Novick (Cambridge: Harvard University Press, 1965) p. 286. 112. A. Schick, "Multipurpose Budget Systems" in Programme Budgeting  and Benefit-Cost Analysis, ed. H.H. Hinrichs and G.M.Taylor ( P a c i f i c Palisades: Goodyear, 1969) p. 359. 113. H. H. Hinrichs, "Government Decision Making and the Theory of Benefit-Cost Analysis", in Ibid., pp. 12-13. 114. R. N. McKean and M. Anshen, op. c i t . , pp. 291-302. 115. M. Anshen, "The Federal Budget as an Instrument for Management and Analysis" i n , Programme Analysis and the Federal Budget, ed. D. Novick, (Cambridge: Harvard University Press, 1965) p.13. 116. G. Black, dp. c i t . , p. 160. 117. Loc. c i t . 118. R. N. McKean and M. Anshen, op. c i t . , p. 307. CHAPTER 3 THE FEDERAL GOVERNMENT CONTEXT , HIGHLIGHTING THE DEPARTMENT OF ENVIRONMENT, WITH PARTICULAR REFERENCE TO MARINE SCIENCES DIRECTORATE A. Introduction This chapter facusses an the operational form of f i n a n c i a l and decision making within the Federal Government. P a r t i c u l a r attention i s paid to the roles of the Treasury Board as both the Cabinet's committee on the expenditure budget,and management, i n the implementation of PPBS. The broad goals of the Federal Govern-ment recommended by the President of the Treasury Board for Cabinet consideration i n March 1972 are summarised, before examining the formation, organisation and goals set for the Department of the Environment f i r s t announced by the Prime Minister on October 9th, 1970, but only o f f i c i a l l y coming into being on July 11th, 1971, following proclamation of the Government Organisation Act 1970. A small subset of the Department, Marine Sciences D i r e c t -orate i s investigated i n some d e t a i l regarding i t s goals (as yet only i n a formative stage) and e f f o r t s being made at the senior le v e l s to implement the recommendations of the Treasury Board regarding PPBS. -80-B. The Canadian Federal Government and the Role of the Treasury  Board The Organisation Chart presented as F i g . 3.1 for the Government of Canada shows the organisation as at A p r i l 1971, p r i o r to the formation of the Department of the Environment discussed in some d e t a i l l a t e r i n t h i s chapter, but gives an in d i c a t i o n of the scope of the Federal Government, and does r e f l e c t the import-ance of the Treasury Board in i t s s t a f f function. The o v e r a l l d i r e c t i o n of government stems from the Prime Minister, and Doern* writes that "compared to previous Prime Min-i s t e r s Mr. Trudeau has a much more e x p l i c i t philosophy of policy making", and in his campaign for the leadership of the L i b e r a l party he stressed the need for a government by l o g i c rather than by passion. In areas such as welfare, housing, Indian p o l i c y , and foreign ownership of Canadian industry, studies and task forces were launched to gather basic data, and to conduct thorough reviews of 2 past programmes, present and future goals. Mr. Trudeau's desire to r a t i o n a l i s e the policy making structure rather that follow the incremental 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 in his statement at a press conference i n August 1969 when he stated: "...and some of the programmes — i t ' s r e a l l y i n -credible when you begin to look at these i n d e t a i l — some of the programmes were started back in the 1920's — to meet a r e a l need then. But they no longer have the same j u s t i f i c a t i o n . And there are other needs which are greater, 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 various reviews of the present government i s because we want to know more of what we are doing, and become more e f f i c i e n t i n i t ..."3 THE GOVERNMENT OF CANADA | THE SOVEREIGN | Tn£ GOVERN0* GENERAL | IEGISLJ-TUREH I ln[ PPiMt ViMSTER~] JUDICIARY | ____5"__E] r-"%-.-h E D DEPARTMENTS AND AGENCIES ] zc t l s J 35 §§ fCr 4Hf] ^ 1 { M l Source: F i g . 3.1 The Government of Canada - Organization Chart S t a t i s t i c s Canada - Canada Year Book 1972 (Ottawa, 1972) p. 138. -82-Houever the addition of formal planning units to both the Prime Minister's Office and the Privy Council Office although r e f l e c t i n g Mr. Trudeau's philosophy are r e a l l y a formalisation of roles that have been i n t e r n a l l y developing in previous years. Ue therefore have a Premier uiho recognises the need for formal planning and examination of Federal objectives uith the r e a l i s a t i o n that only by a r e v i s i o n of the t r a d i t i o n a l incremental system of expenditure budgeting can these objectives be e f f i c i e n t l y implemented. The c e n t r a l role of the Treasury Board i n t h i s aim stems from i t s status as the Cabinet's committee on both the Expenditure Budget and Management. Johnson u r i t e s : "As the Committee on the Expenditure Budget i t i s for the Treasury Board to propose to Cabinet the a l l o c a t i o n of funds as between the myriads of competing programmes and projects, taking into account three things: the p r i o r i t i e s of the government and i t s broad policy d i r e c t i o n s ; the effectiveness of the programmes i n achieving the government's objectives, and the e f f i c -iency with which the programmes are being administered. The job, i n short, i s to propose an expenditure plan which at one and the same time represents an expression 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 of the taxpayers' money in terms of value received for each d o l l a r spent. "5 Turning to i t s ro l e as the Cabinet's Committee on Management Johnson writes: "The job of 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 behalf of the government the administrative p o l i c i e s or regulations (the constraints) uhich are seen by Ministers as being desirable i n guiding or governing departments in the use of the public funds uhich have been allocated to them"6 Considering f i r s t l y the Expenditure Budgeting r o l e of the Treasury Board, the budget i s seen as the meeting point of the decision making process, the point at uhich a l l of the government's diverse -83-p r i o r i t i e s , p o l i c i e s and programmes must somehow be brought to-gether as an integrated and meaningful u n i t . A conscious e f f o r t has been made within the Government to develop mechanisms for ensuring that the Treasury Board and i t s Secretariat are f u l l y aware of the programme decisions and the emerging p r i o r i t i e s of other Cabinet Committees, a l l of which must be approved i n p r i n c i p l e by the Cabinet, usually p r i o r to consideration by the Treasury Board. This i s achieved to some extent by the attendance of o f f i c i a l s at each of the functional committees of Cabinet, either as advisors to the President of the Treasury Board ( i f he i s a member of the committee), or to report to him the f i n a n c i a l and managerial implications of proposals under discussion. This en-sures that at both m i n i s t e r i a l and o f f i c i a l l e v e l the Treasury Board and i t s Secretariat are aware of the programme proposals which have been approved by Cabinet Committees, as well as the factors and p r i o r i t i e s emerging i n each of the policy areas. The t r a d i t i o n a l a l l o c a t i v e mechanism in the Federal Govern-ment framework w i l l now be discussed, before turning to the Treasury Board's Management function. The f i s c a l framework i s the product of discussions of the Cabinet Committees on Economic Polic y , and P r i o r i t i e s and Planning, based on proposals submitted by the Minister of Finance, who pre-pares recommendations as to the appropriate o v e r a l l f i s c a l p o l i c y for the government. These recommendations are based on the l a t e s t evaluation by the Department of Finance of the economic outlook for the f i s c a l year i n question, including prospective revenues and expenditures. Having examined these projections in r e l a t i o n to such c r i t e r i a as the rate of growth of the economy, employment -84-l e v e l s , price s t a b i l i t y , etc., the Department then makes s p e c i f i c proposals as to whether the economy should be stimulated or con-t r o l l e d , and the extent to which t h i s should be accomplished by taxing or expenditure changes. Ministers decide, on the basis of these proposals, the government's f i s c a l policy for the coming year, and s p e c i f i c a l l y what levels should be set for the budgetary surplus or d e f i c i t , bearing in mind the t o t a l cash requirements of the government. In a r r i v i n g at these figures, the expected l e v e l s of revenues are set, and target l e v e l s of expenditure are established. These two decisions constitute the f i s c a l framework, which after approval by the Cabinet, w i l l form the Treasury Board's constraints in 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 claims for the period. Given the enormous quantity of programmes involved in the area of government, the range of choice 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 manage-able proportions. To enable t h i s , the government has adopted a "three budget system: which distinguishes between the programmes which have already been approved and are part of the present expend-it u r e budget (the "A" budget); those which have yet to be approved or incorporated in the budget (the "B" budget), and f i n a l l y those ex 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 scale to make room for new programmes which are ex-pected to contribute more e f f e c t i v e l y to the government's object-ives (the "X" budget). The "A" budget, which i s calculated f i r s t i n the budgetary cycle, r e f l e c t s the cost of merely continuing present programmes - 8 5 -at the existing levels , with an allowance for both increasing ex-penditures required by inflationary affects, and changes in volume of service that may be required as a result of increases in population (for example). The "B" budget represents new programmes, or improvements to the quality of existing programmes, which are being proposed by individual ministers for the next f i sca 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 social 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 pro-grammes ("B" budget) or decide that tax cuts are appropriate within the overall f i s ca l pol icy. The system described above conforms conceptually to the tradit ional budgeting model presented in chapter 2, being largely incrementally determined and lacking in direction towards goals other than in the broadest sense. The evaluation of existing programmes (the "A" budget) has typical ly received l i t t l e attention from the Treasury Board, thus making Mr. Trudeau's remarks presented earl ier in this chapter particularly well founded. It is here of course that the analysis suggested by a PPBS should have a great impact. The Treasury Board's tradit ional management role is con-- 8 6 -cerned with leadership, guidance or regulation respecting the several inputs to programme administration, and the manner in which they are combined or organised, rather than with the programmes themselves. As the theories of management have changed over the years so to have the views of the extent to which Departments should be regulated regarding the a c q u i s i t i o n and use of resources. Under the more t r a d i t i o n a l or mechanistic organisational theory, the Treasury Board was looked on as "the manager" in government, de-termining i n some d e t a i l the quantities and manner of resource ac-q u i s i t i o n and use, but l a t e r management theories favouring free exercise of good judgement by the various Departments on resource a c q u i s i t i o n and t h e i r manner of combination for the purpose of implementing the programmes for which they are responsible are more prevalent i n government today. 7 However Johnson writes that the government has. neverthe-less been slow to bring about the required reforms, possibly due at least i n part to the overstatement of theories suggesting freedom of action at the operating d i v i s i o n a l l e v e l . He goes on to state that: "... The other and more important reason : ;for the apparent slowness with which governments have adapted t h e i r operations to the newer theories of management, i s the fact that the i n s t i t u t i o n s of the parliamentary system themselves impose constraints upon the freedom which may be accorded the departments and agencies of government. The Cabinet as a whole i s held re-sponsible by Parliament for the f a i r and even t r e a t -ment of public servants, within the context of what the community regards as being f a i r and reasonable. The government, as a whale, i s responsible to Parliament for ensuring that the accommodation provided to i t s c i v i l servants, and the expenses they incur, are within the range of acceptable public standards. The Cabinet as a c o l l e c t i v e e n t i t y i s responsible to Parliament for ensuring that inputs are acquired i n the most -87-economical manner, and that contracts are l e t in a way that assures honesty in public adminis-t r a t i o n . The government i s , and must remain f u l l y accountable to Parliament for a l l of the actions of Departments, and for the handling of the funds with which Parliament has entrusted them . .."^ Despite these i n s t i t u t i o n a l forces opposing change, the Treasury Board has been receptive to the concept of PPBS, which in Canada may be traced to the outcome of the Report of the Royal Commission on Government Organisation (the Glassco r e p o r t ) . g As reported by Yeomans , "the i n f l u x on accounting and f i n a n c i a l personnel brought i n to implement the Glassco recommendations on departmental accounting and control practices soon produced a cadre of experts who became concerned about the wider control processes of resource a l l o c a t i o n " . One of the r e s u l t s of t h i s concern was the formation i n 1966 of a study group c a l l e d System of Integrated Management Planning and Control (SIMPAC), created to: "design a computer based system that w i l l bring to-gether v i t a l information from both the public and private sectors for use by planners i n the c e n t r a l agencies and in the various Departments of the Federal Government. These planners w i l l use t h i s data to develop long range plans for a l l o c a t i n g ex-penditures based an meaningful alte r n a t i v e courses of action."10 This then could be stated as the b i r t h of PPBS within the Canadian Federal framework, and brought with i t the concept of a "top-down" or disaggregative approach rather than the "bottom-up" or aggreg-ative approach which led to budgets based on piecemeal decisions. Referring to t h i s new approach the then president of the Treasury Board, Mr. E.J. Benson, asserted: "One of the prime reasons we have achieved such success i n the area i s that we started at the top — where the determination of p r i o r i t i e s has i t s greatest impact and where the largest amounts of the tax d o l l a r are at stake. That i n fact i s -aa-what we are rapidly developing — a comprehensive system of p r i o r i t y a l l o c a t i o n for a l l of the ^ limite d revenues available to the Federal Government." The Treasury Board's Planning-Programming-Budgeting Guide (PPB guide) sets out the basic concepts of the new system as follows: "(a) the setting of s p e c i f i c objectives, (b) the systematic analysis to c l a r i f y objectives and to assess alte r n a t i v e ways of meeting them, (c) the framing of budgetary proposals in terms of programmes directed toward the achievement of the objectives; (d) the projection of the costs of these programmes a number of years i n the future, (e) the formulation of plans of achievement year-by year for each programme, and (f ) an information system for each programme to supply data for the monitoring of achievement of programme goals and to supply data for the reassess-ment of the programme objectives and the approp-riateness of the programme i t s e l f . " 1 2 The guide then goes on to stat e : "Ideally there could e x i s t a complete framework for resource a l l o c a t i o n , one which begins at the l e v e l of the function where only the broad i n t u i t i v e , and i n the truest sense " p o l i t i c a l " decisions can and must be made, and which extends dawn through the various l e v e l s of the hierarchy, with cost-benefit analysis exerting a progressively greater influence on resource a l l o c a t i o n as the decisions to be taken f u l l within ever narrowing terms of reference. 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 or outputs that could meet the needs, and measurable benefits that could be demonstrated. Such an i d e a l state i s , of course, not easy to achieve. At the higher l e v e l s of decision, i t i s not possible to r e l y to any great extent on cost-benefit analysis, in deciding for instance how much should be spent on defence as against s o c i a l measures. And even afte r a decision i s taken to spend a certain amount on health and welfare, the subsequent decisions as to what should be allocated to health and the other sub-functions are only comparatively easier."13 -89-Ideally the Cabinet w i l l express i t s p r i o r i t i e s for any given year according to broad categories based on a c e n t r a l l y determined set of p r i o r i t i e s . The government w i l l exercise i t s p o l i t i c a l judgement and send the f i n a l l y agreed set of p r i o r i t i e s to the lb Treasury Board as "expenditure guidelines". Once these guide-l i n e s are communicated however, i t u i l l s t i l l be necessary f o r the Treasury Board, i n combination u i t h the Cabinet committees and i n d i v i d u a l Departments, to determine uhich of several pro-grammes would be undertaken within the given p r i o r i t y areas. 15 Doern writes that "a further key element of the PPBS, in so far as i t a f f e c t s control resource a l l o c a t i o n , i s the develop-ment, by government Departments of longer range planning and pro-gramme fore c a s t s " . The Treasury Board requirement for programme forecast submissions, sets out i n i t s manual, the following object-ives for the Departments of the Federal Government: "(a) i t w i l l serve as a basis for the determination by the Treasury Board of an optimum a l l o c a t i o n of available resources among the competing re-quirements for a l l programmes in the next year, (b) i t ' w i l l serve as a basis for improved o v e r a l l government planning i n subsequent years, (c) the preparation of programme forecasts w i l l serve to provide a d i s c i p l i n e for Departments so that they might being to think of other than short-run problems."1° Despite c r i t i c i s m of the PPBS approach centred as Doern suggests "on the notion that processes of rationalism involve s i g n i f i c a n t costs, both i n time and resources. They imply also that the policy making means could become ends in themselves, without a better decision being reached. In short the r a t i o n a l i s t i c model can become mired i n a getting ready to get ready syndrome,17" and also on the i n i t i a l requirements for information (e.g. Depart--90-mental submission'of programme forecasts) which may be of l i t t l e d i r e c t use to decision makers at either central or Departmental l e v e l s , he suggests that there i s evidence to support the view that- the PPBS approach has generated an increasing sense of p o l i t i c a l control over new p r i o r i t i e s . The Cabinet's determination of expenditure guidelines i s seen as an important change that has c l e a r l y helped to promote a breakthrough with regard tD the basic problem of how to gain control of governmental processes and develop a capacity to steer 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 sector. Whilst PPBS i s s t i l l i n i t s infancy, being adopted i n concept for part of the 1970-71 Federal Budget, i t should not be assumed that there w i l l be a quick or dramatic breakthrough with a l l governmental expenditures or even budget estimates expressed i n PPBS terms in the near future, because as Johnson remarks: "... i t must be recognised that incrementalism (a basic concept of the t r a d i t i o n a l budget) remains a control element in the decision making process. This i s how a large portion of public policy decisions are and must be made, given the scale of government and given the very nature of s o c i a l change. It i s a matter of integrating and harmonising the PPBS approach ^ with t h i s more t r a d i t i o n a l approach to decision making." This can be seen from the 1970-71 estimates, where U3 percent were statutory expenditures 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 commit-ments. It i s only i n the other 51 percent where the government 19 20 has f l e x i b i l i t y in the a l l o c a t i o n of resources. Doern comments that t h i s 51 percent i s misleading since i t seriously overestimates the degree of f l e x i b i l i t y that a government has in a l t e r i n g basic expenditure patterns i n any short run period, and that a figure of between 10 and 20 percent would be closer to the mark in t h i s respect, -91-the paint being that given a certain l e v e l af taxation (revenue), any new p r i o r i t i e s (the "B" budget" and p o l i c i e s must compete u i t h a long l i s t of existing programmes (the "A" budget). The author houever ventures to suggest that under a f u l l y implemented PPBS, a periodic revieu should be made of a l l e x i s t i n g programmes, uhich may be dropped i f i t can be shown that t h e i r usefulness i s na longer apparent (the thrust of Mr. Trudeau's remarks reported e a r l i e r i n t h i s chapter) since although programme costs u i l l show the t o t a l systems cost projected into the future i t does NOT mean that these costs are f i n a l l y committed ( i . e . are sunk costs), only that IF the programme i s continued, the programme costs u i l l be incurred. Moreover i t may not simply be a decision of proceeding versus scrapping, since many programmes could be follaued at a louer 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 cost savings. Turning back to the issue of goals for Canada as seen by the Federal Government p o l i t i c a l process, an attempt has been raade 21 to formalise these at a conceptual l e v e l , whilst recognising that the weakest l i n k s i n the development of such guidelines are the e x p l i c i t i d e n t i f i c a t i o n of goals, and the measurement of t h e i r achievement. The recommendations concerned the d i s t r i b u t i o n of some $430 m i l l i o n i n the f i s c a l year 1973-4 (representing only 2% percent of the t o t a l federal budget — a long way from the zero based budgeting advocated by some). Five major policy areas were i d e n t i f i e d together with the recommended funding a l l o c a t i o n as given below: "National Wealth $175 M i l l i o n with p a r t i c u l a r emphasis given to: - i n d u s t r i a l development measures related to the new i n d u s t r i a l strategy, -92-- the improvement Df transportation and commun-ic a t i o n f a c i l i t i e s including the Post O f f i c e , - on the job t r a i n i n g . Quality of L i f e $100 M i l l i o n with emphasis to be placed on the enhancement of the physical environment but with the maintenance of the basic approach 'the pol l u t e r must pay'. So c i a l Justice $75 M i l l i o n on the assumption that no neu universal pro-grammes w i l l be started. International Peace and Security $50 M i l l i o n with foreign aid to be raised to 0.51 percent of GIMPf and the loan to grant r a t i o to be at 50 percent. Canadian Integrity $30 M i l l i o n maintaining the Regional Economic Expansion commitment authority at 1972 levels..."22 Whilst the above schedule i s by no means to be considered as a major policy statement, and i t would be wrong to draw too many conclusions from i t (indeed the o v e r a l l categories are l i a b l e to many interpretations as to scope and meaning), i t does represent an e f f o r t to formulate and rank government objectives as required by PPBS at the highest 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 respect to the t o t a l federal budget, i t does give at least an in d i c a t i o n of basic government philosophy. It i s now considered appropriate to turn our attention to a s p e c i f i c Federal Department, namely the Department of The Environ-ment, and to narrow somewhat the sphere of influence from the o v e r a l l area of government involvement to those matters a f f e c t i n g our environment. -93-C. The Federal Department of the Environment The neui Federal Department of the Environment was estab-lish e d by the Government Organisation Act (S.C. 1970-71, c42) uhich received Royal Assent on J u n e 10, 1971. The Department, uhich i s also knoun by i t s short t i t l e Environment Canada, has as i t s primary duty the protection of Canada's a i r , uater and land resources. Speaking i n the Commons debate p r i o r to the passing of the Act, Mr. Davis (then Minister of Fisheries and Forestry, but soon to have the dual t i t l e of Minister of Environment and Minister of F i s h e r i e s ) stated: " B i l l C-207 sets up a neu Department of the Environ-ment. This neu department replaces the Department of Fisheries and Forestry. It also brings a number of related services, branches and directorates together to deal u i t h p o l l u t i o n . . . Our neu Federal Department of the Environment u i l l be concerned u i t h Canada's reneuable resources. It u i l l be concerned u i t h u i l d l i v i n g things, resources such as trees, 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, other resources l i k e a i r , uater and s o i l . . . " 2 ^ He then uent on to say that the neu Department i s a resource manage-ment department, d i f f e r i n g i n one important respect from the other resource departments in that i t deals u i t h the animate, l i v i n g and reneuable, being primarily 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 also referred i n his speech to p o l l u t i o n "intangibles", from the economic stance, but having a r e a l inherent value i n "our human scheme of things". P o l l u t i o n abatement, he said, "must be given top p r i o r i t y " , u i t h "sound operating procedure being folloued to the l e t t e r " . -9k-After remarking on the problems of water p o l l u t i o n control, the Minister stated that he had held discussions with p r o v i n c i a l Ministers regarding transborder s i t u a t i o n s , stressing h i s willingness to complement rather than duplicate p r o v i n c i a l law, but also making clear the need far national a i r quality ob-je c t i v e s ( a i r p o l l u t i o n more than most other p o l l u t a n t s ' i s i n -d i f f e r e n t to man made boundaries, since a i r currents are broadly continental i n th e i r sweep). Mr. Davis stated that he was: "... opposed to a patchwork approach to 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 places, opposed to p o l l u t i o n havens, opposed to big industry picking on our weaker provinces and mun i c i p a l i t i e s , opposed to sloppy housekeeping any-where, because i t i s the l o c a l c i t i z e n r y that i s hurt i n the end. I am prepared to argue against those who say that each industry and each municipality should be able to r e l y on the so c a l l e d 'assimilative capacity' of i t s l o c a l waters and the a i r because of cumulative e f f e c t s .... When does the regulatory authority cry halt? And when does i t begin to discriminate against la t e comers, saying that the rules of the game have to be changed a f t e r a l l 7 " 2 £ * B i l l C-207 was subsequently passed as the Government Organisation Act, 1970, and sections 5 and 6 of Part I of the Act given i n f u l l below r e f e r to the duties of the Minister: "5. The duties, powers and functions of the Minister of the Environment extend to and include a l l matters over which the Parliament of 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 of the Govern-ment of Canada, r e l a t i n g to (a) sea coast and inland f i s h e r i e s ; (b) renewable resources, including i . the forest resources of Canada, i i . migratory birds,and i i i . other non-domestic f l o r a and fauna; (c) Water; - 9 5 -(d) meteorology; (e) the protection and enhancement of. the quality of the natural environment, including water, a i r , and s o i l q u a l i t y ; (f ) technical surveys within the meaning of the Resources and Technical Surveys Act r e l a t i n g to any matter described i n paragraphs (a) to (e) and; (g) notwithstanding paragraph ( f ) of Section 5 of the Department of National Health and welfare Act, the enforcement of any rules or regulations made by the International Joint Commission, promulgated pursuant to the treaty between the United States 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 States of America and Canada, so f a r as the same rel a t e to p o l l u t i o n c o n t r o l . 6. The Minister of the Environment, i n exercising his powers and carrying out his duties and functions under section 5, s h a l l (a) i n i t i a t e , recommend and undertake programmes, and co-ordinate programmes of the Government of Canada, that are designed to promote the establishment or adaption of objectives or standards r e l a t i n g to environmental q u a l i t y , or to control p o l l u t i o n , and (b) promote and encourage the i n s t i t u t i o n of practices and conduct leading to the better protection and enhancement of environmental qu a l i t y , and cooperate with p r o v i n c i a l gov-ernments or agencies thereof, or any bodies, organisations or persons, i n any programmes having s i m i l a r objects..." Although the Department of 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 created to amalgamate those elements already e x i s t i n g within the federal framework involved i n work related to the environment and renewable resources. In e f f e c t therefore one of the concepts of PPBS has been applied i n that there has been a reorganisation of the government structure based an broad mission or programme, rather than a simple aggregation of programmes from various e x i s t i n g agencies, at a senior l e v e l used as a co-ordination mechanism to achieve environmental objectives. -96-Based on the former Department of Fisheries and Forestry, the following elements have been added: 1. The Canadian Meteorological Service from the Ministry of Transport. 2. The A i r P o l l u t i o n Control Division from the De-partment of National Health and Welfare. 3. The Public Health Engineering Di v i s i o n from the Department of National Health and Welfare. h. The Water Sector from the Department of Energy, mines and Resources. 5. The Canada Land Inventory from the Department of Regional Economic Expansion. 6. The Canadian W i l d l i f e Service from the Department of Indian A f f a i r s and Northern Development. Because of the wide variety of tasks suggested by the above l i s t i n g , i t i s not s u r p r i s i n g that Mr. Davis remarked: "Our new environmental department i s a decentralised department. Less than 10 percent of i t s workforce i s located i n the Ottawa area. The rest are to be found out where the f i s h are, where the trees are, where the lakes are and where the problems are .... Here i s decentralisation with a purpose. It i s de-c e n t r a l i s a t i o n with an eye to the expansion of our resource base, and with a view to enhancing our environment i n the long run." 2^ The goals of the Department as l i s t e d by the Minister are to: "1. Carry an established resource programmes and se r v i c e s . 2. Clean up and control p o l l u t i o n . 3. Assess and control the environmental impact of major development. k. I n i t i a t e long-term environmental programmes. 5. Promote and support i n t e r n a t i o n a l environmental i n i t i a t i v e s . 6. Develop an environmental information and education programme."26 -97-The organisation chart presented as F i g . 3-II indicates f i v e organisations at the service l e v e l , each headed by an assistant deputy minister (ADM). These service organisations are supported by ADM's for Finance and Administration (responsible for a l l aspects of administration across the Department) and Policy Planning and Research (providing o v e r a l l co-ordination of programmes). Advice from outside the government i s provided by an Environmental Advisory Council and several resource advisory councils reporting d i r e c t l y to the Minister or his Deputy. The functions of the f i v e services organisations are considered beloui adapted from d e t a i l s given i n Information Canada's booklet on 27 the Department and are described i n the same order as shouin i n F i g . 3-II (reading l e f t to r i g h t ) . i . Atmospheric Environment Service, which has ab-sorbed the functions and r e s p o n s i b i l i t i e s of the former Canadian Meteorological Service, i s operational on a year round, around the clock basis. The service w i l l continue to provide weather information to the public, to industry, and to other government departments. Research a c t i v i t i e s include examination of the scattering and deposition of pollutants, and the chemical reactions taking place within the atmosphere. Special emphasis i s placed on research covering noise 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 climate. i i . Environmental Protection Service i s a new organ-i s a t i o n within the Department taking action i n preventing or combatting environmental problems under the Minister's j u r i s d i c t i o n , and includes the surveillance of a l l areas as well as p o l l u t i o n control i n water and a i r , the management of s o l i d wastes, the control and disposal of environmental contaminants, the control of a c t i v i t i e s having an e c o l o g i c a l impact, noise control, the oper-ation of an emergency p o l l u t i o n centre and the management of the federal government clean up ' programme. * . - - A T M A M A & C M . fiOMA. 3*ACW OA. VMS secfcerAey A C W t S o C f C O O 1*4 C l L. touct {Acs. AfcM ENM-ADM . F U N C T I O N A L . SER V ICES d ADfA WATER „ ACM FtMAN&E i Dtftcroe OlCECTDft ORGANISATION CHART • D E P A R T M E N T O F E N V I R O N M E N T , ' F i g . 3-II [5 /; • Source: Information Canada "Environment Canada,.Its Origination and Objectives, pp. 7-8. - 9 9 -i i i . The Fisheries Service comprises the former service within the Department of F i s h e r i e s , and the Fisheries Research Board (FRB). By bringing together i n one organisation the operations and research, and development functions of the former Fisheries Service and FRB, i t i s considered that 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 industry w i l l be possible. i v . The Lands, Forests and W i l d l i f e Service i s as i t s name suggests comprised of three basic pro-gramme groups: (a) The Lands Branch, bringing together units concerned with land c l a s s i f i c a t i o n , inventory and planning. (b) The Canadian Forestry Service. (c) The Canadian W i l d l i f e Service. v. The Water Management Service, which has the respons-' i b i l i t y for improving the q u a l i t y , management and use of both inland and marine water resources, operating through two Directorates: (a) Inland Waters Directorate which plans and manages national and i n t e r n a t i o n a l water management programmes, conducts research and data gathering r e l a t e d to inland waters and provides for the administration of the Canada Water Act, operating through i t s three branches and f i v e regions. (b) Marine Sciences Directorate, which provides for the development of knowledge on the physical, chemical and dynamic properties of the marine environment both adjacent to Canada and major inland water bodies within the nation. The Directorate w i l l contribute to the e f f e c t i v e use of these resources and preserve and im-prove t h e i r usefulness. The Directorate consists of three Regions, each having a Hydrographic D i v i s i o n (based on the Canadian Hydrographic Service) responsible for planning and implementing the national hydrographic surveying and charting programme, an Oceanographic Di v i s i o n responsible for basic and applied research, and a Ships Div-i s i o n to manage the survey-research f l e e t of the Region in support of federal marine and inland survey and research programmes." -100-A p a r t i a l organisation chart showing the Uater Management Service, and i n p a r t i c u l a r the Marine Sciences Directorate with i t s Regions (the P a c i f i c Region i s the subject of more extensive study i n chapter 4 and the appended report) i s shown i n F i g . 3 - I l l following. Water Manage-ment Services Director General Inland Waters P a c i f i c Region (Victoria,B.C.) 1 Director General Marine Sciences Central Region A t l a n t i c Region HQ (Burlington, (Dartmouth, (Ottawa, Ont.) N.S.) Ont.) F i g . 3-III P a r t i a l Organisation Chart -Water Management Service. In the construction of the Federal estimates for f i n a n c i a l year 1971-72 the t o t a l Departmental estimate of $179.1 M i l l i o n i s divided between three categories, Operating Expenses ($139.8 M), Cap i t a l Expenditures ($28.9 M) and Grants and Contributions ($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 of funds by programme for the Department of Environment. Three major programme areas are i d e n t i f i e d , each with i t s set of objectives, although the items of expenditures within these three areas are c l a s s i f i e d according to the t r a d i t i o n a l object code, and show the incremental change from the 'previous year's estimate and forecast expenditure. Although the programme areas are extremely broad they do represent an attempt to c l a s s i f y expenditures according to mission -101-as required by PPBS. The stated programmes with their objectives are: "1. Administration Programme Objective: To provide overall policy direction and advisory, planning and administrative support services far a l l departmental programmes.29 2. Environmental Quality Programme Objective: To i n i t i a t e , recommend, undertake and co-ordinate programmes designed to enhance the quality of the environment. Sub-Objectives: To preserve, restore and improve the con-dition of the aquatic and forest environ-ments. To improve the quality, management and use of water resources for the benefit of Canada. To develop preventive and other control measures directed to air and water pollution. To provide meteorological and ice inform-ation services to encourage and promote the application and development of meteorological science, and to discharge Canada's international obligations in the f i e l d of meteorology.^ 3. Renewable Resources Programme. Objective: To promote the effective management and economic and sustained use of the renewable resources of the nation. Sub-Objectives: To achieve rational and economic util i s a t i o n of the fishery resources available to Can-adian fishermen. To perform, promote and assist research in the conservation, increase and use of aquatic renewable resources and on the biological productivity of the aquatic environment. To promote effective management and use of the forest resources of the nation. To conserve and manage wildlife resources including migratory birds and their habitat in Canada.^1 -102-With the respective budgeted expenditure for each programme being: 1. Administration Programme $4.9 M 2. Environmental Quality Programme 100.7 3. Reneuable Resources Programme 73.5 Total $179.1 M Ue can see therefore, that at the highest l e v e l every attempt has been made to implement the major concepts of a PPBS, ui t h Depart-mental objectives providing the frameuork for the compilation of the estimates, rather than a schedule based t o t a l l y on the fun 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 of the breadth of the programmes, the budget of a small 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 at t h i s l e v e l (for example the budget for Marine Sciences Directorate uould f a l l e n t i r e l y u i t h i n the Environmental Quality Programme, except f o r the Administration element uhich, of course uould be u i t h i n the scope of the Departmental Administration Programme). Although the costing concept s t i l l f o l l o u s the t r a d i t i o n a l system u i t h comparisons against l a s t year's figures by object code (incrementalism and functional costing) the author's vieu i s that at t h i s l e v e l the basic ideas of PPBS discussed i n chapter 2 are being folloued in a Department that i t s e l f oues i t s very existence at least i n part to the adoption of the PPBS concept of a broad mission rather than the t r a d i t i o n a l functional approach to government operations. Ue nou focus on a small subset u i t h i n the Department, The P a c i f i c Region of Marine Sciences Directorate, part of the Uater Manage-ment Services as shoun i n Fig 3-III and outlined above. -103-D. Marine Sciences Directorate As mentioned e a r l i e r in t h i s chapter Marine Sciences Directorate forms one half of the r e s p o n s i b i l i t i e s of the Uater Management Services unit, having the task of providing development of knowledge on physical chemical and dynamic properties of the marine environment, and i s comprised of three regions and a head-quarters branch as indicated i n F i g . 3-III (on page 100 )-• The t r a d i t i o n a l budget system within the Directorate involved the submission by the Regional Directors of functional cost estimates based largely on an incremental increase over the previous year's figure 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 that the Regional Director represents the f i f t h l e v e l of the executive (under Deputy Minister, Senior Assistant Deputy Minister, Assistant Deputy Minister - Uater Management Service, and Director General-Marine Sciences; r e f e r to Figs. 3-II, and 3-III) with consequent d i f f u s i o n of the goal congruence so v i t a l i f PPBS i s to be successfully implemented. The Regional budgets were aggregated and briefly examined before being passed to the Departmental Finance and Administration section for further aggregation with a l l other service unit cost estimates. The complete Departmental estimates were then forwarded to Treasury Board for assessment,who either tabled them for approval or suggested revisions generally based on t o t a l cost rather than on any preconceived objective ana l y s i s . However, as a r e s u l t of the federal government commitment to the concepts of PPBS, and the Treasury Board Guide referred to e a r l i e r i n t h i s chapter, an attempt at the Director General l e v e l i s being made to implement PPBS via a programme analysis exercise, and on January 12, 1973 32 a memorandum was issued giving estimates related to the 1974-75 year. Directorate Goals were summarised as: "1. To provide charting and s c i e n t i f i c services for marine transportation, resource management and engineering. To provide navigational, s c i e n t i f i c and technical information commensurate with the needs of shipping, resource development, engin-eering, f i s h e r i e s , defence, and l i f e and property, such information w i l l include n a u t i c a l and resource charts and assorted publications, and w i l l deal with marine phenomena such as t i d e s , currents, waves, storm surges and sea i c e . 2. To have the c a p a b i l i t y of supplying s c i e n t i f i c information and advice on the marine environment where the short and long term i n t e r e s t s of Canada are affected by either natural phenomena or human '. intervention, e s p e c i a l l y i n areas of resource develop-ment 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 obtained by developing i n a l l waters of Canadian int e r e s t an understanding of the basic properties and mech-anisms by means of ongoing observations from ships, buoys, a i r c r a f t and other platforms together with laboratory experiments, analysis and mathematical modelling. Areas of primary attention are the Gulf of St. Lawrence, the S t r a i t s of Georgia and Juan de Fuca, the Canadian A r c t i c and Sub-Arctic waters, and the Northwest A t l a n t i c and Northeast P a c i f i c . 3. To foster a growing l e v e l of s c i e n t i f i c and tech-no l o g i c a l expertise i n the marine sciences and i n marine oriented service and production i n order that the greatest benefits accrue to Canada. This growth s h a l l be fostered i n the public, private and academic sectors to enable Canada to have a strong and diverse c a p a b i l i t y i n the provision of services and the manufacture of products, and to protect her interests and to meet her o b l i g -ations i n the i n t e r n a t i o n a l marine forum."33 It should be noted that t h i s exercise of goal s p e c i f i c a t i o n was undertaken subsequent to the costing report by the author forming the appendix to t h i s thesis, and although the goals appear in the revised e d i t i o n of the Directorate Programme Analysis, they should -105-not be taken as being f i n a l -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 for example, a s p e c i f i c goal u i t h i n goal 1 i s : "to have completed a l l basic hydrographic charting for safe navigation on a l l major Canadian shipping routes on the P a c i f i c Coast, the A t l a n t i c Coast route to Belle I s l e , the Mackenzie waterway, and the major inland uateruays, including charts for r e c r e a t i o n a l boating and Dther s m a l l craft,"34 and these goals are to be achieved by the year 1980 ( i . e , during the f i n a n c i a l years 1974-75 to 1979-80). Ulithin the goal period of s i x years, a series of targets u i l l need to be established, the target representing the desired achievement during a one year or annual budget period. Although the f u l l d e t a i l s of the s p e c i f i c targets are not yet completed even on a descriptive l e v e l , the tentative schedule of the nine areas i s given below: "00. The supplying of f a c i l i t i e s and services to other . Department (of Environment) agencies, federal 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 -national agencies. 01. Physical and chemical properties and processes i n Ocean waters. Includes air-sea i n t e r a c t i o n , wave studies, ice studies; that are geographically located i n areas outside the t e r r i t o r i a l l i m i t s . 02. Inshore and estuarine processes. Includes a l l physical and chemical studies not including charting taking place within t e r r i t o r i a l waters. 03. Navigational charting and information, including the entire process of surveying, analysis and cartography leading to the production of navigational charts and associated publications such as S a i l i n g Directions (e.g. B . C . P i l o t ) . 04. Resource charting and information. Includes the entire process of surveying, analysis and carto-graphy leading to the production of resource charts and associated publications such as technical papers. 05. Small c r a f t charting and information. As for targets 03 and 04 applied to small c r a f t charting. -106-06. Marine S c i e n t i f i c and Technical Information and Advisory Service. Includes chart d i s t r i b u t i o n , work on any Task Forces, Committees uhere members of the Directorate s t a f f provide information or advice. 07. Development of marine industry. Includes uork carried out to develop a marine industry i n Canada including the contracting of surveys, instrument design, e t c . Ofl. F a c i l i t i e s ( C a p i t a l Expenditures). A c t i v i t i e s directed towards the a c q u i s i t i o n of neu buildings, neu ships etc. In the case of the l a t t e r does not include operation and maintenance charges. It i s in t e r e s t i n g to compare the target areas u i t h those of the Directorate goals given e a r l i e r , and t h i s i s summarised i n the following table devised by the author from Directorate data. Target Area Code Directorate Goal Areas Affected 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 Target Area Codes Related to Directorate Goals It can be seen from the above table that although the intentions of PPBS regarding the se t t i n g of objectives and goals (termed goals and targets by the Directorate) have been folloued, i t i s anticipated by the author that the cross l i n k i n g of the targets and goals may - 1 0 7 -lead to problems of measurement of both inputs and outputs related to each goal, u i t h the a l l o c a t i o n of j o i n t costs being p a r t i c u l a r l y d i f f i c u l t . The fact that such a framework, even u i t h the above ueak-ness, has been formulated shous an auareness at the Director General l e v e l of the p o t e n t i a l usefulness of PPBS u i t h i n his sphere of influence. The use of the o v e r a l l programme as a basis for subsequent costing and submission for approval of funds represents a major advance in the science of government budgeting. Houever as ue s h a l l see i n the f o l l o u i n g chapter, at the Regional l e v e l , and es-p e c i a l l y u i t h i n the operating d i v i s i o n s there are many problems to be overcome, not the least of uhich i s to persuade harassed s c i e n t i s t s and technologists that the necessary increase i n t h e i r time devoted to data c o l l e c t i o n and i n t e r p r e t a t i o n i s uorthuhile. Another d i f f i c u l t y forseen i s meaningful measurement and assignment of costs f i r s t l y tD the targets and secondly to t h e i r associated goals, and t h i s again u i l l be discussed i n greater d e t a i l i n the follouing'chapter i n the consideration of a Regional Director-ate u i t h i n Marine Sciences Directorate. This therefore concludes the section on the p r a c t i c a l s e t t i n g of the Federal Government, and the f o l l o u i n g chapter examines i n d e t a i l a p r a c t i c a l study concerned u i t h a small part of PPBS theory, namely the obtaining of cost data u i t h i n a small subset of the Federal Government, the P a c i f i c Region of Marine Sciences D i r e c t -orate (forming the appendix to t h i s t h e s i s ) , u i t h the problems both of data and attitudes that had to be overcome by the author. Fina l ly , chapter 5 in summary includes some observations by the author as an outcome of the pract ical 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 depart-ments, with suggested areas for further research. -109-E. References 1. G. B. Doern, "Recent Changes in the Philosophy of Policy • Making in Canada" (unpublished paper, 1971) p. 1. 2. F. Schindler and C. M. Lanphier, "Social Science Research and Par t i c i p a t o r y Democracy in Canada", Canadian Public  Administration XII No. 4 (Winter 1969) pp. 481-49B. 3. "Transcript of the Prime Minister's Press Conference", Ottauia, August 13th, 1969, p. 10. 4. G. B. Doern, op. c i t . p. 5. 5. A. W. Johnson, "The Treasury Board of Canada and the Machinery of Government of the 1970's", (unpublished paper, 1971) p. 2. 6. Loc. c i t . 7. Ibid., p. 19. 8. Loc. c i t . 9. D. R. Yeomans, "PPB i n the Federal Government of Canada", address to 26th Spring Conference, The Personnel Association of Toronto, A p r i l 5th, 1968, p. 2. 10. Treasury Board News Release, Jan. 26th, 1967, p. 2. 11. E. J . Benson, Address to Ontarion Inst i t u t e of Chartered Accountants, Waterloo Ontario, June 3rd, 1968, p. 3. 12. Planning,Programming, Budgeting Guide, 1969 (Ottawa: Govt, of Canada, 1969) p. 8. 13. Ibid., p. 10. 14. G. B. Doern, op. c i t . , p. 14. 15. Ibid., p. 15. 16. Programme Forecast and Estimates Manual (Ottawa: Treasury Board; Aug. 1969) chapter I. 17. G. B. Doern, op c i t . , p. 16. 18. A. W. Johnson "PPB and Decision Making in the Government of Canada" address to 50th Anniversary Conference of Society of of I n d u s t r i a l Accountants, June 18, 1970. 19. C . M. Drury, "New. Release on Tabling of 1970-71 Estimates'; p. 3. -110-20. G. B. Doern, op. c i t . p. 18. 21. Memorandum for Cabinet Approval, President of Treasury Board March 24th, 1972. 22. As quoted i n "Marine Science Directory Programme Analysis Handbook" (unpublished, Ottawa, December 1972.) 23. Commons Debates, Hansard Jan. 27th, 1971, p. 2826. 24. Ibid., p. 2830. 25. Ibid., p. 2831. 26. Environment Canada, Its Organisation and Objectives (Ottawa: Information Canada, 1971) p. 5. 27. Ibid., pp. 1-3. 28. Federal Government Estimates 1971-72 (Ottawa, 1971) pp. 24-25. 29. Ibid., p. 4-6. 30. Ibid., p. 6-10. 31. Ibid., p. 6-20. 32. "Programme Analysis - Revised E d i t i o n " (unpublished, Ottawa, January 1973). 33. G. B. Doern, op. c i t . , pp. 3-5. 34. Ibid., p. 3. 35. Marine Sciences Directorate, Internal Draft Memorandum 1972, pp. 1-2. -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 ink the theory and reason-ing behind a PPBS as investigated in chapter 2 and the objectives of Federal Government at the Minister ia l level as outlined chapter 3 and to see what a PPBS may have to offer at the f i e ld operational level of a Federal Government Department, namely Marine Sciences Directorate (Pacific 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 Pacific Region of the Marine Sciences Directorate, located in Victor ia , B. C . , where the ensuing cost c lass i f icat ion analysis was performed. B. Marine Sciences Directorate (Pacific Region) Before presenting the organisation structure and outlining the various responsibi l i t ies within the region, i t is considered useful to discuss the recent history of the Directorate which at the Regional Director level is at the f i f th t ier of the hierarchy below the Cabinet Minister l eve l . The Directorate is 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 useful frame of reference for. the analysis, p a r t i c u l a r l y u i t h respect 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 outlined, and the costing exercise, uhich i s presented as an appendix to t h i s t h e s i s , i s des-cribed i n some d e t a i l both as to abjective and reasoning behind the s p e c i f i c methods adopted as appropriate for the study. F i n a l l y there i s an outline of recommendations by the author, uhich i t i s hoped uould adjust the e x i s t i n g system to one conceptually capable of providing the information required by a f u l l y operational PPBS structure u i t h i n the Federal government. Expansion of the scope of Marine Sciences a c t i v i t i e s i n the P a c i f i c Region uas placed i n the hands af the Department af Energy, Mines and Resources i n 1962, soon aft e r that Department took on the major federal r e s p o n s i b i l i t y for the development of ocean-ography in Canada. Construction of a West Coast Dceanographic Institute uas o r i g i n a l l y scheduled for the mid 196a 1s, but uas de-ferred i n favour of the Canada Centre for Inland Uaters at Burlington. During the late 1960;s the d i r e c t o r and his deputy uere appointed and took up f u l l time a c t i v i t i e s , and gradually supervised the formation of the research d i v i s i o n s uhich nou form nearly 30% of the inside s t a f f ' s personnel. At the same time, as outlined i n chapter 3, under the Government Organisation Act 1970: Part I - Department of the Environ-ment Act, the r e s p o n s i b i l i t y for Marine Sciences uas vested i n the neu Department of the Environment from June 1971, under the d i r e c t supervision of the Assistant Deputy Minister - Water Management -113-Service. This organisational change had the e f f e c t of bringing the Branch into formal association with many groups such as the Fisheries Research Board and the Atmospheric Environment Service, with whom there have always been close working r e l a t i o n s . However, the farmer close organisational l i n k with those performing marine geology and geophysics has been broken, since those groups r e -mained within the Department of Energy, Mines and Resources. It was not u n t i l summer 1972 that the Marine Sciences Branch was redesignated as a Directorate, when the organisation chart took the form as shown i n F i g . 4-1. The r e s p o n s i b i l i t i e s of the various d i v i s i o n s of the Region are as outlined below: i . Regional Hydrography This d i v i s i o n comprises approximately one h a l f of the non support personnel within the Region, and p r i o r to the addition of the Research Di 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 Directorate as part of the Canadian Hydrographic Service. The r e -s p o n s i b i l i t i e s may be conveniently divided into two categories a) f i e l d hydrography and chart construction, and b) tides and currents. a) F i e l d hydrography and chart construction The hydrographic survey a c t i v i t y on the P a c i f i c coast i n -volves the f i e l d c o l l e c t i o n and o f f i c e compilation of data e s s e n t i a l for the production of the n a u t i c a l charts. The area of respons-i b i l i t y comprises a l l navigable waters of Western Canada to the Alberta-Saskatchewan border, with the exception of the Lower Fraser River, and also the Western Canadian A r c t i c , including the Athabasca-MacKenzie waterway. In general, the data as c o l l e c t e d i s far more >•.>• ' " v ADM lis). FINANCE -PEBSOMNEL -&EMBCAU ORG. C H A R T " ! : - • t " . . . • • 51 D £ P . OlQECTOQ CE&iO'-JAL CCS S H I P S LAUNCHES DEPOT CE&tOMAU CVELO m m 0 « 0 6 C H A R T TIDES 4 COCCEMTS EUECTOO • £N6. ' • v: O C C A M E M 6 I M . E L E C T R O -M E C H A M I C & M E C H A N I C -EKl£»ltsi. • . - • C U M A T E M A R I N E S O E N A C E S DIRECTORATE ( P A C I F I C g £ G < Q N ) Figure 4-1 Source: Directorate Personnel Records. O C E A r J CHEIA C A C 8 0 M fe«jd6et H^OGoCACft. AMAC-ftlS TO ACE e4.eMe»«JT AKlAVX&lS CHEMICAL ANALYSIS <fc' . . OCEAM f H i S l C S DU2. PAC. S E A CES. r OCEAN>C>6 « OPFtMOCE GOAVTAL. ©Cap»iMO0> OC£.A«4 A I Z C T V C N O M e Q t C A L HOb6 .U.i«>6 INUST 4 ESTUAtty G E M O T E I -115-precise than i s required for immediate use, but i s considered to be of increasing value, as i n the future they might be required u i t h p a r t i c u l a r reference to possible deep sea ports, super tanker routes and other s p e c i a l projects. The current programme includes surveys i n the S t r a i t of Georgia, Quatsino Sound o^fVancouver Island, the approaches to Prince Rupert, and on the MacKenzie River. Since the early 1950's, small surveys have been conducted in the western A r c t i c . This programme has recently been i n t e n s i f i e d , u i t h the Region's largest ship CSS Parizeau spending approximately two months each summer obtaining detailed sounding information, geo-physical and oceanographic observations in the Beaufort Sea. In addition to the standard navigational charts, s p e c i a l charts with detailed bathymetric contouring are available for commercial f i s h i n g use, and a new format of folded chart, designed s p e c i f i c a l l y f o r -small boat r e c r e a t i o n a l use i s now being compiled p r i o r to publishing, b) Tides and Currents (surveys) The t i d a l section i s responsible for providing the t i d a l reference datums for the hydrographic charts, and also for the measurement of t i d a l currents i n r e s t r i c t e d passages on the P a c i f i c Coast and i n the Western A r c t i c . Navigational data for the MacKenzie waterway i s also compiled within the section. Cross sections i n the S t r a i t of Georgia from Gabriola Island to Lulu Island, and from Cape Lazo to Texada Island, and in the Malaspina S t r a i t are being studied from data c o l l e c t e d over periods of several months during the past year, use being made of st r i n g s of moored current meters. Work i s i n progress on a mathematical model of the Lower Fraser River, i n corporating 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 to determine water le v e l s i n the t i d a l reaches of the Fraser estuary. Direct benefits should be derived for navigation and flood control, with possible gains to f i s h e r i e s and port development as well as p o l l u t i o n c o n t r o l . i i . Ocean Engineering The present e f f o r t in t h i s area i s concentrated largely upon wave forecasting. Because of the location on the western edge of the continent, the Region has a strong int e r e s t i n the in t e r a c t i o n between atmosphere and sea, bath inshore and offshore. It i s be-lieved that the knowledge i s now available to produce a daily fore-cast of wave conditions throughout the S t r a i t of Georgia. This w i l l be of use to rec r e a t i o n a l boating, towing operations, and would pro-vide considerable assistance i n p o l l u t i o n control a c t i v i t i e s such as debris clearance and s p i l l clearance. i i i . Ocean Chemistry This programme i s only two years old, and i s primarily aimed at determining the concentration and movement of various minor constituents i n the open sea, some of which are very s i g n i f i c a n t from the point of view of the world ocean. Since the expected con-centration of pollutants offshore i s generally far less than i n inshore waters, such a programme ensures the development of tech-niques to meet the future needs of progressively more stringent i n -shore p o l l u t i o n c o n t r o l . At the present time, nutrient and carbon-dioxide analysis systems are i n operation. Plans for the next few years include research on ocean content of heavy metals, including lead, mercury and cadmium. When i n f u l l operation, the programme should provide a valuable f a c i l i t y for the sens i t i v e and precise -117-measurement af pollutants in sea uater, and for source determin-ation (by tagging i f necessary), as u e l l as giving some useful pointers on a i r pollutants. i v . Ocean Physics The current shipborne programme i s aimed at defining ocean c i r c u l a t i o n and mixing i n that part of the northeast P a c i f i c , and in those inshore uaters uhich are of p a r t i c u l a r concern from a uater management and climatology vieupoint. Observations are made from the Canadian ueatherships (under the control of Atmospheric En-vironment Service), manning ocean s t a t i o n "Papa" some 500 miles o f f the coast, and from Marine Science research vessels i n the S t r a i t of Georgia and other inshore uaters. The Frozen Sea Research Group has r e s p o n s i b i l i t y for applied research on ice formation and a r c t i c oceanography, and has set up base f a c i l i t i e s at Cambridge Bay and on Greely Fjord in the A r c t i c . v. Support Services Even though the foregoing sections describe the a c t i v i t i e s of the Directorate, the support services of the Administration 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 Regional Marine Superintendent should be considered. The manager of admin-i s t r a t i o n i s designated Regional Administrator, and i s responsible for the day to day running of the organisation, including material procurement and payments, personnel matters and the preparation of accounts for both the Director General of Marine Sciences i n Ottaua, and i n t e r n a l reporting. The Regional Marine Superintendent's budget comprises approximately one half of the t o t a l Regional -118-Budget of $4.5 m i l l i o n per year, and i t i s therefore e s s e n t i a l that the costly resource of ship a c t i v i t i e s i s e f f i c i e n t l y a l l o -cated among the hydrographic and research d i v i s i o n s . This i s achieved by a series of programme co-ordination meetings between the various d i v i s i o n a l managers where a compromise i s reached after consideration of a l l the competing requirements for ship time. For management purposes, the organisation i s divided into r e s p o n s i b i l i t y centres, each considered as a cost centre with i t s own reference code (termed a c o l l a t o r number). Table 4-1 following gives a l i s t of these c o l l a t o r s together with the budget a l l o c a t i o n for each (year 1971-72) which by reference to the organisation chart ( F i g . 4-1 on page 114 ) can be aligned to the various manage-ment r e s p o n s i b i l i t i e s . C o l l a t o r Code Budget Al l o c a t i o n % of Regional budget Salaries as % of section budget Administration 3130 $253,000 5.6 64.8 F i e l d Hydrography 3135 592,000 13.0 69.5 Tides & Currents 3136 379,000 8.4 37.3 Chart Construction 3137 182,000 4.0 83.5 Frozen Sea Research 3150 224,000 4.9 59.0 Offshore Ocean-ography 3151 194,000 4.3 48.0 Ocean Mixing 3152 88,000 1.9 45.5 Ocean Chemistry 3154 86,000 1.9 40.5 Oceanography and Limnology 3155 273,000 6.0 58.0 Ship D i v i s i o n 3160- -69 2^70,000 50.0 54.5 Total #4 ,541,000 100.0 56.6 Table 4-1 Cost Centred Budget R e s p o n s i b i l i t i e s . -119-Th e c lass i f icat ion system used uithin the Region to control the expenditure of these budget allocations closely follows the tradit ional model presented in chapter 2 of this thesis, with the main concern being the proper stewardship of the funds. The co l -lator based allocations are partitioned into functional " l ine objects", which for convenience of Regional record keeping have been aggregated into series of l ike categories as l i s ted in the following table. Mote that the allocations are subdivided into two major sections, namely Operational and Maintenance (including a l l personnel costs) and capital expenditures. 1. Operational and Maintenance i . Personnel Salaries - subdivided into established and casual staff . Overtime - subdivided into established and casual staff . A l l other personnel expenses i i . Other 0 & M Travel Expenditures Freight Communications Advertising and Publicity Training and Education Miscellaneous Professional and Special Services Rentals Repairs and upkeep of machinery and equipment Materials and Supplies 2. Capital Acquisition or construction of capital mach-inery and equipment. Table 4-II Schedule of Cost Categories Ut i l i sed Uithin the Regional System. -120-It can be seen therefore that u i t h i n the existing Regional system there are none of the requirements for the immediate implem-entation of a PPBS, since there i s no l i s t of objectives u t i l i s e d u i t h i n the expenditure frameuork, and a l l costs are allocated f i r s t l y to the section requiring the expenditure and then to the p a r t i c u l a r category of expenditure as shoun in table 4—II. No attempt has been made to consider t o t a l systems costs, uhich u i l l cut across the tuo dimensions of the present c l a s s i f i c a t i o n system, time (the present budget system has a time horizon of only one year) and c o l l a t o r (there i s no automatic mechanism for costs to be aggregated i n any form other than by these cost centres). For example a hydrographic charting project u i l l u t i l i s e a f i e l d party ( c o l l a t o r 3135) requiring prior datums fixed by the tides and currents section (3136). The f i e l d party u i l l u t i l i s e one of the Region's vessels (3160-69), and f i n a l l y the data u i l l need compiling and p l o t t i n g by the chart construction section (3137). It i s highly probable that even for the smaller projects (e.g. the sounding of a 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 p l o t t i n g u i l l take greater than the one year budget period, and t h i s u i l l c e r t a i n l y be true for the larger surveys e.g. soundings Df S t r a i t of Georgia. Whilst the problems of implementing a PPBS are d i s -cussed more f u l l y l a t e r i n the chapter, the simple example given above at least gives some insight to the problems uhich can be borne in mind u h i l s t investigating the various procedures adopted in the project costing exercise described belou. -121-C. The Project Costing Exercise This section describes in detail the objectives and general methods adapted for a costing exercise performed uithin Marine Sciences Directorate-Pacific 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 resulting report, the tables of uhich are reproduced as the appendix to this thesis. The abjective af the casting study uas to "allocate a l l expenditures uithin the Regional budget for financial year 1971-72 to the various projects and activities carried on uithin the Region during the year". It should be realised at the outset that these total expenditures include many joint costs (for example the ser-vices of the Administration Division) but specifically excludes any free goods (for example the rental far the offices in Victoria, and use made of vessels operated by both Canadian Armed Forces and Ministry of Transport for uhich there is no procedure for cast recovery or charge). Houever every effort has been made to shDu the "cost" of services supplied to other agencies uithout charge, and this i s of particular 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 total Divisional budget may reasonably be allocated to non Marine Science Directorate users. It should also be noted that a limitation exists throughout this study uith reference to capital expenditures uithin the Region, since no attempt is made to "charge" the cost of capital assets to various users over their -122-p e r i o d of u s e f u l l i f e . This of course has s e r i o u s i m p l i c a t i o n s when con s i d e r i n g major c a p i t a l expenditures such as the purchase of v e s s e l s with a r e s u l t i n g undercharging of a l l u s e r s . The general approach to the problem may best be summarised by the f o l l o w i n g review of the procedure adopted. The author, a f t e r studying the o r g a n i s a t i o n a l chart and spending some time with the deputy D i r e c t o r decided to conduct p r e l i m i n a r y i n t e r v i e w s with a l l the d i v i s i o n a l managers, and at t h i s stage the o b j e c t i v e s of the e x e r c i s e were explained i n the hope that t h i s would at l e a s t give an i n d i c a t i o n of what "that stranger i n the end o f f i c e " was t r y i n g to achieve. • Upon r e f l e c t i o n t h i s was a very s u c c e s s f u l technique, and made the subsequent i n depth i n t e r v i e w s f a r e a s i e r to conduct, when each d i v i s i o n a l manager was asked to consider a l i s t of sub-objectives s u i t a b l e f o r p r o j e c t c o s t i n g , something which was qu i t e new to the vast m a j o r i t y of 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 to the author g a i n i n g a thorough understanding of the e x i s t i n g Regional expenditure a s s i m i l a t i o n system b r i e f l y described i n s e c t i o n B above, the i n depth i n t e r v i e w s were conducted. The concept was to discuss a l i s t of p r o j e c t s and how the costs 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. This was considered at the same time as the problem of apportioning the costs of the major j o i n t products v i z Ad m i n i s t r a t i v e costs and the expenditures a t t r i b u t a b l e to the Ship D i v i s i o n . A b a s i c understanding of the process, which i s described i n more d e t a i l below, may be had from the flow chart presented as F i g . 4-II f o l l o w i n g . -123-Administratian Costs \ Functional Costs I Proxy l/ariables I Primary Apportionment to each collator I Secondary Apportionment to each collator (not including Admin.) Ship Division Costs I Ship Records (logs) \ Time as Variable \ Direct Allocation to projects (internal) or users (external) Collator Totals from Ledgers Totals to be Allocated to Projects Materials Personnel Costs (Include salaries, matls., travel, telephone, library charges) to Projects based on time Direct Allocation of certain known materials Project Costs Apportionment to other collators I Fig. 4-II Flow Chart Illustrating Cast Allocation and Apportionment Procedure. -124-Th e apportionment of joint costs is generally a d i f f i cu l t problem. For periodic cost reporting such apportionments are useful i f the cost is 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 is not controllable, the principle being to make the departmental manager at least AWARE of other costs being incurred to support his ac t iv i t i e s . However i f these non controllable costs are used as a determinant of managerial perform-ance 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 is a function of government in i t s own right (and indeed the Department of Environment ut i l i se s i t as a separate programme as discussed in chapter 3) the author was specif ical ly required to make reasonable suggestions for the apportionment of such costs at least to the responsibility or collator number l eve l . After spending some time within the administrative off ice, the author fe l t that the act iv i t ies of the division may be f a i r ly represented by the l i s t of functions given in page 179 of the appended report. The total collator ex-penditure, adjusted to reflect l ibrary costs was then allocated to each function by consideration of actual salaries paid, plus the allocation of non-salary expenditures (on the basis of man years spent). Proxy variables had to be u t i l i s ed to make the apportionment of functional costs to collators , and the various variables, with rules for their 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 184, i l l u s t r a t e s the percentage apportionments, uhich are translated into d o l l a r values i n Table II-4 on page 185. As these costs include apportionment to the Administrative 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 . This exercise forms Table II-5 Dn page 185 and also includes costs re-allocated to the administrative e f f o r t from F i e l d Hydrography ( c o l l a t o r 3135), since the Regional Hydrographer, as one of the senior management team, i s h i s t o r i c a l l y concerned u i t h the o v e r a l l administration of the Region. The f i n a l apportionments comprise a schedule of expenditures to be added to the ledger expenditures of the remaining r e s p o n s i b i l i t y centres for the purpose of project costing u i t h i n each (e.g. $34,242.00 for F i e l d Hydrography from Table II-5 i s considered as an apportionment from Administration i n the l i s t i n g of F i e l d Hydrography expenditures 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 con-cern, since the D i v i s i o n a l budget forms 50% of the t o t a l Regional expenditures. After a v i s i t to the o f f i c e s of Defence Research Establishment-Pacific (DREP) at Esquimalt, uho are responsible for costing the CFAV f l e e t , i t uas decided by the author that a simple method for the a l l o c a t i o n of costs uould be on the basis of ship time spent on each project. This of course ignores fundamental prob-lems of incremental costs or indeed the s p e c i f i c a l l o c a t i o n of the p a r t i c u l a r ship to the project, as i t can be seen from Table 11-10 on page 193 that the ship costs for each vessel are by no means s i m i l a r . Houever i t has been assumed that t h i s i s at least implic-i t l y considered in the ship schedule meetings, and that the a l l o c a t i o n of vessels to projects represents the most e f f i c i e n t -126-resolution of the problem. The f i r s t task therefore, i n the absence of any formal record keeping system of ship usage, uas to construct a meaning-f u l schedule of time spent by the various vessels on p a r t i c u l a r projects as outlined by the various departmental managers. This followed from the second interview with the various managers in a time sequence, but has been included at t h i s stage i n the des-c r i p t i o n since conceptually the a l l o c a t i o n of service department costs should be the f i r s t item considered i n such an exercise. These projects were then correlated with the masters' logs to obtain time spent on each, which was not without d i f f i c u l t y since the ship reports were independently compiled, and referred to n a u t i c a l rather than project l o c a t i o n s . It was decided by the author to u t i l i s e a tabular format for the ship u t i l i s a t i o n , and a "ship usage summary sheet" as comprises Table 11-12-19 (pages 2LD-2D7 was designed. As can be seen, a l l relevant times per projects (for the Regional users) and external users (nan Regional) for each vessel 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 projects, being summarised per c o l l a t o r section and external user i n Table 11-20 (page 203). From t h i s table i t can be seen that approximately 35% of the ship usage costs may reasonably be charged against the various non Regional users, with the most s i g n i f i c a n t sum (20%) or over $500,000 being at t r i b u t a b l e to use by University of B r i t i s h Columbia. The 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 the next stage, with i n depth interviews of each manager, and in most cases several of his senior s t a f f . It was during these discussions that the a c t i v i t i e s of each d i v i s i o n were partitioned into projects -127-• r at least project areas (such as the production of data by the 'Sailing Directions Group leading to the publication of the "B.C. P i l o t " a two volume compendium of inshore waters within the region - see page 222.)* During these discussions i t became apparent that there was some difference in personality between the heads of the newer Research Divisions (generally younger s c i e n t i s t s ) and those of the mare t r a d i t i o n a l functions of the Hydrographic D i v i s i o n , who were c i v i l servants of many years experience, i n that the research managers were generally more receptive to the concept of PPBS and the requirement for t o t a l systems costing with i t s necessarily longer time horizon. After the l i s t i n g of projects, a l l o c a t i o n s of costs to them was performed i n two stages. Since the salary costs form such an important sector of most c o l l a t o r costs (see Table 4-1, page 118), t h i s seemed to be the l o g i c a l s t a r t i n g point. Salary l i s t s were checked, and by a l l o c a t i n g these costs against the p a r t i c u l a r s t a f f members (including the pro rating of any discrepancy — which was generally of the order of 6%) and adding various other expenses attributable to p a r t i c u l a r i n d i v i d u a l s , such as telephone expenses, t r a v e l , l i b r a r y apportionments, etc. the t o t a l "personnel" cost for the c o l l a t o r could be assessed per i n d i v i d u a l . Whilst these costs can never be s t r i c t l y accurate (e.g. there i s the d i f f i c u l t y with overtime payments — cash ac t u a l l y paid in hard currency, as against time taken as leave i n l i e u of such payment, a "soft money" or paper transaction) i t was thought that at least t h i s method was a f a i r attempt i n view of the constraints of both time and data a v a i l a b i l i t y . These "personnel" expenses were allocated to projects -128-an the basis of time spent on each,but the data, being acquired af t e r the event cannot be anything other than a crude assessment except for the hydrographic f i e l d p a r t i e s , who are required to submit a detailed monthly report of uork performed, which i s l a t e r compiled into a comprehensive F i e l d Report. Subsequent to t h i s a l l o c a t i o n of personnel costs, the remaining two p r i n c i p a l expend-it u r e categories of Operation and Maintenance (materials) and c a p i t a l acquisitions required a n a l y s i s . This proved in general to be an extremely tedious exercise, involving the tracing of accounts and other back up information to supplement the ledger postings, which only give the payee and d o l l a r value. In some instances the costs were allocated to personnel, as i n Table III-7 (page 213) for Hydrographic d i v i s i o n purchases, and in others were allocated d i r e c t l y to projects, as i n Table IV/-3 (page 250) for Offshore Oceanography expenditures. The consideration of c a p i t a l expenditures, which comprise an e n t i r e l y separate costing category both within the Regional budget (and also at the Federal Budget l e v e l ) was concep-t u a l l y simple, but i n practice rather d i f f i c u l t to resolve. It was decided by the author to charge any c a p i t a l casts (costs of equipment with a projected useful l i f e greater than one year) to projects that the items were purchased s p e c i f i c a l l y f o r , and would be used s o l e l y an any one project. However i f a p a r t i c u l a r project required the use of certain equipment, and at the time of purchase of the item i t was known that i t would subsequently be used over a period of years on other projects, then t h i s cost was not allocated to the project, but was recorded separately as a c o l l a t o r cost. The rationale behind t h i s dichotomy was that i n the former instance the cost represents part of the t o t a l system cost required by the pursual of -129-project, whilst i n the l a t t e r only part of the cost should be attributed to the project i n question, with subsequent transfer of cost to other projects l a t e r i n the asset's l i f e . Although the r e s u l t i n g "timing difference" i s of im-portance under the present t r a d i t i o n a l budgetary system, advent of the PPBS " t o t a l system cost" renders i t far less so, and an equitable charging system could be achieved by an inventory system where the cost of c a p i t a l assets can be recorded, and a '.iseful l i f e " determined, charges being made each year against projects for the depletion i n the worth of the assets either over a time base, or perhaps on a usage base (for example a machine with an estimated useful l i f e of 1D,0QQ hr would be charged to projects at (cost - salvage) -S- 10,DOD). However at present there i s no Regional Inventory f o r these items, and although the author recommended the usefulness of such a system (indeed a system performing a s i m i l a r function i s at present being de-vised), i t was not considered p r a c t i c a l to allocate part of the cost of c a p i t a l assets purchased during the year on a somewhat arb i t r a r y basis to projects undertaken, as t h i s might be mis-leading i n the t o t a l consideration of 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 of the two approaches may be seen i n the appended report as follows: a) F i e l d Hydrography - Ca p i t a l Expenditures NOT allocated (page 220 ). b) Ocean Chemistry Division - Capital Expenditures apportioned as per Table IV-13 (page 26U ). Following the consideration of projects, the determination of -130-support serv ice apportionments, the a l l o c a t i o n of personnel costs and mater ia l s costs to personnel or pro jects as appropriate , and a ca re fu l cons iderat ion of the most equitable treatment of c a p i t a l cos t s , a f i n a l apportionment uas undertaken, the most convenient analys i s being a tabular format, u i t h a se r ie s of step douns being considered to have s u f f i c i e n t p r a c t i c a l accuracy (rather than a rather complex s o l u t i o n u t i l i s i n g s imul-taneous equat ions) . The general method i s u e l l i l l u s t r a t e d for F i e l d Hydrography i n Table I I I-9 , page 227 , uhere a step by step analyses r e s u l t s i n the f i n a l i s a t i o n of pro ject costs as summarised on page 228 • A s i m i l a r procedure uas performed i n each of the r e s p o n s i b i l i t y centres , u i t h the f i n a l r e su l t being an a l l o c a t i o n of t o t a l Regional Expenditure for the year to projects (except for the exclus ion of some c a p i t a l casts recorded separa te ly ) , although as s tated previous ly no i n c l u s i o n of e i ther revenues, or costs of services suppl ied free by other depart-ments ( i . e . free goods) uas considered u i t h i n the scape of t h i s study. -131-D. Recommendations for PPBS at the Regional Level Before discussing the recommendations in d e t a i l i t i s considered useful to restate the concepts underlying the i n s t i t -ution of PPBS. The most commonly agreed j u s t i f i c a t i o n appears to be an anticipated improvement in the e f f i c i e n c y of r e s u l t s of governmental decisions. However a simple d e f i n i t i o n of " e f f i c i e n c y " i s not r e a l l y appropriate. Ulildavsky*" outlines three d i s t i n c t sub-definitions pertaining to i t s use at various l e v e l s of de-c i s i o n complexity. These may be considered as: "pure e f f i c i e n c y - meeting a set objective at lowest . i cost, or obtaining the maximum amount of the objective f o r a s p e c i f i e d amount of resources. mixed e f f i c i e n c y - here the analyst a l t e r s the objective to s u i t available resources, recognis-ing that the d e i s r a b i l i t y of object-ives may be dependent upon the cost of achieving them. t o t a l e f f i c i e n c y - occurs when the analyst, who has already altered both means and ends (resources and objectives) discovers that the most e f f i c i e n t system cannot be achieved without a change i n the decision mach-inery. Thus a further variable, implying a change in 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." lile can further subdivide the concept of e f f i c i e n c y into a l l o c a t i v e and d i s t r i b u t i o n a l . In the private sector both of these measures are based on s u p e r i o r i t y of power i n the market place. In the wider sphere of public decision making, based on u t i l i t y v i a an implied s o c i a l welfare function, i t i s suggested that not only the t o t a l r e s u l t s of decision making are considered, but also the various groups affected by the decision. In e f f e c t therefore, i t -132-may not be s u f f i c i e n t to simply undertake those projects ranked highest by cost-benefit or s i m i l a r studies. The "who and by how much?" should be investigated i n addition to the t o t a l costs and benefits. This i s the u t i l i t y concept being applied i n a micro sense, whereas at present the decision may be simply based on a single figure a r i s i n g from conventional a n a l y s i s . D i s t r i b u t i v e e f f e c t s may be included i n the analysis by the u t i l i s a t i o n of various weightings to be applied to the costs and benefits a p p l i c -able to the various factions as a r e s u l t of the project, but t h i s may prove a complex p r a c t i c a l exercise, as there i s no s c i e n t i f i c way to compare losses and gains among d i f f e r e n t people. Uie can therefore see that far from there being a seemingly simple object-ive function underlying decision making i n the public sector, there i s a mesh of interdependences none of 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 practicable, but we must guard against the danger that i t might become hidebound and perceived as an end i n i t s e l f , being followed r e l i g i o u s l y f o r i t s own sake rather than used j u d i c i o u s l y as an aid to management. The following schedule of recommendations arises both from the cost study described e a r l i e r i n t h i s chapter, and the basic considerations of the aims and theory of PPBS discussed i n d e t a i l i n Chapter 2. It i s thought un l i k e l y that many of the suggestions can be ins t i g a t e d immediately within the Region (or Department of the Environment as applicable) but are at least worthy of further study regarding p r a c t i c a b i l i t y . -133-1. Use of Total Systems Cost A basic requirement of a PPBS i s that costs should be based on programmes r e f l e c t i n g a set of departmental objectives. At present the budget period of one year i s s t r i c t l y adhered to u i t h i n the Region, and in e f f e c t the estimates represent an ad hoc e f f o r t to both estimate and control expenditures u i t h i n the functional l i n e objects set doun by Marine Sciences Directorate Headquarters, although as discussed i n Chapter 3, an e f f o r t i s being made to implement the programme approach. Whilst the concept of a zero base budget (where EACH item of expenditure requires j u s t i f i c a t i o n i n every budget) i s perhaps impractical u i t h i n the Region due to constraints of time and s t a f f , the e x i s t i n g incremental approach of being alloued " l a s t year's a l l o c a t i o n plus x% for i n f l a t i o n a r y e f f e c t s " i s extremely crude, and obviously needs r e f i n i n g . A comprehensive set of programmes should be designed and costed, i n order that there i s some rationale to support the budget requests. The e x i s t i n g information system u i t h i n the Region i s defective i n that although the managers receive periodic f i n a n c i a l statements, they are not accurately informed of the d o l l a r values i n the "commitment" and "expenditure" categories, uhich r e s u l t s i n incorrect "remaining balance" figures of t h e i r c o l l a t o r allotment being given. This i s of v i t a l concern, e s p e c i a l l y nearing the end of the f i n a n c i a l period. The information system i s currently being revised as a r e s u l t of a separate report by the author,considered outside the scope of t h i s t h e s i s , but i t i s considered uorthuhile -134-to i l l u s t r a t e the general problem of status d i f f e r e n t i a l between "commitments'1 and "expenditures" by a simple example, and to see the e f f e c t that the implementation of a PPBS would have. Consider Department X - Budget A l l o c a t i o n : Year 19X1 1. Operations and Maintenance Personnel $100,000 Materials 50,000 2. Ca p i t a l 50,000 Total Departmental Budget $200,000 At the year end, the manager i s confident that a l l the monies have been spent, since he requisitioned and has received goods and services against those items well before the March 31st year end. Outstanding Commitment Expenditure Balance Manager's B e l i e f 0 200,000 0 Accounting System Data 25,000 175,000 25,000 However the accounting system indicates that of the $100,000 worth of r e q u i s i t i o n s raised during the year (against which goods and services have been received) $25,D00 value have NOT yet been paid, presumably due to lat e receipt of invoices. The departmental ex-penditures reported to Headquarters i n Ottawa are therefore $175,000 rather than the $200,000 allowed for by the budget (note that only actual disbursements are reported as expenditures, no allowance being made for commitments or o b l i g a t i o n s ) , and for which the department has presumably received good value. The implications of t h i s divergence are twofold: -135-( i ) Next year's budget (19X3 i n f a c t , since the budget for 19X2 m i l l have been fixed by t h i s time) for department X u i l l be based on the reported expenditure of $175,000 following the t r a d i t i o n a l budget a l l o c a t i o n procedure. ( i i ) As personnel expenditures are generally assured, t h i s means the budget a l l o c a t i o n for goods and services u i l l be cut from $100,000 (in year 19X1) to $75,000 ( i n year 19X3). Houever since the $25,000 short f a l l of expenditures i s r e a l l y a commitment against future budgeted funds rather than a "saving", the manager i s i n serious trouble for the coming year. In e f f e c t his "discretionary" spending pouer has been cut not merely from $100,000 to $75,000, but also by the add i t i o n a l $25,000 already committed from non payments i n 19X1, i . e . because of the lack of adequate information, h i s e f f e c t i v e budget had been halved. Note that i f the manager had KNOWN that certain accounts would not be paid during the year 19X1, he could order and pay for c e r t a i n equipment from his 19X2 estimates by t r a n s f e r r i n g equivalent d o l l a r values of budget monies between the two years. This would r e s u l t i n the expenditure t o t a l f o r 19X1 being as budgeted, although of course the physical goods and services paid for would not be exactly as intended by the budget. The above i l l u s t r a t i o n , although the outstanding commitment has been exaggerated to highlight the concept, i s a very r e a l problem both for managers within the Region, and of course the Director himself who i s responsible for the e f f i c i e n t administration of the Regional budget to the Director General i n Ottawa. This - 1 3 6 -problem, however, could be resolved by the application of a simple PPBS concept to the Directorate. If the Regional budget could be summarised by programme ^ (and into sub programmes or elements at the d i v i s i o n a l l e v e l ) capable of being costed on a basis of output, then the year end analysis could shou progress made towards project completion and variances of both schedule ( e f f i c i e n c y variancee) and cost f o r r e s u l t s achieved (spending variance) could be analysed. It i s r e a l i s e d that an objective measurement of outputs may be d i f f i c u l t , but an assessment of percentage cost completion at a given stage of output may be s u f f i c i e n t , and t h i s can be compared against the budgeted figures on the continuing programme to analyse the variances. The budget period of one year would s t i l l be relevant f o r performance or achievement, but would not play such a v i t a l r o l e as the present "spend i t or lose i t " doctrine so prevalent within the Region suggests, since i f for circumstances such as a harsh A r c t i c summer prevented the hydrographers from taking soundings, than a continuing budget a l l i e d to the programme would recognize t h i s deviation and allow funds to be transferred forward to ensure that monies were available to continue the project as and when required. In the U.S., the "spend i t or lose i t " doctrine, which formerly led to a l a s t minute spending spree towards the year end was somewhat reduced by a Budget Bureau apportionment i n quarterly 2 allotments. -137-The o v e r a l l concept advocated above may be defined as the continuing cost concept, but the author prefers to include i t in the more widely applicable approach of Total System Concept, which may be defined to include the t o t a l cost of each programme, including f a i r value for a l l services u t i l i s e d . The notion of f a i r value may c o n f l i c t with " s o c i a l value" as discussed i n Chapter 2, when i t was argued that market value may not be appropriate for goods and services (for instance i f a former welfare r e c i p i e n t i s taken on the labour force, then the s o c i a l cost of his employment should r e f l e c t the benefits due to non payment of welfare monies), but i n small piecemeal analyses such as the Region with i t s t o t a l s t a f f of approximately 260 i t i s thought that the market value i s an adequate p r a c t i c a l measure of s o c i a l cost. 2. The Use of Cost Based Tranfer Prices The t o t a l system cost should include those resources which are at present supplied as a free good (an example within the region would be the use of the o f f i c e s within the Federal Building on Government Street, supplied without any transfer of funds by the Ministry of Public Works). The applicable cost to be charged would be the f a i r r e n t a l cost of equivalent o f f i c e space in the V i c t o r i a area, representing the *bpportunity cost" to the Ministry of Public Works. It i s suggested that t h i s cost be apportioned to each c o l l a t o r proportionally to the area u t i l i s e d , with the common areas of hallways, u t i l i t i e s , e t c . being excluded, but t h e i r cost -138-being i m p l i c i t l y included 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 foot of USABLE space. The use of opportunity cost i n t h i s manner i s r e a l l y an i l l u s t r a t i o n of transfer p r i c i n g i . e . that price charged by one department for i t s output that becomes an input of another. The theory and c a l c u l a t i o n of p a r t i c u l a r transfer prices i s outside the scope of t h i s thesis, but the reader i s referred to S h i l l i n g l a w ^ and Hirschleifer** for a f u l l e r exposition of the t o p i c . The general concept however may be summarized as charging that price which leads to the most e f f i c i e n t use of resources within the TOTAL organisation. If a " p r i c e " can be recovered from an external user then the resource should be sold externally, unless any i n t e r n a l department can contribute at least as much as t h i s sum to the organisation by way of an added value. In t h i s instance the transfer price would be the market price i f the supplying department can s e l l a l l i t produces. However, i f the external market cannot absorb the t o t a l produce there i s room for bargaining between the supplying and receiving departments for a mutually acceptable transfer price for t h i s excess supply. From the b r i e f summary given above i t can be seen that the problem of transfer 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 external market in the private sector, i s extremely complex, and the matter i s generally resolved under the t r a d i t i o n a l system either by supplying the item as a free good, or by using a cost basis (lack of e f f i c i e n c y control) and regulating that the departments do not use external sources (again leading to possible i n e f f i c i e n c i e s ) . In the absence of any -139-Federal Government wide study to consider the whole issue of transfer p r i c i n g , i t i s considered useful to at least investigate the e f f e c t of charging at cost for services rendered to other departments, so they are at least aware of th e i r r e s p o n s i b i l i t y to ensure that e f f i c i e n t use i s made of any seemingly "free" goad. The d i v i s i o n of Regional workload into cost centres may be extended to the exi s t i n g c o l l a t o r system and transfer prices calculated at predetermined dates based on anticipated casts and usage for the period. The problem of transfer prices applied to j o i n t products (for example ship u t i l i s a t i o n ) i s discussed under recommendation 6 on page 143 . 3. The Costing by Projects The s e l e c t i o n of projects to be costed separately w i l l r e -quire much foresight to avoid projects being neither i r r e l e v a n t nor a l l consuming. It i s suggested that certain service areas, for example Administration, be designated as a service project and NOT allocated to the working or d i r e c t p r o j e c t s . Although i t may be argued that an attempt should be made to allocate a l l costs, when dealing with the marginal decision, i t i s the incremental cost that i s appropriate, and i n general although the Administration Department provides services to other sections, in the marginal case these costs w i l l be i r r e l e v a n t . However an equitable basis of 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 give the respective managers at least an ind i c a t i o n of the cost of support required by the i r programmes in a si m i l a r manner to that discussed i n the transfer p r i c i n g section -ma-in recommendation 2 above. It i s recognised that the f u l l implementation of PPBS i s several years away, and the 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 necessity be required to supplement the newer programme or project cost system. As such an operation w i l l of necessity r B s u l t i n a higher workload for the various managers, t h e i r support should be a c t i v e l y sought. It i s suggested that the simplest method of achieving both programme and functional costing i s to use a matrix approach to Regional accounting. In the budgetary planning phase, costs of programmes w i l l i n e v i t a b l y comprise functional requirements, which w i l l need costing to give an i n d i c a t i o n of t o t a l programme costs. These functional costs should be entered into a matrix box such that both the function and programme are i d e n t i f i a b l e . At the expenditure stage however, such a system w i l l require knowledge of both dimensions before appropriate cost coding can be allocated, which w i l l prove impractical for the routine bookkeeping associated with the purchase of j o i n t items (e.g. a new f i l i n g cabinet for the hydrography o f f i c e ) and could r e s u l t i n much additi o n a l work to s a t i s f y an impractical system. It i s therefore suggested that whilst a matrix approach w i l l be useful i n the preparation of programme estimates, the a l l o -cation of many expenditures w i l l of necessity require posting "after the f a c t " , possibly as a r e s u l t of a detailed year end analysis s i m i l a r to the appendix as prepared by the author. -141-4 . C a p i t a l Acquisitions As discussed e a r l i e r i t was not possible to treat the costing of c a p i t a l assets to projects i n an equitable manner, since no inventory of these assets i s maintained u i t h i n the Region. The method adopted of charging to s p e c i f i c projects when i t could be established that t h e i r purchase and use was to be far that project alone, and separately l i s t i n g assets to be used on a variety of projects both i n the current and future years, was r e a l l y an attempt by the author to 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 that even i f i t had been possible to assess the proportional use of assets purchased within the year considered, the lack of an inventory system giving estimated book values for a l l c a p i t a l assets at present held by the Region would have precluded a s i m i l a r assessment for assets bought i n PRIOR budget periods. The author made recommendations for a simple inventory and project cost assessment system that was the subject of a separate report, and t h i s i s now being investigated p r i o r to i t s adoption within the Regional information system. B a s i c a l l y i t involves l i s t i n g of a l l c a p i t a l assets giving h i s t o r i c a l cost and allowing for anticipated salvage value. This i s the "cost" of the assBt to be set against usage over the expected l i f e of the item on a h i s t o r i c a l cost basis, s i m i l a r to depreciation expense as used i n the private sector. A p r a c t i c a l problem of assessing the expected l i f e w i l l occur, since for many assets, there i s no h i s t o r i c a l experience of t h i s factor - for items such as the departmental vessels, twenty years was thought to be appropriate by the Regional -142-Marine Superintendent, but the Region's oldest ship "Ulm. J . Stewart" i s over forty years o l d . With e l e c t r o n i c equipment, technical obsolescence i s more l i k e l y to be the c o n t r o l l i n g factor rather than any physical l i f e c h a r a c t e r i s t i c s , and again lack of experience in t h i s r a p i d l y advancing technological f i e l d makes an assessment of l i f e i n the early stages of the inventory system l i t t l e more than a guessing game. However none of the above i s meant to detract from the p o t e n t i a l usefulness of the inventory system which w i l l provide a p o l i c i n g of assets as well as information to aid i n project costing as required. 5. Purchase, Lease or Rent Decisions In the private sector an "opportunity rate of return" i s u t i l i s e d to determine which of the competing items should comprise the c a p i t a l budget. This rate of return uses a discount rate s u f f i c i e n t to cover both the cost of c a p i t a l and a measure of p r o f i t (indeed i t can be argued that a "normal" p r o f i t can reasonably be considered as a cost of doing business). The i n t e r e s t rates con-sidered appropriate for benefit-cost analyses i n Chapter 2 centred around a: s o c i a l discount rate determined from considerations of a s o c i e t a l welfare function. Its extension to use as an opportunity cost of c a p i t a l i s conceptually sound, but p r a c t i c a l only i f a l l the intangible factors can be included 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 small operational 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 horizon of say a f i v e ysar period, the market rate w i l l provide a good proxy, and IF the ensuing benefits can be quantified, then the c a p i t a l budgeting -143-technique can be applied to the purchase of c a p i t a l assets. The analysis can also include a comparison with alte r n a t i v e methods of financing e.g. r e n t a l or leasing of assets can be investigated. Whilst i t i s r e a l i s e d that many of the assets 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 resale market) and therefore a long term r e n t a l or leasing agreement i s l i a b l e to prove costly for ce r t a i n projects of short duration, a l t e r n a t i v e s to purchase although c o s t l y , might well prove cheaper than purchase and subsequent scrapping. At present the purchase of assets i s invariably more at t r a c t i v e than r e n t a l or lease agreements because the cost of 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 leasing agency conducting the agreement. It i s not known whether the use of the approach suggested above w i l l have a marked e f f e c t on the composition of c a p i t a l assets, but i t would at least ensure a r a t i o n a l approach to a c q u i s i t i o n decisions, aiding the general PPBS concept of thoughtful analysis p r i o r to action. 6. The Problem of Shared Resources or Joint Costs No mention of any form of cost a l l o c a t i o n within a multi-use organisation would be complete without a consideration of "shared resources", or resources which are u t i l i s e d by more than one functional department or d i v i s i o n . In general these items are li m i t e d to administrative costs, which are l i k e l y not to form an important part of the t o t a l depart-mental cost, e s p e c i a l l y i n a technical Directorate where much of the o v e r a l l task i s performed by trained technologists and s c i e n t i s t s . -144-Houever the major single segment of expenditure u i t h i n the Region may be attr i b u t a b l e to the Ship D i v i s i o n , and so the costing method adopted for t h i s sector has v i t a l implications for d i v i s i o n a l expenditures i n general, and project costing i n pa r t i c u l a r After study of Defence Research Establishment P a c i f i c (DREP) who have u t i l i s e d a project planning system for the past tuo years, i t uas decided to employ a s i m i l a r system of transfer costs based on actual ship expenditures and u t i l i s a t i o n . At present there i s no p r a c t i c a l alternative supplier for the ships, although because of the s p e c i a l requirements of the Athabasca-Mackenzie project, a charter vessel has been used for that p a r t i c u l a r task. This means that a l l competing users are "locked" into the Region's Ship D i v i s i o n , uho i n a l l fairness do make every e f f o r t to s a t i s f y the competing demands of the users by means of a series of co-ordination meetings u e l l before the "busy season"-of May-October. (A complete schedule of users can be seen i n Table 11-20, page 208 ). Each vessel i s considered as a cost centre, and a l l expend-itures (including the annual r e f i t , but excluding any assessment for depreciation) are costed to the p a r t i c u l a r ship. In t h i s uay the t o t a l cost f o r the ship may be determined for the budget period. Some of the costs u i l l be paid uhether or not the ship i s actually used (e.g. creu costs excluding overtime and maintenance costs of painting, e t c . ) , and may reasonably be thought of as fixed costs for the period. Costs d i r e c t l y a t t r i b u t a b l e to ships' usage u i l l be loading or conversion costs, f u e l , crew's overtime or s a i l i n g allouance. Food, etc. and these form the variable portion of t o t a l - 1 4 5 -cost. These costs i n general w i l l be unimportant compared to the f i x e d cost mentioned above, and basic cost accounting theory t e l l s us that t h i s marginal cost of usage (or incremental cost) i s the short run cost of operating the vessels. However the a c q u i s i t i o n of these vessels i s a long run, and c r i t i c a l f i n a n c i a l resource a l l o c a t i o n , and consideration lim i t e d s o l e l y to the incremental cost would r e s u l t i n the ship being seen as almost a "free good", as the variable costs are r e l a t i v e l y i n s i g n i f i c a n t . A costing system based on incremental data would not there-fore be as great a constraint favouring e f f i c i e n t usage as a system based on f u l l costing, and for t h i s reason i t i s suggested by the author that a f u l l charging rate should be adopted. The problems with f u l l costing should not be ignored however. These may be summarised as ( i ) the snowball usage e f f e c t - where the cost to each user depends on the quantity of usage by other users ( i . e . i s an uncon-t r o l l a b l e of any one manager) e.g. price per day w i l l be v i r t u a l l y halved with double the t o t a l usage, ( i i ) average cost provides the wrong incentive to the supplying department, as there i s no consideration of marginal e f f e c t s . With the present system giving the Regional Ship D i v i s i o n a monopoly over supply, i f a l l costs are to be recoverable against users, there i s no incentive for the Regional Ship D i v i s i o n to cut costs or even maintain them within reasonable l i m i t e d (of course, the t r a d i t i o n a l incremental and functional budget system has i t s use as a p o l i c i n g device under these circumstances). Because of the lack of external competition i n the r e s t r i c t e d -146-market segment of s c i e n t i f i c vessel charter, a relaxation i n the regulations preventing 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 that the most p r a c t i c a l solution i s to vieu the problem i n the long run, since a ship ac q u i s i t i o n decision cannot be taken u i t h a short time horizon, and any sale as a r e s u l t of l i t t l e usage uould undoubtedly prove a costly proposition. A l l users should be prepared to submit programmes of th e i r expected usage patterns, uhich u i t h PPBS u i l l simply be an extension of the required long term departmental programme. This u i l l then be analysed i n terms of ex i s t i n g and future requirement D f ship time, and meetings organised to accurately programme the t o t a l demand requirements i n p r a c t i c a l units (for example ship days) and to assess anticipated cost based on h i s t o r i c a l data. This assessment u i l l enable users to rethink t h e i r pro-grammes i n terms of cost data, and to make adjustments uhere approp-r i a t e , uhich u i l l have a great e f f e c t i f the demand exceeds ex i s t i n g supply (requiring the a c q u i s i t i o n of a neu vessel), but be of ne 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 exceeds demand. In t h i s case, consideration should be given to laying o f f the creu and either mothballing or h i r i n g out the vessel — or i f govern-ment po l i c y prohibits t h i s practice, then the addit i o n a l monies required should be met from a s p e c i a l fund rather than the Regional a l l o c a t i o n . When f i n a l i s e d , the programmes may be costed u i t h at least reasonable confidence, and these charging rates should be l e v i e d -147-against ALL users i n order that they are encouraged towards e f f i c i e n c y which i n the long run may lead to considerable savings i f the f l e e t can be reduced, but i n the short run w i l l not show much return because of the major e f f e c t s of the f i x e d cost com-ponents. The users at present receiving ship time as a free good (e.g. University of B r i t i s h Columbia) should, of course be i n receipt of Federal funds to allow for t h i s change i n costing concept, but far from being a "paper transaction", this.should a l i g n respons-i b i l i t y with authority enabling a l l the relevant alternatives for the funds to be examined ( i . e . the u t i l i s a t i o n of ships w i l l be subject to marginal a n a l y s i s ) . The charging of Administration costs to the various other departments i s discussed i n the appended report, page 179, and has 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 . However, the practice of further charging to projects (which was s p e c i f i c a l l y required by the Director) i s not considered appropriate by the author even though PPBS does suggest the use of " t o t a l system costs". (See comments under recommendation No. 3 on page 139.) It i s suggested that the o v e r a l l programme should bear these costs, but the sub elements or projects should not, since analysis of the various alternatives w i l l become extremely cumber-some i f an allowance (probably a r b i t r a r y ) i s made for administrative overhead. -148-7. Costs for S p e c i f i c Analyses The continuation of project costing i s s p e c i f i c a l l y recommended u i t h i n the region, and may be extended as greater experience i s gained of the s p e c i f i c inputs necessary, and the use that may be made of the outputs. S p e c i f i c amongst tjiese i s the choice betueen al t e r n a t i v e s , uhere costing of small elements of projects may be p a r t i c u l a r l y useful i n comparisons of the f o l l o u i n g type: a) betueen a l t e r n a t i v e in-house methods of achieving objectives b) betueen in-house and external methods. The l a t t e r comparison uould need a c a r e f u l study of the "relevant and incremental" costs i n order to determine the actual d o l l a r savings to be r e a l i s e d , dependent upon the action taken. 8. The Measurement of Benefits v i a Output Measures The measurement of benefits forms an important part of a PPBS, i n order that the benefits can be assessed against resource costs. A l l i e d to the problem of measuring the benefits i s the prima facie need for measuring output i n order that performance t o -wards end objectives may be assessed both as to effectiveness and e f f i c i e n c y . Perhaps the most fundamental problem u i t h analysis u i t h i n the public sector i s the d i f f i c u l t y of measuring outputs and t h e i r accrued b e n e f i t s . There u i l l aluays be same programmes that defy precise q u a n t i f i c a t i o n of benefit (e.g. a programme of park con-s t r u c t i o n ) ^ since the benefits may be intangibles such as scenic -149-beauty, etc. It i s to be hoped that PPBS does not degenerate into a "number crunching" exercise, with a l l programmes requiring a single numerical value i n order to "pass the t e s t " (receive the necessary funds). The objectives of PPBS as described i n Chapter 2 s p e c i f i c a l l y allow q u a l i t a t i v e work, which should be accorded equal status with the (seemingly) more rigorous quantitative an a l y s i s . It should be r e a l i s e d that PPBS i t s e l f i s a resource ( i . e . i t has a cost) and should not be wastefully u t i l i s e d i n areas that are not amenable to t h i s form of a n a l y s i s . The author suggests that once the general approach of PPBS has been implemented dawn to the operational l e v e l i n a Department and shown to be a p r a c t i c a l proposition, i t should be attempted i n other Departments. It i s further suggested that at the aggreg-ative l e v e l PPBS should always be useful (by forcing an examination of objectives for example) but i n Departments having less tangible benefits, the approach may not o f f e r much at the middle management l e v e l , where resources (e.g. cost) w i l l be the general measure of performance as i n the t r a d i t i o n a l budget model. This area i s d i s -cussed i n greater d e t a i l under recommendation ID on page 184 . The measurement of benefits of s c i e n t i f i c research i s extremely d i f f i c u l t , with the small but r e a l p o s s i b i l i t y of a major breakthrough, as often as not occurring by pure chance — the serendipitous discovery of 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 of funds to research requires great ingenuity and foresight by the declaim maker since i t i s v i r t u a l l y impossible, even with the aid of s t a t i s t i c a l analysis and p r o b a b i l i t y to accurately determine benefits (see recommendation 9 on page 153 ). -150-A hypothetical example from the Region might be the possible assessment of p o t e n t i a l benefits accruing i f i t uas suddenly found possible to give complete accuracy i n ueather forecasting because of a r e l a t i o n s h i p betueen movement of the uorld's major uater bodies, uind patterns and r e s u l t i n g ueather. The benefits to farmers and fishermen could conceivably be quantified ( a l b e i t . u i t h d i f f i c u l t y ) but the benefit of knouing u e l l i n advance the exact ueather pattern uould avoid the need for carrying umbrellas and raincoats i n vain, and lead to intangible benefits regarding scheduling of s o c i a l events, etc . With the technical aspects of the Region's output, namely the compilation of n a u t i c a l charts, standard s t a t i s t i c s of output are measured yearly as a crude assessment of p r o d u c t i v i t y . A l - ^ though 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 as 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 uniformity of survey areas. The t r a d i t i o n a l s t a t i s t i c s for 1971 (calendar year) are as follows: Stations b u i l t 293 Kilometers of Sounding 20,602 km Shoals examined 1,236 2 Area sounded 17,702 km Number of bottom samples 1,143 But whilst these s t a t i s t i c s are useful, no measure or r e l a t i v e d i f f i c u l t y of uorking, or a c c e s s i b i l i t y of the p a r t i c u l a r location forms part of the s t a t i s t i c s . It i s nou intended to i l l u s t r a t e a conceptual frameuork for assessing benefits from n a u t i c a l charts, before investigating a p a r t i c u l a r project performed u i t h i n the Tides and Current Section of the Hydrographic D i v i s i o n . It i s suggested by the author that the prime benefit of naut i c a l c h ^ r f c t ^ g i s "the prevention of accidents at sea by the provision of r e l i a b l e data regarding safe passages and lanes, thereby stimulating seaborne trade betueen Canada and LJorld markets" ui t h an important fringe benefit accruing to the re c r e a t i o n a l s a i l o r . The shipping tonnage of the Canadian Marine (1971 data) i s approximately 290 m i l l i o n tons, uith that for B.C. being some 68 5 m i l l i o n tons. The value of the commercial f i s h i n g catch uas approximately $172 m i l l i o n for Canada and $59 m i l l i o n for B.C.6 Canadian vessel r e g i s t r a t i o n s f o r small c r a f t (no d e f i n i t i o n of maximum tonnage available) 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 indicates the dramatic grouth i n re c r e a t i o n a l boating. A c a l c u l a t i o n of benefits could be performed by assessing the l e v e l of accidents that might be expected u i t h e x i s t i n g charts, t many of uhich date back to the 1890's (being the r e s u l t of Royal Naval lead l i n e soundings) and comparing these to the future impact of accurate charts. Since i t uould not be fe a s i b l e to have control areas u i t h d i f f e r e n t standards of charting accuracy to test accident frequency, much of the assessment must be subjective, but the o v e r a l l concept i s presented for consideration. Superimposed on t h i s hypothesis i s the comparatively recent development of the Super tanker, an extension of ship technology from cost curve data that -152-suggests that: "the cost savings r e s u l t i n g from an increase i n ship size are greatest for ships u i t h high speeds."7 The r e s u l t i s that ue must expect more of these large vessels, u i t h high speed and corresponding lack of manoeuverability to be plying t h e i r trade o f f Canadian shores, u i t h the implic-ations of a possible super tanker route to Washington from Alaska being an important consideration for the Region. To examine a p r a c t i c a l example of a project c a r r i e d Dn u i t h i n the Region, the V/ictoria Harbour model (Tides and Currents project 9, page 229 ) i s investigated. As part of the continuing investigation into applied hydraulic research, a mathematical model uas constructed of V/ictoria Harbour, Gorge Ulateruay and Portage I n l e t . A schematic diagram i s presented belou. SCHEMATIZATION of NUMERICAL MODEL of F i g . h-III. Numerical Model of V i c t o r i a Harbour, Gorge Wateruay and Portage I n l e t . Source: Marine. Sciences, P a c i f i c Region Annual Report 1971 (calendar) p. 11. -153-The model examined the e f f e c t of a proposed dam between V i c t o r i a Harbour and the Gorge upon the t i d a l behaviour in the Harbour, and also the f e a s i b i l i t y of a canal between Portage Inlet and Esquimalt Harbour. C a l i b r a t i o n of the model was achieved by f i e l d measurements of l o c a l tides and currents. The benefits of such models may be summarized as accurate prediction of the e f f e c t s of constructing 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 regrading of the bed of the bed by dredging) which may have a far reaching impact, even rendering a harbour unusable because of the inducement of seiches. A cost-benefit study of such models could only be ascertained AFTER the fact i f the model led to the avoidance of a major error i n con-s t r u c t i o n , but judicious use of 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 experience over a number of years could give reasonable confidence figures for anticipated benefits to be compared against model study costs. 9. Selection of Research Projects The decision of the appropriate l e v e l of funding for research i s an extremely complex area, generally resolved as a r e s u l t of much p o l i t i c a l discussion rather than detailed quantifiable a n a l y s i s . The f i e l d of research may be considered as two segments, applied research being the application of known techniques to solve s p e c i f i c problems, and pure or basic research being e s s e n t i a l l y study for i t s own sake, with the p o s s i b i l i t y of a serendipitous discovery having f a r reaching e f f e c t s . -154-Since applied research has a d e f i n i t e end i n view, It i s generally more amenable to systematic analysis v i a a u t i l i t y - c o s t approach, u i t h an approximate man year and research cost being com-pared to the u t i l i t y of benefits a r i s i n g from a successful solution of the problem area. Pure research i s generally funded on a more i n t u i t i v e basis, as comparative analyses are generally not applicable, This makes the process of deciding where to give support and uhere to withhold i t p a r t i c u l a r l y d i f f i c u l t . It i s suggested that the government sets the l e v e l of support as a r e s u l t of p o l i t i c a l bargaining ( i . e . a what can be afforded basis) and makes the a l l o c a t i o n of these funds to those projects which o f f e r the most promise, with periodic review to see i f t h i s promise i s being f u l f i l l e d . The reader i s referred to Science Council Report No. 18, chapter 4, for a more complete discussion of passible 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 set of evaluation c r i t e r i a i s investigated from four points of view — s c i e n t i f i c , technological, s o c i a l and operational, although the v i t a l problem of t h e i r ranking remains unresolved. Even allowing for t h i s deficiency, t h i s report provides a useful frame of reference for such as the Regional Director i n his submission of projects to the Director General for approval. 10. Strategy for the Implementation of PPBS The strategy for implementing PPBS may be fundamental to i t s acceptance within a widespread organisation such as the Federal Government. It i s not seen as s u f f i c i e n t to design a worthwhile -155-system, i t must be e f f e c t i v e l y "sold" to the s t a f f who u i l l be required to perform the many (additional) functions necessitated by i t s implementation. g Adapting Uildavsky'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 intentions and perceptions of management, and the bureaucratic system that both creates oppor-t u n i t i e s and imposes r e s t r a i n t s . In a remarkably u i t t y but per-ceptive account of strategies available the U. S. p o l i t i c a l g manager Uildavsky makes the t e l l i n g point given by his informants that: " i t ' s not uhat's i n your estimates, but hou good a p o l i t i c i a n you are that matters. Being a good p o l i t i c i a n requires c u l t i v a t i o n of an active c l i e n t e l e , the development of 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 strategies that e x p l o i t opportunities to the maximum."10 The strategy for implementation u i l l not be an across the board approach common to a l l Departments, or indeed Divisions u i t h i n a Department. The d i f f e r e n t age, backgrounds, educational t r a i n i n g , e t c . of the various personnel suggest that a single approach u i l l not be applicable to a l l s t a f f . There i s l i k e l y to be more resistance from the more senior c i v i l servants uho have "uorked t h e i r uay through the ranks", as these u i l l be people uho have prospered i n the e x i s t i n g system and may be loathe to see any change uhich might disrupt t h e i r uay of operating. It i s suggested that a "soft s e l l " approach u i l l be more l i k e l y to succeed u i t h such personnel, and opportunities should be available for self-extension courses to teach any of the neu techniques required (further discussed under recommendation 11 f o l l o u i n g ) . -156-The Department Df Environment comprises a more s c i e n t i f i c and technological work force than many Departments, and i s thus l i k e l y to be more receptive to the i n s t i g a t i o n of a newer decision technology and the upheaval i t might cause at least i n i t s i n i t i a l phases. A gradual approach i s favoured, which i n the event seems to be the method, adopted (even i f inadvertantly), with a gradual permeation of the system from the top down rather than a sudden change from the e x i s t i n g to the new (and largely unknown). It i s suggested that PPBS can be applied throughout the range of Federal government a c t i v i t i e s at least as far as the objectives 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 appraisal of those Departments that are l i k e l y to benefit most from the system (for example those with pro-grammes more l i a b l e to y i e l d to cost and benefit computation and analysis such as Public Works and Transport) where the next stage of reform, namely a matrix form of budget and accounting structure as described above could be applied to a control subset. In a subset such as the Region investigated by the author the t o t a l annual cost would be approximately $60,000 as outlined below. -157-One PPBS Analyst (versed i n general manage-ment and governmental accounting) $14,000 One c l e r i c a l support s t a f f (temporary) 6,000 One Bookkeeping assistant (to aid general accounting) 6,000 Total additional salary cost $26,000 Additional time required by a l l s t a f f i n procedures ( i n the marginal case may necessitate 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 $1,300,00a1 = 26,000 Materials etc. (taken as $2240 per man year) 6,720 Total a d d i t i o n a l cost $58,720 ^$1,300,000 i s the t o t a l salary b i l l of non ship personnel 2 $2240 i s the average administrative cost of materials per man year (see Table I I - I , pg. 181 ) It i s important to r e a l i s e that although the t o t a l a d d i t i o n a l salary b i l l i s of the order of $26,000 t h i s i s more than doubled by a consideration of overheads, uhich under a t r a d i t i o n a l budget system might be seen as a free resource. The accounting procedures should be cont r o l l e d by existing s t a f f , although the neu system should be designed a f t e r consultation betueen the PPBS analyst and chief accountant to ensure that a l l interested parties (including the operational managers) receive the required information. As discussed e a r l i e r a f u l l PPBS may not be appropriate for every Department (e.g. Justice) uhere the benefits cannot be r e a l i s t i c a l l y quantified i n monetary terms. Houever the Treasury Board should r e a l i s e that there must be exceptions to the general approach and make due allowance for t h i s f a c t , perhaps -158-even retaining certain functions on a t r a d i t i o n a l incremental budget system, whilst s a t i s f y i n g themselves that such exceptions are r e a l i s t i c ones. The Treasury Board should also ensure that a PPBS i s not abused, for there i s always the temptation that i f Departments discover that they cannot obtain the funds they want by using the given c r i t e r i a , then they may twist the p r e v a i l i n g c r i t e r i a or attempt to sabotage the workings of the system. Therefore the Treasury Board must be seen to be f a i r and reasonable i n t h e i r consideration of a l l funding requests whether based on PPBS or not ( i n the case of any s p e c i a l exceptions). 11. PPBS and Management Education At the highest government l e v e l , the usefulness of PPBS as a method for achieving r a t i o n a l a l l o c a t i o n of government ex-penditures i s well recognised — w i t n e s s Mr. Trudeau's remarks referred to i n Chapter 3. Mr. Davis, the Minister responsible f o r Marine Sciences has outlined Departmental objectives, and the ADM Finance and Administration, i n conjunction with the Treasury Board has aided the Director General of Marine Sciences i n the formulation of Goals and Targets for the Directorate. Referring to F i g . which i s an attempt to i l l u s t r a t e the various l e v e l s of hierarchy within the Department of the Environ-ment, we can see therefore that the PPBS concept has penetrated at least from the Cabinet l e v e l (Mr. Davis) to the f i f t h l e v e l (Director General of Marine Sciences i n Ottawa). As far as the Regional Director i s concerned, i t i s -159-1 Minister (Cabinet level) I 2 Deputy Minister (Chief Executive) I 3 Senior A.D.M. I k ADM Uater Management Service 5 Director General Marine Sciences (Ottawa) I 6 Director (Pacific Region) I 7 Deputy Director 8 Divisional Manager 9 (Department or Section Manager) F ig . 4-IV. Hierarchial Organisation Chart l inking Minister of the Environment to Regional Divisional Managers. apparent from the fact that the costing exercise performed by the author (and forming the appendix to this thesis) was the f i r s t study attempting to relate costs to anything other than line objects, that the idea of monitoring expenditures and performance u t i l i s ing PPBS concepts i s extremely new at this l eve l . In fact the motivation for the exercise arose from rumours regarding the poss ibi l i ty of transfer prices based on costs for certain items at present received a free goods to the Region (e.g. ship time from DREP and incremental usage of weatherships). In this event, the Region would want to make corresponding charges to users of Regional services (for example University of Br i t i sh Columbia ship usage). Certainly at the Divisional Manager or Departmental Manager level within the -ISO-organisation, the concept of PPBS i s foreign. In fact the author would suggest that technical competence commensurate with pro-f e s s i o n a l standards i s the e x i s t i n g goal at t h i s l e v e l . Because of the importance of obtaining relevant data, i t i s at t h i s managerial l e v e l where much of the workload w i l l f a l l with the successive stages i n the implementation of PPBS within the Federal Government. The author therefore would suggest an education programme, of perhaps one week's duration as a suitable medium to explain to these managers the reasons f o r , basic concepts of, and operational requirements f o r the implementation of PPBS as i t a f f e c t s them. This programme, coupled with the strategy outlined under recommendation 10 should ensure a reasonable t r a n s i t i o n from the t r a d i t i o n a l budget system to PPBS where appropriate. 12. PPBS and P o l i t i c a l Control by Legislature tdildavsky^ quotes Diesing, 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 kind of reason, because i t deals with the preservation and improvement Df decision structures, ... and unless these e x i s t there can be no reasoning and no de-c i s i o n s are passible. ... In a p o l i t i c a l decision, action i s never based on the merits of a proposal 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 that compromise i s an e s s e n t i a l part of the parliamentary democratic system i t i s u n l i k e l y that a r a t i o n a l l y determined set of programmes of any Cabinet w i l l proceed through parliament without change — indeed as stated throughout t h i s t h e s i s , the author does not contend that PPBS i s an attempt by technocrats to usurp the power given to elected o f f i c i a l s , but i s an aid to -161-enable more r a t i o n a l decision making by them. The v i t a l concern i s that PPBS does not become a numbers game. Although great importance u i l l be attached to the d e f i n i t i o n and content of ob-jec t i v e s and programmes, the implications of PPBS go far beyond s p e c i f i c p o l i c i e s . 12 Uildavsky suggests that i t i s useful to distinguish betueen policy p o l i t i c s (uhich policy u i l l be adapted), partisan p o l i t i c s (uhich party u i l l uin o f f i c e ? ) , and system p o l i t i c s (hou u i l l decision structures be set up?). PPBS i s v i t a l l y concerned ui t h the l a s t mentioned and contains an i m p l i c i t c e n t r a l i s a t i o n concept, being disaggregative rather than aggregative i n nature. Although Uidavsky remarks on the lack of s c i e n t i f i c evidence that decisions should be made c e n t r a l l y , the author f e e l s that i t i s a fundamental to the parliamentary system that the e s s e n t i a l policy decisions ARE made c e n t r a l l y by our elected representatives. Summary The foregoing suggestions are thought by the author to outline some of the techniques and concepts uorthy of study by the Region and Department of Environment, i n order that a PPBS can be e f f e c t i v e l y implemented. U h i l s t i t i s r e a l i s e d that such a system u i l l necessarily increase the operational uorkload, e s p e c i a l l y of the Administrative department, the t o t a l expected benefits from PPBS summarised i n Chapter 2 of t h i s thesis should ensure that the net ef f e c t i s an increase i n t o t a l uelfare because of increased effectiveness of decision 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 : Cost-Benefit Analysis, Systems Analysis, and Programme Budgeting" Public Administration Review XXVI, 4 (Dec. 1966) p. 292. 2. A. Llildavsky, The P o l i t i c s of the Budgetary Process, (Boston: L i t t l e , Brown & Co. 1960) p. 31. »t 3. G. S h i l l i n g l a w . Cost Accounting, Analysis and Control (Homewood 111: Irwin, 197 , pp. 593-609. 4. J . H i r s c h l e i f e r , "On the Economics of Transfer P r i c i n g " . Journal of Business 29.3 July 1956, pp. 172-184. 5. Marine Sciences Directorate: Programme Analysis (Unpublished: Ottawa, 1972), p. 26. 6. Canadian S t a t i s t i c a l Review (Ottawa: S t a t i s t i c s Canada, 1972) p. 86. 7. A. R. Ferguson, et a l . The Economic Value of the U.S. Merchant  Marine (Evanston: Transportation Centre at Northwestern University, 1961) p. 134. 8. A. LJildavsky. The P o l i t i c s of the Budgetary Process, op.cit..p.63 9. Ibid, pp. 63-126. 10. Ibid, pp 60-65. 11. A. Uildavskjj, "The 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. 12. Ibid., p. 304. -163 CHAPTER 5 SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS UITH SUGGESTIONS FOR FURTHER RESEARCH A. Summary The justification for this study as outlined in Chapter 1 uas the growing size of the federal government sector uithin 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 activities uithin the nation's GNPo The rationale for the existence of a government sector, and the budgetary system traditionally adopted uithin i t uas examined, together uith i t s ueaknesses, before outlining PPBS aims, procedure uith i t s probable impact and problem areas uithin a large bureau-cratic frameuork.. In Chapter 3, the Federal Government uas discussed in i t s operational setting, detailing the key role of the Treasury Board in the fund allocation process based on policies outlined by the government, before examining the Federal Department of the Environ-ment, which as a neuer Department (being instituted only in 1970) might be expected to be relatively free of many of the traditional institutional constraints. A subset of this Department, the Marine Sciences Directorate was studied in greater depth to investigate th progress being made towards the implementation of PPBS. -164-Chapter 4 considered one of the three Regions u i t h i n Marine Sciences Directorate, o u t l i n i n g the budgetary and casting process followed, before considering the project costing study performed by the author (and presented as the appendix to t h i s t h e s i s ) . It i s evident- that the t r a d i t i o n a l budget with i t s incremental approach to funding, and emphasis on l i n e object expenditure control i s s t i l l being followed at t h i s l e v e l despite an attempt by the Director General to apply some of the major concepts of the PPBS approach to the o v e r a l l programme. F i n a l l y several recommendations have been made to enable the aims of PPBS to be achieved within the Region, which i s considered by the author to represent a reasonable model for many of the more te c h n i c a l l y oriented departments within the Federal Government organ-i s a t i o n . B. Conclusions and Recommendations i . Conclusions The two general conclusions are a) that PPBS represents a worthwhile attempt to improve the a l l o c a t i v e e f f i c i e n c y of the vast funding within the government sector, for i t i s only by an integrated budgeting system that funds may be allocated to projects or pro-grammes based on the e f f i c i e n t achievement of pre-defined objectives. A second requirement i s one of effectiveness, to ensure that the funding DDES i n fact provide progress towards the achievement of these objectives which under the t r a d i t i o n a l system was largely presupposed. This w i l l t y p i c a l l y take the form of measuring OUTPUTS -165-of the funding to enable achievement to be assessed against some yardstick or target for the resources u t i l i s e d . The problems as outlined i n Chapter 2 should not be minimised, but u i t h thoughtful application of the system i t i s suggested that they are by no means insurmountable, and b) that although many papers on the topic of PPBS suggest that the system i s being extensively used u i t h i n the Federal 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 operational l e v e l u i t h i n the government departments, uhere many of the managers are unfamiliar u i t h the concept of PPBS, or uorse are t o t a l l y oblivious to the need for a more e f f i c i e n t a l l o c a t i v e device. At the senior l e v e l of Cabinet the concept i s being applied, and t h i s top doun approach has penetrated to the Director General l e v e l — but no further at present. The remaining penetration u i l l probably prove to be the most d i f f i c u l t to achieve, involving as i t does several thousand managers at the operational l e v e l . But achieved i t must be i f the PPBS i s to y i e l d maximum benefit i n the national a l l o c a t i o n of scarce resources among the many competing programmes u i t h i n the government sector. i i . Recommendations 1. The use of t o t a l systems costs for various programmes, u t i l i s i n g a longer budget period of say f i v e years, thus ensuring that a l l RELEVANT expenditures are considered, and obviating the "spend i t or lose i t " approach so prevalent at present. 2. Investigation into the use of transfer p r i c i n g betueen the various government departments, to stop the "free good concept" -166-from preventing optimum resource use being achieved because of the possible wasteful usage of goods seen as free by the user. 3. The gradual s h i f t (which w i l l be of necessity a slow one) away from l i n e object expenditure c l a s s i f i c a t i o n within c o l l a t o r s , to a r e d e f i n i t i o n of cost centres by projects.(or project areas) rather than simply functional sections. 4. The i n s t a l l a t i o n of an inventory system to enable a r e a l i s t i c estimate to be made of costs of using the major c a p i t a l assets consistent with the use of t o t a l systems cost (as outlined in 1 above). 5. The r e a l i s t i c appraisal of a l l c a p i t a l a c q uisitions to assess i f a cheaper t o t a l cost could be achieved by renting or lease agreements. This w i l l require the use of an "opportunity cost of c a p i t a l " and for the Region i t i s suggested that a market based rather than conceptual " s o c i a l value" would be appropriate. 6. The r a t i o n a l a l l o c a t i o n of costs of resources u t i l i s e d by more than one project, or project area, based on an i n t e l l i g e n t use of surrogates. This w i l l again aid i n the application of t o t a l systems costs as described under 1 above. 7. The use of data generated by the improved Regional information system for s p e c i f i c analyses, taking care that only the relevant data i s u t i l i s e d . 8. The compilation of benefit measures to enable outputs to be measured i n terms of achievement towards goals. (See also section C following). 9. The r a t i o n a l s e l e c t i o n of research projects to be undertaken, rather than a simple following of s c i e n t i s t s * whims and -167-fanciea. Idhilst further work needs to be undertaken in t h i s area, an excellent s t a r t i n g point i s Science Research Report IMo. 18, discussed above. 10. The importance of s e l e c t i n g an appropriate strategy for the implementation of PPBS, bearing i n mind differences in s t a f f composition, and programme analysis problems across the wide range of government a c t i v i t i e s . 11. The education of management i n PPBS concepts and procedures to a l l e v i a t e passible adverse reaction (and even sabotage) to the a d d i t i o n a l workload i t requires, and to enable a better goal congruence to be achieved between the Cabinet's goals and those of the operational l e v e l managers. 12. It i s suggested that PPBS w i l l help to put power back into the hands of the elected representatives v i a an abjective look at Departmental objectives, p o l i c i e s and programmes, and the i n -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 that favours those projects that most cl o s e l y meet them. C. Suggestions for Further Research 1. Research into the relevant i n t e r e s t rates for government projects to enable ALL competing programmes to be considered on an equal footing. 2. The measurement of the benefits of government programmes i s at present generally l i t t l e more than a guessing game. Analysts require to i d e n t i f y the r e c i p i e n t s , and perhaps even weight t h e i r accrued benefits for socio-economic goals to be achieved, and - 1 6 8 -much research i s necessary to make this task a practical one. 3. Concomitant with the above, is the treatment of those items which are generally termed the "intangibles". These .may form either benefits or costs, and their equitable treatment is necessary to enable rational choice to be made between altern-atives. 0. Closing Comment Uhilst 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 this in i t s e l f i s no mean feat. -169-LITERATURE CITED A. Books Bird, R. M. The Growth of Government Spending i n Canada-. Toronto: Canadian Tax Foundation 1972. Black, G. The Application of Systems Analysis to Government Operations. Washington D.C.: National I n s t i t u t e of Public A f f a i r s , 1966. Brennan, M.J. Theory of Economic S t a t i c s . New Jersey: Prentice-H a l l , 1970. Dale, E. Management-Theory and P r a c t i c e . 1965. Drucker, P. The Practice of Management. New York: Harper and Bros. 1954. Eaton, A.K. Essays on Taxation. Toronto: Canadian Tax Foundation, 1966. Ferguson, A.R. et a l . The Economic Value of the U.S. Merchant Marine Evanston: Transportation Centre at North Western University, 1961. Learned, E.P. et a l . Business Policy - Text and Cases. Homewood 111.: Irwin Inc. 1969. L i t t l e , I.M.D. A C r l t i q u e of Welfare Economics. Oxford: Clarendon Press, 1950. McKean, R.N. E f f i c i e n c y i n Government through Systems Analysis, with  Emphasis on Water Resources Development. New York: Wiley and Sons, 1958. Mises, L. von. Bureacracy. New Haven Press, 19*+«+. Mosher, B. Programme Budgeting, Theory and Practice with P a r t i c u l a r  Reference to the U.S. Department of the Army, 1965. Musgrave, R. The Theory of Public Finance. New York: McGraw H i l l , 1965. Shillinglaw, G. Cost Accounting, Analysis and Control. Homewood, 111: Irwin, 1972. Simon, A.H. The New Science of Management Decision. New York: Harper, I960. -170-Smithies, A. The Budgetary Process i n the United States. Neu York: McGrau H i l l , 1955. . Uildavsky, A. The P o l i t i c s of the Budgetary Process, Boston: L i t t l e , Broun & Co., 1964. B. A r t i c l e s Abert, J.G. "Structuring Cost Effectiveness Analysis", Management  Information Systems and the Public Services. Edited by H. U i l l , Neu York: Simon and Schuster, 1970. Alchian, A.A. "Cost Effectiveness of Cost Effectiveness", Management  Information Systems and the Public Services. Edited by H. U i l l , Neu York: Simon and Schuster, 1970. Anshen, M. "The Federal Budget as an Instrument for Management and Analysis", Programme Analysis and the Federal Budget, Edited by D. Novick, Cambridge: Harvard University Press, 1965. B a l l s , H.R. " E f f i c i e n t Public Administration", Management Inform- ation Systems and the Public Services. Edited by H . U i l l , Neu York: Simon and Schuster, 1970. . "Financial Management i n Government", Management Inform- ation Systems and the Public Services. Edited by H. U i l l , Neu York: Simon and Schuster, 1970. . "The Budget and i t s Function", Management Information Systems and the Public Services. Edited by H. U i l l . Neu York: Simon and Schuster, 1970. Baumol, U.J., "On the Appropriate Discount Rate for the Evaluation of Public Projects", Programme Budgeting and Benefit-Cost  Analysis. Edited by H.H. Hinrichs and G.M.Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. Beard, C A . "Prefatory Nate", The Need f o r a National Budget, Uashington, D.C. 1912. Breckner, N.U. "Costing of Systems", Defence Management. Edited by S. Enke, Neu Jersey: Prentice H a l l , 1967. Broun, P.L. "Establishing a Programme Structure", Planning fProgramming, Budgeting, Edited by F.J.Lyden and E.G.Miller, Chicago: Markham, 1972. Churchman, C U . and Schainblatt, A.H. "PPB: Hou can i t be Implemented", Planning,Programming, Budgeting, Edited by F.J.Lyden and E.G. M i l l e r . Chicago: Markham, 1972. -171-Currie, G.N.M., "E f f i c i e n c y vs Service i n Public Administration", Management Information Systems and the Public Services. Edited by H. U i l l . New York: Simon and Schuster, 1970. Deniston, O.L. et a l . "Evaluation of Programme Effectiveness and Programme E f f i c i e n c y " , Planning, Programming, Budgeting. Edited by F.J. Lyden and E.G. M i l l e r . Chicago: Markham, 1972. Fisher, G.H. "The Role of Cost U t i l i t y Analysis i n Programme Budgeting", Programme Analysis and the Federal Budget. Edited by D. Novick. Cambridge: Howard University Press, 1965. Grosse, R.N. and Proschan, A. "The Annual Cycle: Planning, Pro-gramming Budgeting", Defence Management. Edited- by 5. Enke, New Jersey: Prentice-Hall, 1967. Haldi, J . "Programme Monitoring, Evaluation and Control", Programme  Budgeting and Benefit-Cost Analysis. Edited by H.H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. Hatry, H.P. " C r i t e r i a for Evaluation i n Planning State and Local Programmes", Programme Budgeting and Benefit-Cost Analysis. Edited by H. H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. Henderson, P.O. "Investment C r i t e r i a f o r Public Enterprises", Public Enterprise. Edited by R. Turvey, London: Penguin, 1968. Hitch, C.J. "Programme Budgeting", Management Information Systems  and the Public Services. Edited by H. U i l l . New York: Simon and Schuster, 1970. Jernberg, J . "Information Change and Congressional Behaviour: A Caveat for PPB Reformers", Planning, Programming, Budgeting. Edited by F. J . Lyden and E.G. M i l l e r . Chicago: Markham, 1972. Lewis, V.B. "Toward a Theory of Budgeting", Planning, Programming, Budgeting. Edited by F.J. Lyden and E.G. M i l l e r , Chicago: Markham, 1972. L i k e r t , R. "An Overview of New Patterns of Management", Current Perspectives i n S o c i a l Psychology, Edited by E. P. Hollander and R. G. Hunt. New York: Oxford University Press, 1971. L i t t l e , P.L. and M i t c h e l l , C.L. "The Programme Budget: Planning and Control for the Public Sector", Management Information Systems  and the Public Services. Edited by H. U i l l , New York: Simon and Schuster, 1970. -172-McGilvery, F.E. "Programme and Responsibility Cost Accounting", Planning, Programming, Budgeting. Edited by F. J . Lyden and E.G. M i l l e r . Chicago: Markham, 1972. McKean R.N. "Remaining D i f f i c u l t i e s i n Programme Budgeting", Defence Management. Edited by S. Enke, Neu Jersey: Prentice-H a l l , 1967. , and Anshen M. "Limitations, Risks and Problems (of Programme Budgeting)" Programme Analysis and the Federal  Budget. Edited by D. Novick, Cambridge: Harvard University Press, 1965. Mottley, CM. "Strategic Planning" Planning, Programming, Budgeting. Edited by F. J . Lyden and E. G. M i l l e r . Chicago: Markham, 1972. Niskasen, U.A. "Defence Resource A l l o c a t i o n Process" Defence Manage-ment. Edited by S. Enke. Neu Jersey: Prentice H a l l , 1967. • Novick, D. "The Department of Defence" Programme Analysis and the Federal Budget. Edited by D. Novick, Cambridge: Harvard University Press, 1965. Ott, D.J. and Ott, A.F. "The Budget Process", Planning, Programming, Budgeting. Edited by F. J . Lyden and E. G. M i l l e r . Chicago: Markham, 1972. - ' Rouen, H. "Objectives, Alternatives, Costs and Effectiveness". Programme Budgeting and Benefit-Cost Analysis. Edited by. H. H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. Scherer, F.M. "Government Research and Development Programmes" Measuring Benefits of Government Investments. Edited by R. Dorfman. Washington D.C: Brookings I n s t i t u t i o n , Studies of Government Finance, 1965. Schick, A. "Multipurpose Budget Systems" Programme Budgeting and  and Benefit-Cost Analysis. Edited by H. H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. f "Systems P o l i t i c s and Systems Budgeting" Planning, Programming, Budgeting, Edited by F. J . Lyden and E. G. M i l l e r , Chicago: Markham, 1972." ' , "The Road to PPB: The Stages of Budget Reform". Planning, Programming, Budgeting. Edited by F. J . Lyden and E. G. M i l l e r . Chicago: Markham 1972. Schultze, G.L. "Why Benefit-Cost Analysis?" Programme Budgeting and  Benefit-Cost Analysis. Edited by H. H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. -173-Staats, E. B. "Survey of Use by Federal Agencies Df Discounting Techniques i n Evaluating Future Programmes". Programme  Budgeting and Benefit-Cost Analysis. Edited by H. H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1929. Stockfish, J.A. "The Interest Rate Applicable to Government Invest-ment Projects", Programme Budgeting and Benefit Cost  Analysis, Edited by H. H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. Taylor, G.M. "Designing the Programme Structure", Programme Budgeting  and Benefit-Cost Analysis. Edited by H. H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. Uright, C. "The Concept of a Programme Budget", Programme Budgeting  and Benefit-Cost Analysis. Edited by H. H. Hinrichs and G. M. Taylor. P a c i f i c Palisades: Goodyear Publishing, 1969. C. Government Publications 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 Organisation Act 1970. Report of Royal Commission on Government Organisation, Vol. I, Ottawa, 1962. , Transcript of Prime Minister's Press Conference. Ottawa, Aug. 13th, 1969. Department of the Environment, Environment Canada, Its Organisation  and Objectives. Ottawa: Information Canada, 1972. , Marine Sciences Directorate Annual Report 1971. Ottawa: Information Canada, 1972. , Marine Sciences Directorate, Unpublished Internal Draft Memorandum 1972. , , , Marine Sciences Directorate: Programme Analysis Handbook, Ottawa, 1972. , Marine Sciences Directorate: Programme Analysis Handbook (Revised). Ottawa, 1973. Province of Ontario, E f f e c t i v e Management through PPBS. Toronto, 1969. -174-Science Council, Report Mo. 18. Ottaua: Information Canada, 1972. S t a t i s t i c s Canada, Canada Year Book 1972. Ottawa: Information Canada, 1972. Treasury Board, Memorandum for Cabinet Approval March 24th 1972. Ottaua, Unpublished, 1972. ; , News Release on Tabling of 1970-71 Estimates. Ottawa, 1969. , News Release June 26th, 1972. Ottaua, 1972. , Programme Forecast and Estimates Manual. Ottaua, 1969. , Planning, Programming, Budgeting Guide, Ottaua, 1969. United States, Commission on Organisation of the Executive Branch of the Government Budgeting and Accounting. Washington D.C.: U.S. Government Printing O f f i c e , 1948. , Department of Defence Directive 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 - Introduction of Neu Government-wide Planning and Budgeting System (August 25th, 1965) Washington, D.C. 1965. , Subcommittee on Economy i n Government of the Joint Economic Committee,Congress of United States. The Planning, Programming, Budgeting System: Progress and P o t e n t i a l s . Washington D.C. 1969. , Task Force on Budget and Accounting. Report on Budgeting and Accounting i n the U.S. Government. Washington D.C: U.S. Government Printing O f f i c e , 1955. D. Journals Posner, B. "Planning-Programming-Budgeting" Federal Accountant, 15 (Summer 1966) pp. 9-21. Buchanan, J . M. "Positive Economics, Welfare Economics, and P o l i t i c a l Economy" Journal of Law and Economics 2(1959) pp.124-138. Foley, D.K. "Resource A l l o c a t i o n and the Public Sector". Yale Economic  Essays 7 (1967) pp. 45-98. Hammond, R.J. "Convention and Limitation i n Benefit-Cost Analysis" Natural Resources Journal 6(1966) pp. 195-222. -175-Hansard. Commons Debates 27 January 1971. H i r s c h l e i f e r , J . "On the Economics of Transfer P r i c i n g " Journal  of Business 29.3 (July 1956) pp. 172-184. Key, V/.O. "The Lack of a Budgetary Theory" American P o l i t i c a l  Science Review 34(1940). Marglin, S.A. "The S o c i a l Rate of Discount and the Optimal Rate of Investment" The Quarterly Journal of Economics (Feb 1963) pp. 95-111). New York Bureau of Municipal Research, "Next Steps i n the Development of a Budget Procedure for the City of New York", Municipal Research (57) 1915. Samuelson, P.A. "Aspects of Public Expenditure Theories" Review of  Economics and S t a t i s t i c s 50(1958) pp. 332-338. Schindler F. and Lanphier CM. "Social Research and Participatory Democracy in Canada" Canadian Public Administration XII No. 4 (winter 1969). Ward, J . T. "Cost-Benefit Analysis" Journal of Public Administration (New Zealand) 29 (March 1967) pp. 18-30. Weidenbaum, M.L. "Programme Budgeting: Applying Economic Analysis to Government Expenditure Decisions" Business and Government  Review, 7 (July-August 1966) pp. 22-31. Uildavsky, A. "The P o l i t i c a l Economy of E f f i c i e n c y : Cost-Benefit Analysis Systems Analysis and Programme Budgeting" Public  Administration Review XXVI, 4(December 1966) pp. 292-310. E. Lectures and Papers Benson, E.J. Address given to Ontario I n s t i t u t e of Chartered Accountants, Waterloo, Ontario, June 3rd, 1968. Doern, G. B. Recent Changes i n the Philosophy of Policy Making i n  Canada. Unpublished Paper 1971 (Mimeographed). Johnson A.W. PPB and Decision Making i n the Government of Canada. Address to 50th Anniversary Conference of Society of I n d u s t r i a l Accountants, June 18th, 1970. , The Treasury Board of Canada and the Machinery of Government of the 1970's. Unpublished paper 1971 (Mimeographed). -176-IMovick, D. O r i g i n and H i s t o r y of Programme Budgeting. RAIMD paper P3427. Santa Monica, 1966, 11 pp. Quade E.S. Systems A n a l y s i s Techniques f o r Planning, Programming, Budgeting. RAND paper P3322. Santa Monica, 1966, 31 pp. Royce, P.J. Some P r a c t i c a l Problems of Cost-Benefit A n a l y s i s f o r Major Highways P r o j e c t s (unpublished paper 1972). Smithies A. "Outline f o r D i s c u s s i o n " paper presented at PPB Seminar 1966 (mimeographed). Yeomans, D.R. "PPB in- the Federal Government of Canada" Address given at 26th Annual Spring Conference, The Personnel A s s o c i a t i o n of Toronto, A p r i l 5th, 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 Division -179-A) ADMINISTRATION (INCLUDING LIBRARY) - COLLATOR 3130 Administration, as a service unit, provides managerial administrative and c l e r i c a l support to the whole organization. It is therefore reasonable to apply the costs incurred by the unit as an overhead to a l l other sections benefittinp from the services provided. It was thought that a blanket allocation of these costs by a simple pro-rating exercise based on such parameters as i) total budget or i i ) total manpower would be rather oversimplified, and no basic understanding of the costs of the various functions of the administrative effort would be forthcoming. It was therefore decided to examine the cost structure of the section, subsectionalize based on functions where appropriate, and apportion these costs on "proxy variables" within each subsection. Costs which could be allocated directly to various other cost centres (collators) were not included in the overall apportionment, but extracted from the various cost categories and considered separately. Examples of these are library costs and telephone accounts, each of which were apportioned to the cost centres as the result 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 by the l i s t given below: i . Procurement i i . Personnel i i i . F i l i n g and Typing Services iv. Supervisor and Secretary v. Director and Secretary v i . Deputy Director and Secretary v i i . Finance -180-The next task was to assign costs to these functions prior to an apportionment of the costs to the various collators. The salary cost was apportioned from ledger totals based on the budgeted figures, and travel was allocated directly from ledger entries. a) Salaries Total salary b i l l as per ledger $189,500.32 Less: Library allocation (see appendix I) (910.00) To be apportioned $188,590.32 b) Non Salary Expenditure Total of non salary admin, expenditure = $ 97,293.20 Less: i . Actual library allocation - not including casual c l e r i c a l ass't, but including librarian (paid by contract)- see Appendix I (11,354.02) i i . Travel warrants (9,632.00) i i i . Travel - non warrant (7,991.29) iv. Telephones (see Appendix II) (17,836.10) 'Total to be apportioned $ 50,479.79 The basis for 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 section, but the small discrepancy in the man year figures w i l l have a negligible effect in the apportionment. -181-TABLE I I - l Salaries Man Years Cost Apportionment i . Procurement $ 26,227.00 3.25 $ 8,400.00 i i . Personnel 19,634.00 2.50 6,150.00 i i i . 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. v i . Deputy Director and Secretary 28,851.00 ,2.00 4,480.00 v i i . Finance 12,956.00 1.75 3,920.00 PLUS Direct Allocations a. Secretary to Regional Hydrographer (3135) 6,895.00 1.00 2,240.00 b. Secretary to Frozen Sea Research Group (3150) 6,020.00 1.00 2,240.00 c. Secretary to W. Vancouver Group (3155) 5,378.00 1.00' 2,240.00 d. Administrative Assistant to Sailing Directions Group (3135) 4,110.00 0.75 1,680.00 TOTALS $188,590.32 21.50* $50,479.79 * cf 21.25 given by Personnel Section in year end summary. TABLE II.2 (i) ( i i ) ( i i i ) (iv) (v) (vi) Deputy Directors Secretary (vii) Direct Allocations Totals Procure-ment Personnel Filing & Typing Supervisor & Secretary Director & Secretary Finance (a) (3135) (b) (3150) (c) (3155) (d) (3135) Salaries $188,590.32 26,227.00 19,634.00 27,363.00 18,775.00 32,381.32 28,851.00 12,956.00 6,895.00 6,020.00 5,378.00 4,110.00 Travel (Warrant) f 9,632.00 284.00 961.00 5,357.00 3,030.00 Travel (Non Warrant) 7,991.29 - 220.30 67.36 1,679.62 2,665.21 2,150.80 1,208.00 Telephones 3,019.32 568.74 203.10 280.35 387.30 930.88 459.75 189.20 Library 1,812.00 604.00 604.00 604.00 A l l Other Expenditures 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 TOTALS $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 i i . Personnel i i i . Filing & Typing Services iv. Supervisor & Secretary v. Director & Secretary - Pro Rata to number of requisitions Pro Rata to total number of staff employed by section in year Based on subjective apportionment (see Table II.3) - Based on subjective estimate of work-load on other functions (i) 20% (ii) 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 al l Hydrographic salary dollars counted $0.25. vi. Deputy Director & Secretary -v i i . Finance Pro Rata to Personnel per Section but al l Hydrographic personnel counted 0.6x Pro Rata to number of ledger entries, including requisitioned & non-requisitioned expenditures. b) Apportionment Analysis See Table II.3 following. b) Apportionment A n a l y s i s TABLE II.3 3130 Admin. 3135 Hydrog. 3136 T i d a l 3137 Charts 3150 Frozen Sea 3151 Offshore Oceanog. 3152 Ocean Mixing 3154 Ocean Chem. 3155 M.Van. 3160-9 Ships T o t a l s i . Procurement Re q u i s i t i o n s 150 322 228 93 173 134 25 105 129 1,527 2,886 Z 5.2 . 11.1 7.9 3.2 6.0 4.6 0.9 3.6 4.5 53.0 100 11. Personnel T o t a l Employees 26 42 18 31 14 14 5 10 11 184 355 X 7.3 11.8 5.1 8.7 3.9 3.9 1.4 2.8 3.1 52.0 100 i l l . F i l i n g & Typing S u b j e c t i v e X 60 10 5 2 1 5 3 2 2 10 100 See Table II.4 i v . S u p e r v i s o r & S e c r e t a r y f o r step down v. D i r e c t o r & S e c r e t a r y Actual Salary $190,000 407,000 155,000 163,000 143,000 88,000 35,000 59,000 143,000 160,000 Apportionable S a l a r y $190,000 102,000 39,000 41,000 143,000 88,000 35,000 59,000 143,000 160,000 SIM 1 19.0 10.2 3.9 4.1 14.3 8.8 3.5 5.9 14.3 16.0 100 v i . Deputy D i r e c t o r & Sec r e t a r y A c t u a l Number Apportionable Number 19 19 36 2 1 . 6 14 8.4 19 11.4 10 10 13 13 4 4 3 3 8 8 138 138 236.4 X 8.1 3.6 4.8 4.2 5.5 1.7 1..3 3.4 58.3 100.0 v i i . Finance Reqa. & Claims 272 501 309 150 226 234 43 144 184 1,773 3,836 Z 7.1 13.1 8.1 3.9 5.9 6.0 1.1 3.8 4.8 46.2 100 I <-> 03 •c-1 Primary Apportionment Of Administrative Costs TABLE II.4 (i) (ii) ( i i i ) (iv) (v) (vi) (vii) Filing & Supervisor Director & Deputy Dir. Direct Collator Procurement Personnel Typing & Secretary Secretary & Secretary Finance Allocations Totals $35,195.74 26,491.40 37,880.50 26,886.92 46,418.41 39,575.55 18,273.20 30,803.00 261,524.72 Step Down of (iv) 5,372.34 10,758.00 1,348.00 (26,886.92) 1,348.00 1,348.00 6,712.58 - -To Be Apportioned 40,568.08 37,249.40 39,228.50 - 47.766.41 40,923.55 24,985.78 30,803.00 261,524.72 3130 2,110.00 2,720.00 23,370.00 9,047.35 3,318.00 1,775.00 _ 42,340.35 3135 4,500.00 4,400.00 3,912.00 \ 4,880.00 3,720.00 3,280.00 14,925.00 39,617.00 3136 3,210.00 1,900.00 1,955.00 V 1,865.00 . 1,470.00 2,025.00 - 12,425.00 3137 1,300.00 3,240.00 782.00 y 1,960.00 1,964.00 975.00 - 10,221.00 3150 2,440.00 1,455.00 391.00 6,850.00 1,720.00 1,475.00 8,260.00 22,591.00 3151 1,870.00 1,455.00 1,955.00 y 4,260.00 2,250.00 1,500.00 - 13,290.00 3152 366.00 522.00 1,173.00 \ 1,675.00 695.00 275.00 - 4,706.00 3154 1,460.00 1,043.00 782.00 \ 2,825.00 531.00 950.00 - 7,591.00 3155 1,830.00 1,157.00 782.00 \ 6,850.00 1,390.00 1,200.00 7,618.00 20,827.00 3160-9 21,482.08 19,357.40 4,026.50 7,554.06 23,865.55 11,530.78 - 87,816.37 I CD I -186-Secondary A l l o c a t i o n Of Administrat ion (3130) Costs - Pro Rated To Primary Apportionment - Includes Direct A l l o c a t i o n From 3135 of $10,342.69 (For Regional Hydrographer)-see sect ion on c o l l a t o r 3135 for de ta i l s TABLE II.5 Section Co l la tor Primary Apportionment Secondary Apportionment Total + D i rect Assignment From 3135 F ina l Total Admin. 3130 $42,340.35 (42,340.35) - - . Hydrog. 3135 39,617.00 7,680.00 47,297.00 1,870.00 4 9 , 1 6 7 . 0 0 ( 1 ) Tida l 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 28,026.00^ 2 ) 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 2 5 , 8 4 0 . 0 0 ( 3 ) Ships 3160-9 87,816.37 16,935.35 104,751.72 4,039.69 108,791.41 Direct A l loca t ions Considered Separately Use (1) $34,242.00 (2) $19,766.00 (3) $18,222.00 Although the.preceding ana lys is portrays a hopefu l ly truer i n d i c a t i o n than a blanket a l l o c a t i o n of costs incurred i n providing Administrat ive services to each Section within the Reglon ( i t i s rather cumbersome to apply on a continuing basis. It was decided therefore to check the apportionments as ca lcula ted against -187-th e more simple approaches described earlier viz i . pro rata to budget allocation i i . pro rata to total manpower. The results are presented in the table below: TABLE II.6 Rational Analysis i . Pro Rata To Budget i i . Pro Rata To Manpower Section Collator Apportionment 3130 Only % 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 i 5.6 Ships 3160-9 104,752 40.0 2,120,026 51.3 136 54.9 ' 100.0 100.0 100.0 j It can be seen that neither of the simple approaches give an accurate portrayal of incurred costs, but in the interests of ease of calculation, and the relatively small proportion of Administrative overhead as a total of cost per Section, either method could be adopted as a reasonable "proxy". Alternatively, the percentages worked above for the rational analysis can be applied i f i t i s thought that there has been no material shift in the Administrative workload in future years. - 1 8 8 -APPEND1X 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 Administration collator and 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 skills specific to the com-prehensive 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 responsibilities are included in the definition of any group in another category. Minimum Qualifications: Each of the group definitions in the category includes a statement of "Minimum Qualifications". These requirements are to apply without modification to a l l new entrants appointed to positions in the category on or after July 1, 1967. With respect to experienced public servants who may not possess the formal education prescribed in the definitions but who are certified or who are qualified for cert-i f i c a t i o n in their jobs on June 30, 1967, in classes prescribed by the C i v i l Service Commission, the statements are intended to indicate the norms against which the qualifications of the individual may be assessed in order to judge whether or not the combination of his education, training and experience provides, for the particular job being f i l l e d , qualifications equal to or higher than those prescribed in the "Minimum Qualifications" of the relevant occupational group." Mrs. Stastny, the libr a r i a n , has prepared a l i s t of staff who, in her opinion, meet the above c r i t e r i a in connection with the librarian's job s p e c i f i -cation, and this has been used as a basis for the apportionment of costs to the various Sections. This l i s t of staff i s shown on page 18, Table 11-7 TABLE II.7 Admin. (3130) Hydrography (3135) Tides & Currents (3136) Charts (3137) Frozen Sea (3150) Offshore Oceanog. (3151) Ocean Mixing (3152) Ocean Chemistry (3154) W. Vancouver (3155) Ship Admin. (3160) SE REM 3 EG ESS 11 PC 3 DD 8 SE RES 2 SE RES 1 SE RES 2 SE RES 1 SE RES 3 SE REM 2 - EG ESS 10 PC 2 SE RES 2 EG ESS 6 SE RES 1 - SE RES 2 AS 3 EG ESS 9 PC 2 PC 2 SE RES 3 SO 2 EG ESS 9 EG ESS 6 EG ESS 7 SE RES 1 EG ESS 8 EG ESS 9 EG ESS 7 EG ESS 9 EG ESS 6 EG ESS 8 EG ESS 8 GT 4 EG ESS 7 EG ESS 6 EG ESS 9 3 12 4 1 4 4 2 1 6 -Tota l - 37 No. -191-L i b r a r y Account 1971/72 Statement I Funds Expended On Library Material And Services 1971-72 A. Li b r a r y Materials C o l l a t o r s A c t u a l l y Charged 1. Books 2. Journal subscriptions (current year) 3. Journal backruns (hard copy) 4. Government Publ i c a t i o n s 5. Microforms (Other than Government Publications) 6. Library supplies $3,350.00 4,150.00 1,730.00 250.00 1,100.00 210.00 $10,790.00 Various Various Various Various Various (3130) B. Li b r a r y Services 1. P r i n t i n g 2. Binding 3. Travel 4. Equipment s e r v i c i n g C. L i b r a r y Equipment 1. Micro equipment 2. Furnishings D. S a l a r i e s 1. P r o f e s s i o n a l (by contract) 2. C l e r i c a l - casual part-time $ 150.00 150.00 200.00 2,600.00 1,120.00 6,160.00 910.00 500.00 (3130) 3,720.00 (3130) (3130) (Sals 3130) 7,070.00 $22,080.00 -192-A detailed examination was made of the library accounts f i l e to determine the actual value of materials Al-5 (see above) purchased under each collator code. From the analysis, the following actual allocation schedule was obtained. TABLE II.8 From From Total No. of Total Collator Statement 1 Analysis Allocation Professionals" Apportionment 3130 $11,500 $ 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 — — Total 22,080.00 37 22,364.40 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. -193-APPENDIX II - TELEPHONE EXPENSES The telephone accounts f o r the Directorate are paid under the general Administration account under two cost categories, each further separated into l o c a l and long distance c a l l s . i . BC T e l i i . Centrex No charge i s made by BC T e l for l o c a l c a l l s , and i t was assumed that t h i s cost Is recovered under the general r e n t a l charges, which was therefore a l l o c a t e d equally to each telephone i n s t a l l a t i o n w i t h i n the Dir e c t o r a t e . Long distance c a l l s , however, are monitored, and charges and itemized g i v i n g date, number d i a l l e d and time of c a l l ( i n minutes) for each telephone. From the monthly data, a t o t a l cost for long distance c a l l s made from each telephone was ascertained f o r the year. The Centrex system i s operated by the Federal Government and a monthly account i s submitted for both short and long distance c a l l s , but no item i z a t i o n of the charges i s made. The method adopted for apportionment was to consider the short distance c a l l s as being a function of the number of telephones (and therefore equally apportionable to each unit) and the long distance charges were apportioned i n the same r a t i o as the t o t a l BC Tel long distance charges. Apportionment Data BC T e l Rental charges Long distance charges Centrex Short distance charges Long distance charges TOTAL $ 5,840.32 3,678.70 1,144.50 7,401.83 $18,065.35 -194-Number of separate installations 32 Therefore standard cost per telephone = 5,840.32 + 1,144.50 = $ 218.00 For ease of calculation, the following simple formula was adopted. CHARGE PER PHONE = $200 + (3 X BC TEL LONG DISTANCE CHARGES) = $17,836.10 The total amount apportioned by this method i s ($18,065.35 - $17,836.10 = $229.25) less than the total account, but the discrepancy i s thought negligible. A schedule of cost apportionment i s shown on page 23. (Table II.9). These cost apportionments are applied as appropriate to form part of the total personnel costs in the various analyses of cost centres found later in this report. 32 BC Tel long distance calls allocated as per accounts Centrex long distance charges 3,678.70 7,401.83 -195-Telephone Cost Apportionment Schedule TABLE II.9 j Department Tel. No.' User(s) Cost Apportionment Admin. (3130) 3383 Dr. Stewart $ 930.88 3546 Dr. English 459.75 3188 Mr. Bolton 344.22 3505 Mr. Gutfriend 387.30 3301 Mr. Wills 729.12 3521 Mr. Adair, Mr. Crouch 366.99 3659 Mr. Cotton, Mrs. Vinden 203.10 3203 Mrs. Buie 280.35 3204 Mr. Parsons 200.00 3595 Mrs. Stastny 284.40 3698 Mr. Gravel 201.75 Hydrog. (3135) 3239 Mr. Sandilands, Mr. Huggett 408.00 Messrs. Clarke, Coldham, Tamasi, Raymond, Eaton, Larkin 334.65 3892 Mr. Mcintosh 321.21 Messrs. Lusk, O'Connor, Mortimer, Popejoy, Yee, Hlina, Fujino 249.90 3653 Mr. Richardson, Mr. Woods 217.50 3523 Messrs. Anderson, Lee, Pierce, Vosburgh, 2,283.90 3642 Mr. Jones, Mr. Chivas 235.35 3638 Mr. Watt 1,184.25 3623 Electronics Lab 604.32 Tidal (3136) 3300 Mr. Wigen 756.45 3354 Mr. Rapatz 893.34 3687 Mr. Bath, Mr. Douglas 377.16 , 3130 Mr. Ages 431.49 Charts (3137) 3584 Mr. Smithers 275.10 Mr. Banyard 248.85 3830 Mr. Nast 315.45 Offshore Oceanog. (3151) 3345 Dr. Garrett 895.32 3159 Dr. Thomson 491.70 3331 Dr. Tabata 267.27 3362 Messrs. Abbott-Smith, Hansen, Smith, De Jong, Minkley, Luscombe 549.33 Ocean Mixing (3152) 3286 Dr. Nasmyth 287.40 3377 Dr. Gower 200.30 Ship Admin. (3160) 3886 Mr. Geldart, Capt. Green 1,251.99 3197 Workshop Foreman 368.01 $17,836.10 -196-B) SHIP DIVISION - COLLATORS 3160-69 The ship budget for the Region totalled some $2,600,000 or approximately 50% of the total Regional expenditure. In addition to the above costs, use was made of Canadian forces Auxiliary 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 totals adjusted as necessary, and then an apportionment of these costs to the various collators 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 is a useful decision making tool, since the daily cost would rise with decreasing usage,giving an indication to management of less efficient use of resources, and could form part of the input for a continuing operation versus charter decision. Capital costs have been included in this allocation, because with the exception of "Revisor", which was generally troublesome in operation and required two new engines, the capital expenditures form less than 7% of the total expend-iture, but no attempt has been made to include any cost allowance for depreciation. Ship Administration (3160) includes a H depot costs and r e l i e f crew personnel 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 total cost per vessel to be determined. -197-Both the Marine Superintendent's and DREP's records were examined to f i n d ship usage for the year, and a cost per day was determined based on T o t a l Apportionable Cost No. of Days at Sea The days at sea category includes loading and unloading, and a l s o any time spent i n ports other than Esquimalt and V i c t o r i a . The cost per day as determined above was then applied to a l l users and the t o t a l ship usage cost per s e c t i o n ascertained. These "charges" are subdivided i n t o c o n t r i b u t i o n to project costs under the relevant c o l l a t o r sections l a t e r i n t h i s report. Ship Costs - Ledger Totals And Adjustments TABLE 11.10 C o l l a t o r Sa lar ies Other Op. & Mtce. Capi ta l Tota l Remarks 3160 Admin. $159,535.09 (6,000.00) 159,762.68 (107,500.00) 24,573.43 343,871.20 (113,500.00) Mackenzie Charter-Transfer to 3166 To be apportioned 153,535.09 52,262.68 24,573.43 230,371.20 3161 Parizeau 338,452.35 331,021.90 (27,034.54) 4,379.60 27,034.54 673,853.85 Repair & upkeep includes remote contro l system - Transfer to Capi ta l To be apportioned 338,452.35 303,987.36 31,414.14 673,853.85 3162 Wm. J . Stewart 465,993.37 179,977.73 12,069.44 658,040.54 To be apportioned 3163 Vector 173,542.47 86,399.59 1,153.51 261,095.57 To be apportioned 3164 Richardson 45,190.79 10,026.60 651.08 55,868.47 To be apportioned 3165 Revisor 7,745.50 10,614.82 (9,156.01) 2,699.62 9,156.01 17,168.58 21,059.94 17,168.58 Repair & upkeep includes $9,156.01 for engine - Transfer to Cap i ta l Transferred from 3168 To be apportioned 7,745.50 1,458.81 29,024.21 38,228.52 3166 Mackenzie Charter 6,000.00 107,500.00 -113,500.00 Transferred from 3160 To be apportioned 3168 Launches - 42,217.76 (17,168.58) 41,206.20 83,423.96 (17,168.58) Repair & upkeep includes engines for Revisor - Transfer to 3165 Cap i ta l to be apportioned 25,049.18 41,206.20 66,255.38 3169 Laymore 156,584.71 215,336.39 18,536.29 390.457.39 To be apportioned U3 CO I Ship Cost - To ta l A l l o c a t i o n To Vessels (Includes Admin. (3130) & Ship Admin. (3160) Overheads) TABLE 11.11 3160 Ship Admin. 3161 Parizeau 3162 Wm. J . Stewart 3163 Vector 3164 Richardson 3165 Revisor 3166 Mackenzie Charter 3168 Launches 3169 Laymore $230,371.20 1,620.00 108,791.Al 673,853.85 658,040.54 261,095.57 55,868.47 38,228.52 113,500.00 66,255.38 390,457.39 Apportionable Costs Telephones Add Admin. (3130) Overhead 340,782.61 (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 Total Overhead Step Down of 0/H $ 774,266.77 756,240.54 300,095.57 64,208.47 43,928.52 130,400.00 76,145.38 452,797.08 F i n a l Apportionable Costs I Ship Usage Summary Sheet 1971/72 -200-Vessel: "Parlreau" (3161) Total Apportlonable Cost - $774,266.77 No. of Days at Sea - 212 .'. Approx. Cost Per Day » $3,650.00 Use 1. Total Days At Sea 2. Conversions (Foreign Port Load & Unload) TABLE 11.12 Date Days Use User UBC UVIC DREP FRB 3135 3136 3155 Other Self Mtce. Refits Trials etc April 1971 19(3) 5 1 2 ' 15(2) 5 4(1)CM Albemi Inlet May 30 1 1 2 30 - - -1 Conv. f o r A r r t l r - - -June (1) 28 1 2 — — - -(l)Loadil for Arctic 28 Conv. fnr A r r M r ¥ - - -1 Sea Trials July 29(1) 1 2 - - - 29(l)Arcti c - - -Aug. 30 1 1 2 - - - - 30 Arctic 1 - - • -Sept. 23(1) 4 1 2 4 - - - 23(l)Arcti c - - -Oct. 6(1) 24 1 2 6(1) 24 - . - • - • - -• -Nov. 14(2) 1 2 8(2) 2 - - - 4 CM Baynes Channel - -Dtc. 3(1) 1 2 - 3(1) - - - - - -25 Refit. Jon. 1972 12(1) 1 2 3 6(1) 3CM Jua de Puca BaynesX h 14 Refit Feb. 13(2) 1 2 8(1) 5(1) Baynes Qi -Tr i a l Is, Race Rocks 1 March 19(1) 1 2 l8(l)-(4 J (1) Juanij ncajHaro ^Georgia ^VanHbr. 1(3151) Wave C Model • lmate 5 S.M. Total Days 212 67 6 - 16 85 37 - 1 % 100 31.6 2.8 -• 7.6 40.1 17.4 - 0.5 $ Value $244,796.77 21,700 - 58,900 310,500 134,500 - 3,870 . Ship Usage Summary Sheet 1971/72 Vessel: "Wm. J. Stewart" (3162) Total Apportionable Cost - $756,240.54 No. of Days at Sea - 214 .*. Approx. Cost Per Day - $3,530.00 Use 1. Total Days At Sea 2. Conversion (Foreign Port Load & Unload) TABLE 11.13 Dt.te Days Use User UBC UVIC DREP FRB 3135 3136 3155 Other Self Mtce. Refits Trials etc April 1971 20(1) 5 ' 1 2 20(1) 11 T 9(1) of Ge 5 eng. -Str. prgia May 20(11 1 2 20(11) 2000) Str.-of Georgia „ 0(l)0aatsino Narrows 1 June 26(4) 1 2 26(4) 19(4) Quateino Narr. 7 Pr. Rupert | July 25(4) 1 2 25(4) 23(4) Pr.-Rupert ^Georgia Aug. 21(2) 1 2 21(2) 20(2) Pr. Rupert 1 Georgia Str.l Sept. 21(9) 1 2 1 21(9) MalaapinaStc Georgia Str. 1 " 1 Oct. 10(6) 1 2 10(6) Geor gia Str. Nov. 1 . 2 30 Refit Dec. -1 2 13 Refit Jan. 1972 22 1 2 22 Prep. ! 1972 Seasc or n Feb. i2(o: 11 1 2 12 Training -11 Prep, for 197.2 Season March 22(o: 1 2 22 Trainlr g " Total Days 214 214 Z 100 100 $ Value 756,240.54 Ship Usage Summary Sheet 1971/72 -202-V e s s e l : 'IVector" (3163) T o t a l Apportionable Cost No. of Days a t Sea .'. Approx. Cost Per Day $300,095.57 206 $1,455.00 D M 1. T o t a l Days At Sea 2. Conversion ( F o r e i g n P o r t Load & Unload) TABLE 11.14 Date Days Use User UBC UVIC DREP FRB 3135 3136 3155 Other S e l f Mtce. R e f i t s T r i a l s etc A p r i l 1971 15(3) 1 1 2 15(3) 1 - - - - - - -6 S.M. May 13(3) 1 2 9(2) - - - - 4(1) CM In Alberni l e t -L 9 S.M. 1 June 16(3) 1 2 16(3) - - - - - - -6 S.M. J u l y 14(3) 1 2 8(2) - - - - 6(1) P< Geor]$i i l l n . -i Str. 11 S.M. Aug. 21(4) 1 2 13(3) 2 CM Bay Ch.; Aide Bk.; Rosa Str n e s 6 ( l ) Polh. Stu n Georgia Str. <rio 1 dy Sept. 17(1) 1 . 2 10(1) - - - - 7 CM 6 RosarioStr. 1 BaynesCh, i 1 1 Oct. 14(2) 1 2 7(1) 5(1) 2 CM Ba ynes_Ch 11 S.M. Nov. 17(3) 1 • 2 13(2) 4(1) - - - - - -Dec. 12(2) 1 2 9(2) - - - - 3 CM Ra Brotc Bayne ce Res 7 h i e Ldg s Ch. Jan. 1972 l ( o ) 1 2 1 — — — • — 28 R e f i t Feb. 18(3) 1 2 17(3) 1 CM Ba ynes Ch. March 18(3) 1 2 18(3) 7 Repairs T o t a l Days 206 161 5 6 _ 20 14 Z 100 78.2 2.4 2.9 _ _ 9.7 6.8 $ Value * 234,695.57 7,200 8,700 - - 29,100 20,400 Ship Usage Summary Sheet 1971/72 -203-Vessel: ."Richardson" (3164) Total Apportlonable Cost - $64,208.47 No. of Days at Sea « 147 .'. Approx. Cost Per Day • $436.00 TABLE 11.15 Date Days Use User UBC UVIC DREP FRB 3135 3136 3155 Other Self Mtce. Refits Trials etc April 1971 (30) 1 2 75Z —tmrr 25Z Hay (31) 1 2 - - - 75Z - - 25Z June (30) 1 2 - - - - 75Z - - 25Z July 1(30) 1 2 - - - 75Z - - 25Z Aug. 24(1) 1 2 - - - - 75Z - - 25Z Sept. • Oct. Nov. Dec. | ! Jan. 1972 1 Feb. March Total Days 147 110 37 Z 100 75 25 $ Value 48,100.00 16.108W .. (Foreign Port " Load & Unload) 1. Total Days At Sea 2. Conversion Ship Usage Summary Sheet 1971/72 Veaael: "Revisor" (3165) - sole user 3135 Hydrography no records from Marine Supt. .•. use Hydrog Field Report data Total Apportionable Cost » $43,928.52 No. of Days at Sea -.'. Approx. Cost Per Day • $246.00 TABLE 11.16 Use 1. Total Days At Sea 2. Conversion (Foreign Port Load & Unload) Date A p r i l 1971 May June Days Use User UBC UVIC DREP FRB 3135 3136 3155 Other Self Mtce. Refits Trials etc July Aug. Sept. Oct. Nov. Dec. Jan. 1972 Feb. March Total Days Z $ Value 178 100 178 100 43,928.52 63 dayc 115 dayt revision surveys Haro Strait Ship Usage Summary Sheet 1971/72 Vessel: (Mackenzie Charter) (3166) U«e ^adTunload) 1. Total Days At Sea 2. Conversion Total Apportionable Cost - $130,400.00 No. of Days at Sea » 108 .'. Approx. Cost Per Day » $1,210.00 TABLE 11.17 Date Days Use User UBC UVIC DREP FRB 3135 3136 3155 Other Self Mtce. Refits Trials etc April 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 --206-SHIP USAGE SUMMARY SHEET 1971/72 Vessel: CFAV LAYMORE Total apportionable cost: $390,457.39 (MSD costs only) No. of days at sea: 128 Approx. cost per day: $3,050. TABLE 11.18 Use 1. total days at sea 2. Conversion CAF: Canadian Armed Forces EMR: Energy, Mines & Resources FRB: Fisheries Research Board Date Days Use USER UBC UVIC CAF DREP EMR FRB MSD 3151 MSD 3155 Self mtce Refits T r i a l s , etc. : Apri l 1971 7 1 2 1 6 May 11 1 2 2 4 5 June 17 1 2 3 9 2 2 1 July 20 1 2 4 1 1 14 Aug. 10 1 2 6 4 Sept. 12 1 2 3 9 Oct.-. 7 1 2 7 Nov. 1 !22 Dec. 1 2 Jan. 1972 11 1 2 11 EOLl I Feb. 22 1 2 13 EOL I 9 Howe Snd. - Mar. 11 1 2 9 2 Howe Snd. Total Days 128 3 24 : 33 : 8 1 24 24 11 Z 100 2.3 18.7 26.0 6.2 0.8 18.7 18.7 8.6 $ Value 9,000. 73,100 101227.39 24,200 3,130 73,100 73,100 33,600 Ship Usage Summary Sheet 1971/72 Vessel: "Endeavour" . CFAV Vessel Use 1. Total Days At Sea 2. Conversion -207-(Foreign Port Load & Unload) 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 Date Days Use User UBC UVIC DREP FRB 3135 3136 3155 Other Self Mtce. Refits T r i a l s etc T3T51T A p r i l 1971 May June July Aug. Sept. Oct. Nov. Dec. 3 Wave Height Measurement Off Tofino Jan. 1972 Feb. March Total Days $ Value 6,000 COST SUMMARY FOR SHIP USAGE (MSD COST ONLY) TABLE 11.20 UBC UVIC CAF DREP EMR FRB HYDROG. 3135 TIDAL 3136 OFFSHORE OCEANOG. 3151 W. VAN GR. 3155 TOTALS PARIZEAU $244,796.77 21,700.00 58,900.00 310,500.00 134,500.00 3,870.00 774,266.77 WM.J.STEWART 756,240.54 756,240.54 VECTOR 234,695.57 7,200.00 8,700.00 29,100.00 20,400.00 300,095.57 RICHARDSON 48,100.00 16,108.47 64,208.47 REVISOR 43,928.52 43,928.52 MACKENZIE Charter 130,400.00 130,400.00 LAUNCHES 15,375.00 925.00 275.00 1,875.00 51,145.38 5,250.00 650.00 650.00 76,145.38 LAYMORE(CFAV) 9,000.00 73,100.00 101,227.39 24,200.00 3,130.00 73,100.00 73,100.00 33,600.00 390,457.39 TOTALS 503,867.34 102,925.00 101,227.39 33,175.00 3,130.00 133,875.00 1,340,314.44 168,850.00 93,728.47 54,650.00 2,535,742.64 Z Of TOTAL 19.8 4.1 4.0 1.3 0.1 5.3 . 52.9 6.6 3.7 2.2 100 External usage costs: $878,199.73 (34.6Z) MSD Usage Costs: $1,657,542.91 (65,4Z) Note: Additional "cost" of $ 6,000.00 for usage of CFAV ENDEAVOUR by 3151 not funded by MSD. UBC: University of British Columbia UVIC: University of Victoria CAF: Canadian Armed Forces DREP: Defence Research Establishment Pacific. EMR: Energy, Mines 4 Resources (Dept. of) FRB: Fisheries Research Board -209-III. H Y D R O G R A P H I C D I V I S I O N A. Field Hydrography B. Tides & Currents C. Chart Construction HYDROGRAPHY - COLLATOR 3135 Including: i . Field Hydrography i i . Hydrographic Research & Development i i i . Sailing Directions i v . Survey Electronics -211-A) FIELD HYDROGRAPHY Apportionment of Service Unit Costs. a) Administration (3130) (Total for 3135) $34,242.00 Library apportionment (Total 3135) $7,264.40 Telephones (Total 3135) 5,839.08 b) Ship Division $1,340,314.44 c) Other Direct apportionments -Administration (3130) $14,925.00 PROJECT IDENTIFICATION 1. Supervisory and special projects. 2. Field party 'A' - WM. J. STEWART Project a) Strait of Georgia b) Quatsino Narrows c) Dixon Entrance, Brundige Inlet, various testing assignments, d) Malaspina Strait. 3. Field party 'B' - PARIZEAU Project e) Western Arctic f) Baynes Sound, Lambert Channel 4. Field party 'C - PILOT II Project g) Athabasca-Mackenzie Waterway 5. Field party 'D' - REVISOR Project h) Revision surveys j) Haro Strait, Juan de Fuca Strait APPORTIONMENT RULES i . A l l salary and ship charges pro-rated to TIME SPENT ON PROJECT taken from cruise reports, i i . Other ledger categories assigned either by: i . direct assignement to Field party following detailed analysis i i . pro^rating by R. Wills and author, i i i . Capital 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 NOTES SUPERVISION WM.J.STEWART PARIZEAU PILOT II REVISOR M. BOLTON McINTOSH HUGGETT RICHARDSON LUSK . Sand Hands on SECRETARY O'CONNOR CLARKE ROGERS WOODS loan to Centre Region until R. WILLS Spec. COLDHAM LEE Aug/71. GOODWILL p r 0 ; j * HIGHTON POPEJOY -Sept. '71 on. LANDRY YEE JARVOS HLINA PIERCE ROBITAILLE ROBITAILLE DOERING RAYMOND SEAMAN EATON BROWN KANGRO RAINKO SCHRETLEN SOUTAR RYAN WATT NOTE; Underlined personnel are survey electronics staff. -213-TABLE III.2 1. SUPERVISORY AND OTHER ASSIGNMENTS PERSONNEL COSTS. CLASSIFICATION Tota l adjusted salary TELEPHONE TRAVEL LIBRARY TOTAL COST EG ESS 11 $21,611.51 $344.22 $3,166.56 $620.40 $25,742.69 ST5 9,135.00 * EG ESS 10 19,907. 729.12 1,897.45 604.00 23,137.57 EG ESS 9 17.042. 604.00 17,646.00 EG ESS 9 (from Sept. 1st 1971) 5,815. 477.10 604.00 6,896.10 TOTAL $82.557.36 TOTAL PERSONNEL COST: $82,557.36 * A l l o c a t i o n from Administrat ion (3130) see Table II-2. FIELD PARTY ' A ' - WM.J. STEWART Project a) S t ra i t of Gerogia No. of days i n f i e l d 38 b) Quatslno Narrows 28 c) Dixon Entrance, Brundige In le t , various test ing assignments 56 d) Malaspina S t r a i t 45 TABLE III.3 PERSONNEL COSTS. CLASSIFI-CATION Tota l ad just , sa lary d. P r o j . (a) d. P r o j . (b ) d . P r o j . (c) d. P r o j . (d) 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 & EG ESS4 11,149 38 2,520 28 1,870 56 3,709 45 3,050 EG ESS4 2,747 38 2,747 0 O- 0 O- 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-EL4 38 28 56 45 Telephones 138.00 103.00 208.49 164.00 Library (2(3 $604.00) 274.00 203.00 407.00 324.00 Travel 405.00 300.00 595.26 480.00 TOTAL PERSONNEL COSTS $22,424.00 $17,707.00 $34,919.75 $22,993.00 -215-3. FIELD PARTY 'B' - PARIZEAU Project e) Western Arctic f) Baynes Sound, Lambert Channel No. days i n f i e l d 122 49 PERSONNEL COSTS TABLE III.4 CLASSIFICATION Total ad j us ted salary d. Proj . (e) d. Proj. (f) EG ESS9 $19,136 122 $19,136 0 Q-EG ESS6 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 N.A. 117 40 8,160 N.A. 0 0 O-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-Electri-cal. 21 0 Telephones 616.00 84.27 Library (1@ 604.00) 604.00 Travel 1,955,00 781.97 $63,794.00 $11,890.24 (d.: days) $75,684.24 -216-4. FIELD PARTY 'C - PILOT II Project g) Athabasca-Mackenzie waterway. Days in f i e l d 108 TABLE III.5 PERSONNEL COSTS CLASSIFICATION* Total Adjusted salary Days Project.(g) EG ESS8 17,597 108 17,597 EG ESS6 12,924 108 12,924 Telephones 108.75 Library (1@ $604.00) 604.00 Travel 3,292.84 Total Personnel Costs $34,526.59 -217-5. FIELD PARTY 'D' - REVISOR Project h) Revision surveys No. of days in f i e l d 63 j) Haro Strait, Juan de Fuca Strait 115 TABLE III.6 PERSONNEL COSTS CLASSIFICATION Total adjusted Salary Days Proj.(h) Days Proj . (j ) EG ESS8 EG ESS4 $17,597 10,464 63 63 $6,230 3,700 115 115 $11,367 6,764 Telephones Library (1(3 604.00) Travel Total Personnel Costs 37.60 214.00 136.00 $10,317.60 71.15 390.00 248.57 $18,840.72 -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 readily available. However a l l other ledger categories are allocated to Field Parties only because: i . No rational apportionment rules could be suggested i n retros-pect for the apportionment WITHIN FIELD PARTIES of the materials and services consumed. i i . The "projects" by their very nature generally have extremely arbitrary boundaries, and many are named for convenience or reference only. These costs are later "stepped down" i n the Final apportionment table. -219-TABLE III.7 REMAINING LEDGER COSTS. 1. Supervisory 2. Party 'A' 3. Party fB* 4. Party 'C' 5. Party 'D' TOTALS Travel: 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 Mis cellaneous 28.00 28.00 $10,356.33 36,092.46 7,103.44 9,871.71 63,423.94 Professional 4 special services ledger total: $4,192.22 - but reduced by $1,328.96 for roofing and wiring to electronics lab. (See List of Capital expenditures following.) -220-CAPITAL ACQUISITIONS (Not apportioned) - Identifiable Purchases (Major Items) Side Scan Sonar Electronic Test Equipment Electronic calculator Computational Equipment Tellurometer Surveyors' coats Power supply unit Converter Radio telephone Sounder Office equipment Office furniture (2 drawing tables) " " (3 f i l i n g cabs.) Digitizer (for PARIZEAU) Trailer for REVISOR Reflecting projector TOTAL - Other capital expenditures LEDGER TOTAL $30,088.93 2,956.00 898.20 5,660.43 7,000.00 517.40 1,050.00 1,450.00 234.76 2,095.00 841.44 358.40 335.29 1,344.00 3,417.00 7,590.00 $65,836.85 8,785.58 $74,622.43 ADDITIONAL NON-APPORTIONED ITEMS Roofing of El e c t r i c a l Laboratory Wiring of " " 568.00 (Prof. & Special services) 760.96 ( " " " ) i i . 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 for OT, increases, etc. 4,179 (say) SALARIES TELEPHONES LIBRARY (1@ $604.00) TRAVEL FIELD ACCOUNT COURSE FEES (OVERHEAD) MATERIALS - for colour photography and photo mosaic 3,572.25 TOTAL $57,241.25 $45,000.00 2,283.90 604.00 3,836.44 1,432.55 512.71 -222-i i i . 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 $31,980.85 PROJECTS: 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 ) Vol. 1. 675 : 60.8% i i ) Vol. 2. 435 : 39.2% 1110 $19,435.00 12,545.85  $31,980.85 -223-i v . SURVEY ELECTRONICS STAFF EN ENG2 $10,066 EL4 10,358 EL4 7,186 ELS 11,807 EL4 8,803 EL2 7,186  $55,906 STAFF Apportionment "Rules" EN ENG2 $10,066 $2000 R&D, Rest pro rata to projects. EL 4 10,358 Field Party A. EL 4 7,186 $2950 party B, Rest pro rata to projects. EL 5 11,807 Pro rata to projects. 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 TABLE III.8 A l l supplies charged under Field Hydrography (Section i) 2 PARTY 'A' 3 PARTY 'B' 4 PARTY'C 5 PARTY 'D* 1 Proj.(a) Strait of Georgia Proj.(b) Quatslno Narrows Proj.(c) Dixon En-trance,etc. Proj.(d) Malaspina Strait Proj.(e) Western Arctic Proj.(f) Baynes Sound Proj.(g) Athabasca-Mackenzie Proj. (h) Revision surveys Proj. (j) Haro Str. Juan de F. RAD TOTALS EM ENG2 Sal. $ 900 835 1,630 1,040 1,234 417 1,120 315 575 2,000 10,066 Tel. 106 98 190.25 123 145 49 132 37 68 236 1,184.25 EL4 2,475 1,817 3,654 2,912 «• 0- O- 0- O- 10.858 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 LAB. TELEPH. 57 52 101 65 178.32 26 70 19 36 e- 604.32 SUB TOTAL 6,496.00 5,543.00 10,882.25 7,567.00 13,147.32 1,862.00 4,994.00 1,403.00 2,564.00 3,236.00 57,694.57 TRAVEL 191 163 322 223 388.82 55 147 41 76 96 1,702.82 T O T A L $6,687.00 5,706.00 11,204.25 7,790.00 13,536.14 1,917.00 5,141.00 1,444,00 2,640.00 3,332.00 $59,397.39 Travel Costs: 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. Strait of Georgia 22,424.00 b. Quatsino Narrows 17,707.00 c. Dixon Entrance, Brundige Inlet 34,919.75 d. Malaspina Strait 22,993.00 B e. Western Arctic 63,794.00 f. Bayne Sound & Lambert Channel 11,890.24 C g. Athabasca-Mackenzie Waterway 34,526.59 D h. Revision Surveys 10,317.60 j . Haro Strait and Juan de Fuca Strait 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 74,622.43 (Additional Items) 1,328.96 HYDROGRAPHIC RESEARCH & DEVELOPMENT 57,241.85 SAILING DIRECTIONS 31,980.85 ELECTRONICS Exclusive of a l l materials (included above) 59,397.39 -226-SHIP USAGE CHARGES PARTY A WM. J. STEWART Project a) Strait of Georgia b) Quatsino Narrows c) Dixon Entrance d) Malaspina Strait Training Cruises April 1971 Feb.-March 1972 PARTY B PARIZEAU Project e) Western Arctic f) Baynes Sound $135,940.54 100,450.00 200,900.00 161,100.00 38,830.00 119,020.00 $756,240.54 221,500.00 89,000.00 $310,500,00 PARTY C PILOT II Project g) Athabasca-Mackenzie $130,400.00 PARTY D REVISOR Project h) Revision Surveys 15,670.00 j) Haro-Juan de Fuca Strts. 28,258.52 $43,928.52 LAUNCHES COST - apply as pro rated 0/H to a l l projects $51,145.38 see f i n a l apportionment chart. RICHARDSON - Western Arctic Program - used in years 1967-70 (75% of cost of RICHARDSON 71-72) $48,100.00 TOTAL $1,340,314.44 -227-is 3 f l i 8 8 1 3 : in HI as s e. : i i l l = 12 E 8 3 3 i i 8 2 i i 3 3 a t a i i 8 8 8 " 8 S ! 8 | s d : : : j ; 8 8 a § § I * 3 ; s S 3 5 3 -" -' a 8 8 8 = 8 S - s 8 8 g g S 2 3 2 3 8 = « } i 3 a i i i i { { , t i n itnmn c -ll S.' 8 8 I 2 5 s 2 8 8 3 « © o e> 3 * S 5 J 4 i 2 ! I 3 I : « . a 1I3S a a * a 3 a ? ! * s i £ f 1 I : i t ] i ? i i -. 7 r i PROJECT COST SUMMARY TRAINING CRUISES $157,850.00 PROJECT a)Strait of Georgia 181,621.54 b) Quatsino Narrows 136,278.00 c) Dixon Entrance, Brundige Inlet 272,380.71 d) Malaspina Strait 211,198.00 e) Western Arctic 406,844.75 f) Baynes Sound 117,889.20 g) Athabasca-Mackenzie Waterway 191,631.03 h) Revision Surveys 33,118.60 j) Haro Strait - Juan de Fuca Strait 60,078.95 RESEARCH & DEVELOPMENT 63,493.85 SAILING DIRECTIONS a) Vol. 1 Southern BC Coast 20,303.00 b) Vol. 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 Division Other direction apportionments Supervision (3135) Photographic services (3137) IDENTIFICATION OF SUBSECTIONS i . Supervisory i i . Tides i i i . Data processing iv. Current Survey v. Hydraulic Research PROJECT IDENTIFICATION 1. Quatsino Narrows 2. Vancouver Harbour 3. Alberni Inlet 4. Tsawwassen 5. Strait of Georgia 6. Tsunami Warning Gauges 7. Baynes Channel, Race Rocks, T r i a l Island 8. Fraser Delta - Field work & numerical modelling 9. Victoria Harbour Model 10. O i l Spillage 11. "VANLENE" accident 12. Arctic Coast, Gauging 13. Eskimo Lakes 14. Mackenzie River 15. Tide Gauge Development -230-APP0RTI0NMENT "RULES" i . Personnel costs assigned to subsections based on apportionment by S.O. Wigen. i i . Other ledger categories assigned to subsections or projects as assigned by S.O. Wigen. i i i . Capital expenditures have been apportioned, since i t is thought-that these items are directly identifiable with the project areas. PERSONNEL COSTS TABLE III.10 i . Supervisory i i . Tides i i i . Data Pro-cessing iv. Current Survey v. Hydraulic Research TOTALS Adjusted Salaries $19,847.00 31,749.00 25,258.00 36,623.12 28,476.00 141,953.12 Telephones 756.45 893.34 188.58 620.07 2,458.44 Library (4@ $604.00) 604.00 604.00 & 604.00 604.00 2,416.00 Travel 4,163.97 6,986.30 494.74 1,317.67 12,962.68 Education 0/H 165.00 0- 165.00 Total Personnel Costs $25,371.42 $40,397.64 $25,258.00 $37,910.44 $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 Relevant Totals FREIGHT $1,051.08 6) 50%, 12) 15%, 13) 10%, 14) 25% COMMUNICATIONS 1,954.77 Items identified PROF. & SPECIAL SERVICES 8,367.75 15) $8,000.rest 1/3 each 3), 4), 5) OTHER PROF. SERVICES 33,714.30 '$7,237.36 v) rest 5) 40%, 8) 25%, 9) 10% 3) 25% RENTALS 6,115.05 6) 100% REPAIR & UPKEEP OF BUILDINGS & WORKS 490.00 5) 100% REPAIR & UPKEEP OF KACHINERY & EQUIPMENT 4,926.74 i i ) 20%, iv) 50%, v) 30% UTILITIES 8.09 5) 100% MATERIALS & SUPPLIES 23,688.09 2) 20%. 3) 30%, 4) 5%, 5) 40% , 7) 5% MACHINERY & EQUIPMENT 17,508.40 Items identified CAPITAL ACQUISITIONS 70,337.33 Items identified SHIP USAGE CHARGES TABLE III.11 d = days PROJECT d. VECTOR d. PARIZEAU LAUNCHES TOTAL. 1. Quatsino Narrows 2. Vancouver Harb. 14 $50,900.00 $1,635.00 $52,535.00 3. Alberni Inlet 5 $7,275.00 5 18,200.00 820.00 26,295.00 4. Tsawwassen 5. Strait of Georgi, i 3* 5,092.00 7 25,450.00 975.00 31,517.00 6. Tsunami Warning Gauges 7. Baynes Channel Race Rocks, T r i a l Island 7 10,185.00 11 39,950.00 1,610.00 51,745.00 8. Fraser Delta 9. Victoria Harbour Model 1 1,455.00 47.00 1,502.00 10. O i l Spillage 34 5,093.00 163.00 5,256.00 11. VANLENE Accid. 12. Arctic 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. APPORTIONMENT RULES i . Supervisory "stepped down" i i ) 40%, iv) 40%, v) 20% i i . Tides 1) 12.5%, 3) 12.5%, 4) 6.25%, 5) 18.75%, 6) 6.25%, 12)12.5%, 13) 6.25%, 14) 25% i i i . Data Proc. 3) 25%, 5) 50%, 12) 10%, 13) 5%, 14) 10% iv. Current Sur-vey Hydraulic Research 2) 17.6%, 3) 23.5%, 4) 5.9%, 5) 35.3%, 7) 11.8%, 10) 5.9% v. 3) 10%, 5) 15%, 7) 6%, 8) 42%, 9) 15%, 10) 6%, 11) 6% -23k-1 i H 3 ! 3 Jl n |1 i 11 I M 31 J! 1 J I 11 M Ji ' I I f 3 ' i .ii » 1 I 1 13 ! 3 1 ' ! lA 13 i 1 ' 1 Jl ! 1 ? Jil l H I ! .! ' 31 1 ! 3 ' I l. M M \m mi i! I Mil j S3 'JI I n I .1! • • ? u i n illi i n ! Ji s s i n ! III 1 i t 5 I 1111 Jil i i l iUi' lMiii 8 8 c ft 3 , i i , 1 [ j J I i j ! 1 1 i 111 11 • d a\i .•. I 1 I i i i r IS 3 1 i J J  i i J l 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 Albemi Inlet 83,409.14 4 Tsawwassen 11,753.41 5 Strait of Georgia 121,237.07 6 Tsunami Warning Gauges 11,924.26 7 Baynes Channel 69,450.23 8 Fraser Delta 37,182.93 9 Victoria Harbour 12,568.70 10 Oi l Spillage 13,581.00 11 "VANLENE" Accident 3,264.00 12 Arctic Coast Gauging 10,782.46 13 Eskimo Lakes 5,417.51 14 Mackenzie River 18,498.86 15 Tide Gauge Development 32,358.33 -236-C. CHART CONSTRUCTION - COLLATOR 3137 Apportionment of Service Unit Costs. a) Administration (3130) Library apportionment Telephones $12,681.00 $604.00 839.40 b) Ship Division NIL Other Direct Apportionments Supervision (3135) 5,100.00 IDENTIFICATION OF SUBSECTIONS i . Supervisory i i . Checking i i i . Chart Corrections iv. Chart Sales v. Chart Revision v i . Chart Compiling v i i . Special Projects v i i i . Photographic PROJECT IDENTIFICATION Because of the nature of work of the section i t was not possible to define specific projects. APPORTIONMENT "RULES" i . A l l personnel costs apportioned to subsections. I i . Where possible, subsections further divided into project areas although this i s not possible in a l l instances because of d i f f i c u l t y of project definition within certain of the subsections. i i i . Photographic accounts and "Professional Services" costs have been separately identified and charged as appropriate, but remaining costs have been apportioned based on man year u t i l i z a t i o n per subsection. PERSONNEL COSTS TABLE III.14 1 i . Supervisory i i . Checking i i i . Chart Cor-rections iv. Chart Sales v. Chart Revision v i . Chart Compiling v i i . Special Projects v i i i . Photographic TOTALS Adjusted Salaries Telephones Library <1@ $604.) Travel $15,419.86 275.10 604.00 1,123.60 9,529.00 445.15 36,057,00 131.60 14,766.00 315.45 160.44 31,420.00 306.60 36,733.00 1,498.00 9,334.00 248.85 10,010.00 163,268.86 839.40 604.00 3,665.39 17,422.56 9,974.15 36,188.60 15,241.89 31,726.60 38,231.00 9,582.85 10,010.00 168,377.65 REMAINING LEI Prof. & Special Ser. Other Costs 3GER CATEGOR] 525.00 EES 525.00 2,622.78 1,055.00 2,105.00 2,100.00 2,104.83 2,100.00 525.00 6,576.36 4,209.83 16,029.14 TOTAL Subsection Unit 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 i . Supervision "Stepped down" i i ) 23.8%, i i i ) 4.75%, iv) 9.5%, v) 14.3%, vi) 14.3%, vi) 14.3%, v i i ) 28.65 v i i i ) 4.75%. i i . Checking v) 50% vi) 50% i i i . Chart Correction NONE iv. Chart Sales NONE v. Chart Revision Pro rata to total number of revisions v i . Chart Compilation Pro rata to chart time sheets v i i . Special Projects See Final Apportionment ' i i i . Photographic 3135 Hydrography 10% 3136 Tidal 7% 3137 i) i i ) 2%, i i i ) 5%, iv) 1%, v) 15%, vi) 28%, v i i ) 10% 61% 3150 Frozen Sea 8% 3151 Oceanography 6% 3152 Ocean Mixing 1% External UBC, SFU, Post Office, 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 for itemlsation within subsections as appropriate TABLE III.16 i . Supervisory i i . Checking i i i . Chart Cor-rections i v . Chart Sales v. Chart Revision v i . Chart Compiling v i i . Special Projects v i i i . Photographic Total Subsection costs Step down of (i) P a r t i a l Step down of ( v i i i ) ( v i i i ) supervision Step down of ( i i ) $17,947.56 (17,947.56) 10,499.15 4,269.00 337.00 27.00 (15,132.15) 38,811.38 852.00 843.00 67.60 16,296.89 1,705.00 168.35 13.20 35,931.60 2,567.00 2,525.00 202.00 7,566.07 42.435.83 2,567.00 4,703.66 407.20 7,566.08 9,859.00 5,135.56 1,683.50 135.00 16,835.21 852.00 (10,260.51) (852.00) Subtotal Total overhead $17,781.0C 0- O- 40,585.42 3,980.00 18,183.44 1,740.00 48,791.67 4,760.00 57,679.77 5,651.00 16, 813.06 1,650.00 6,574.70 0-Total to be apportioned $ «• 44,565.42 19,923.44 53.551.67 63,330.77 18,463.06 6,574.70 -ZkQ-FINAL PROJECT APPORTIONMENT AND CgST SUMMARY i i i . Chart corrections - no identifiable projects $44,565.42 iv . Chart Sales - no identifiable projects 19,923.44 Vancouver Boat Show v. Chart Revision - contribution to cost $1,345.20 v i . Chart compiling- contribution to cost $2,160.90 , from accounts $1,279.50 $3,506.10 travel 917.60 salaries 1,009.00 (3 men for 2 weeks) supervision 300.00 $3,506.10 est. TABLE III.17 v. CHART REVISION - TOTAL TO BE APPORTIONED $52,206.47 Area No. of Revisions % Allocation 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 Main-land 5 31 16,200.00 Small scale - Off-shore navigation 1 6 3,130.00 TOTALS 16 100 $52,206.47 v i . CHART COMPILATION - Total to be apportioned total man hours allocated cost per hour (including 0/H) $61,169.87 3,196 hours $19.20 TABLE III.18 CHART No. Area / 1 Completion 1971-72 hours spent 1971-72 cost apportionment 1971-72 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 3310 (4 sheets) St. of Georgia Gulf Islands St. of Georgia 100 1400 26,763.87 3454 North Nanaimo 50 225 4,290.00 3687 Quatsino Narr. 100 310 5,940.00 3980 Brundige Inlet 10 21 429.00 3509 Collection of plans St. of Georgia. 50 190 3,670.00 3196 $61,169.87 v i i . SPECIAL PROJECTS - Total to be apportioned $18,463.06 Total man months to be allocated 12 a) Strait of Georgia bathymetric contours 7 man months 10,823.06 Reports for oceanography - direct charge to 3151 4 man months 6,100.00 Samll drafting jobs - 1 man month 1,540.00 $18,463.06 -2^2-v i i i . PHOTOGRAPHIC - Non chart usage - total to be apportioned $6,574.70 Direct charges 3135 Field 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 168.35 External 1,180.00 $6,574.70 IV. R E S E A R C H D I V I S I O N S A. Ocean Physics Division i) Frozen Sea Research i i ) Offshore Oceanography i i i ) Ocean Mixing iv) Oceanographic Section - West Vancouver B. Ocean Chemistry Division A) OCEAN PHYSICS DIVISION i) FROZEN SEA RESEARCH - COLLATOR 3150 APPORTIONMENT OF SERVICE UNIT COSTS a) Administration (3130) $19,766.00 Library Apportionment 2,416.00 Telephones 2,180.22 b) Ship Division NIL OTHER DIRECT APPORTIONMENTS Ocean Physics - Supervision (3152) 2,140.57 Photographic Services (3137) 1,350.00 Administration (Direct Assignment of Total 8,260.00 Secretarial Cost) Property Rental - paid by Ministry of Public Works 1971-72( 825 Devonshire Road - Rental $4080.00 (3388 square feet) Cleaning 2976.00 Fuel 510.00 Furnace Repairs Water, etc. 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. LEDGER CATEGORIES Salaries, etc - 3150 only Travel Freight Communications (not including telephones) Prof, and Special Services Rentals Repair and Upkeep of Equipment Materials and supplies *Machinery and equipment Miscellaneous Capital Expenditures Overheads (including rental payments) -245-$142,976.55 11,235.15 11,159.66 228.72 3,233.16 211.10 2,896.79 10,121.50 4,565.62 26.00 35,926.23 44,078.79 266,659.27 *N0TE: $147.94 deducted from category 'Material and Supplies" represents Library Allocation. -2U6-i i ) OFFSHORE OCEANOGRAPHY - COLLATOR 3151 $ 16,490.00 $2416.00 2203.62 93,728.47 (MSD funds 6,000.00 (non MSD f und s) 2.140.57 1,011.00 6,100.00 PROJECT IDENTIFICATION 1 . Weathership Oceanography 2. EOLE Buoy Project 3. Strait of Georgia Currents 4. Theoretical Studies 5. Advisory and Administrative 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. APPORTIONMENT OF SERVICE UNIT COSTS a) Administration (3130) Library Apportionment Telephones b) Ship Division OTHER DIRECT APPORTIONMENTS Ocean Physics - Supervision (3152) Photographic Services (3137) Special Projects (3137) PERSONNEL COSTS TABLE IV-I TOTAL 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 Adjusted Salaries $ 98,702.05 14,062.05 9,375.00 10,750-00 9,815.00 9,705.00 8,050.00 13,010.00 11,030.00 3,462.00 4,135.00 2,880.00 1,435.00 993.00 Telephones 2,203.62 895.32 549.33 267.27 491.70 Library (4@$604.00) 2,416.00 604.00 604.00 604.00 604.00 Travel 9,546.27 1,473.55 13.50 19.50 170.34 1,649.85 4,223.47 1,929.66 48.40 18.00 Total Personnel Costs $112,867.94 17,034.32 9,388.50 11,373.50 9,985.34 11,904.18 8,050.00 18,104.74 14,055.36 3,510.40 4,153.00 2,880.00 1,435.00 993.00 Remaining Ledger Categories assigned as per final apportionment table. Personnel Cost Apportionment Table TABLE IV-2 TOTALS 1. Weathership Oceanogr. 2. EOLE Buoy Project 3. Str. of Georgia 4. Theoretical Studies 5.Advisory & Admin. SE RES 1 $17,034.32 33 1/3% 33 1/3% 0 0 33 1/3% CSA 2 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 • CR 5 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 50% 0 50% SE RES 1 14,055.36 0 0 0. 75% 25% STD ASST 3,510.40 100% 0 0 EG ESS 3 4,513.00 100% 0 0 0 0 CR 2 2,880.00 25% 0 50% 25% 0 CS 1 1,435.00 100% 0 0 0 0 CR 2 943.00 0 0 100% 0 0 -249-Ship Usage Charges PARIZEAU - Wave Climate Model - Project 5 $ 3,870.00 RICHARDSON - Western Arctic Programme - used in Arctic 16,108.47 years 1967-70 (25% of cost of Richardson 1971-72) Apply as overhead to Project Area 5. LAUNCHES - Pro rated to MSD usage (all to "Parizeau") 650.00 LAYMORE - E0LE Buoy Project 2 73,100.00 TOTAL $93,728.47 ENDEAVOUR - Wave Climate Model - Project 5 6,000.00 * TOTAL $93,728.47 *N0TE: Endeavour not funded by Marine Sciences Directorate -250-Final Apportionment TABLE IV-3 TOTAL Project 1 Weathership Project 2 EOLE Buov Project 3 Georgia Str. Currents Project 4 Theoretical Studies 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 9,388.50 11,373.50 9,985.34 11,904.18 8,050.00 18,104.74 14,055.36 3,510.40 4^ 153.00 2,880.00 1,435.00 993.00 $ 5,678.31 7,041.40 11,373.50 9,985.34 11,904.18 8,050.00 0 0 0 4,153.00 720.00 1,435.00 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 Freight 1,227.69 1,227.69 0 0 0 0 Communications 100.00 100.00 0 0 0 0 Prof & Special Services 8,649.02 8,449.02 0 0 0 200.00 Rentals 50.00 50.00 0 0 0 0 Repair & Up-keep of Equip. 27,519.44 •ff 27,006.94 437.50 0 0 75.00 Materials & Supplies 11,186.62 8,801.82 1,684.80 100.00 600.00 0 Machinery & Equip. 23,483.27 23,483.27 0 0 0 0 Acquisitions (Capital) 17,906.20 17,906.20 0 0 0 0 Ship Usage Costs "Parlzeau" 3,870.00 3,870.00 "Richardson"0/1 16,108.47 16,108.47 Launches 650.00 650.00 "LaymoreV 73,100.00 73,100.00 "Endeavour" 6,000.00 6,000.00 Project Cost Sub Totals 302,718.65 147,365.67 83,747.71 15.095.77 11,861.51 45,147.99 O/H to be Apportioned 25,741.57 11,859.57 8,100.00 1,210.00 952.00 3,620.00 Final Project Cost Secondary Stepi 328,460.22 oun of Proj 159', 225.24 •ct Area 5 P 91,347. 7i :o rated to 16,305.77 •roject Costs 12.813.51 48.767.99 26.077.99 17,900.00 2,640.00 2,150.00 (48,767.99: Revised Projeci Costs $185,303.23 1 1 109,247.71 18.945.77 14,963.51 0 *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 $185,303.23 2 - EOLE Buoy Project 109,247.71 3 - Strait of Georgia Currents 18,945.77 4 - Theoretical Studies 14,963.51 -252-i i i ) OCEAN MIXING - COLLATOR 3152 APPORTIONMENT OF SERVICE UNIT COSTS a) Administration (3130) Library Apportionment Telephones (Total 3152) b) Ship Division OTHER DIRECT APPORTIONMENTS Photographic Services (3137) $1,208.00 487.70 $5,834.00 NIL 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 Telephones Library (2 @ $604.00) Travel $28,329.69 287.40 1,208.00 1,292.21 NOTE: *Dr. Nasmyth's Personnel Cost Allocation 3152-0cean Mixing (included is Sals. 60% - 12,843.43 above) DIRECT CHARGES 3150 Frozen Sea 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 Repair and upkeep Materials and supplies $4,111.89* Machinery and equipment Capital expenditure $4,173.27 + $10,OOO1 $10,038.88 177.04 + $12,0002 16,160.42 3,241.60 + $15,OOO3 19,173.27 FINANCIAL ENCUMBRANCES 1. Professional Services $5,000 National Research Council $5,000 Defence Research Establishment Pacific 2. Materials and Supplies $12,000 DREP 3. Capital Expenditure $15,000 DREP *N0TE: Deduction of $43.53 Library Allocation CONTRACT - Dr. Gower Supervision from Dr. Nasmyth 2,140.57 Telephone expenses 200.30 A l l other costs paid by headquarters (Ottawa) • $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) $18,220.00 Library Apportionment $3,624.00 Telephones - paid by Fisheries Research Board v \ n . . r.. . . (W. Vancouver) c / , cr. n n b) Ship Division 54,650.00 OTHER DIRECT APPORTIONMENTS Administration - (Direct Assignment of total 7,618.00 Secretarial cost) Ocean Physics - Supervision from 3152 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. i i ) 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 IV-4 TOTALS SE RES 2 EG ESS 7 EG ESS 5 EG ESS 5 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 Adjusted Salaries $152,548.97 20,319.97 12 713.00 10.599.0C 10,599.00 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 Library 3,624.00 604.00 604.00 604.00 604.00 604.00 604.00 Travel 11,657.39 1,297.02 3,000.00 529.71 3,058.74 3,221.44 413.68 136.80 $167,830.36 22,220.99 13 ,317.00 10,599.0( 10,599.00 13,347.00 14,867.71 18,249.74 9,706.00 16,828.44 13 003.00 1,114.00 17,169.68 6,808.80 ining Ledger Categories assigned part to Personnel and part by Direct Assignment - see Final Apportionment Table for detail; I ro cn i Personnel Cost Apportionment Table TABLE IV-5 TOTALS 1. Howe Sound 2. St r a i t of Georgia 3. Babine Lake 4. Ar c t i c Project 5. Effects of Thermal Pollution 6. Lighthouse Programme 7. Support Services SE RES 2 $20,923.97 20% 1 80% 0 0 0 0 0 EG ESS 7 13,317.00 25% 60% 15% 0 0 0 0 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 EG ESS 6 9,706.00 50% . 50% 0 0 0 0 0 EG ESS 8 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 SE RES 3. 6,808.80 0 100% 0 0 0 0 0 I ro >j i -258-Ledger Category Apportionment Table TABLE IV-6 Category Relevant Total Apportionment Freight $ 2,359.63 100% Position GL MAN 9 Prof, and Special Services 15,869.43 Direct assignments to Personnel and Projects Rentals Repair and upkeep of equipment 1,676.37 4,489.99 $1,000 Position GL MAN 9 $676.37 to computer Direct assignments to Personnel Materials and supplies Repair and upkeep 21,281.23 5,916.47 Direct assignments to Personnel and Projects Direct assignments to Personnel Capital acquisitions 39,182.49 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 PROJECTS 1 Days "VECTOR" Days "LAYM0RE" LAUNCHES TOTAL 1. Howe Sound 2. Strait of Georgia -Pollution Study 14 $20,400.00 11 33,600.00 $650.00 33.600.00 $21,050.00 $20,400.00 $33,600.00 $650.00 $54,650.00 n i A L AProcriomotT TAJLC P r o l a e t * C t a . o r , T o t a l SE EES 2 EC ISS 7 EC ESS 5 EC ISS 5 CL K M 9 D D K 4 SO 2 EC 888 * E0 ISS 8 ES ISS 3 S I BIS 1 SE U S 3 SE EES 3 Coaputar S a r v l c a a 1 How* Sound 2 S t r a i t of C a o r f l * 3 Bablna Laka 4 A r c t i c P r o j . 5 Tharaal P o l i o . Llghtbowa* 7 Support S a r v l c a a j V r i a a d a Adsls. t i t r a t i o n Oeaao Phvatca 1 16,120.00 2 . 1 * 0 . 5 7 T o t a l Ovarhaad 10 ,160 .57 P t n n a i l Coat* 167,830.36 21 ,120.99 13 ,117 .00 10.399.00 10 ,599 .00 11 ,147.00 14,867.71 18,249.74 9 ,706 .00 16,818.44 13 ,003 . K 1.114.00 17 ,169 .68 6 ,808 .80 ••••laIni Udnr Catator laa P r a l c h t P r o f . 6 Spac. Sar». I n u l a l a p . 6 Upkaap o f Kqulpaarat Rata, 4 S u p p l l a * •a*. 6 Dpa-Mp- Toola • r a n * C a p i t a l Exp. 2 , 3 5 9 . 6 ) 1 3 . 8 6 9 . 4 ) 1 .676.37 4 ,489 .99 21 ,281 .23 3 ,916.47 1 .932.08 123.39 820.86 2 ,958 .23 69.00 1 .139.63 1,000.00 3,000.00 1,912.08 382.26 820.90 2 ,956.24 460.03 460.03 698.06 188.42 1.440.00 273.71 609.75 3 ,593.92 3 ,611.80 5 ,860 .80 676.37 961.11 19 .104 .00 4 , 6 6 1 . 9 3 9 .119 .49 3 .192.00 483.34 2 ,617 .12 7.700.84 193.00 88.93 t o t a l Coata To la appoTtlonad Aa Far r a r a o o o a l Coot Apportloaaatat Tab l a 28 ,233 .35 13 ,117 .00 10.399.00 10 .668 .00 21 ,706 .63 21,421.24 •18 ,249 .74 9 ,706.00 17,288.49 13,701.06 2.742.42 17 .441 .40 16,626.27 26 ,622 .26 ( t a p Down Of Paraoooal Coata SI U S I EC ESS 7 EC ESS 3 EC ESS S CL MAX 9 a n c t EC ESS 4 EC CSS 1 EC U S 5 U U S 1 SE U S J SE U S } (28 ,253 .55) (13 ,317 .00) 10,399.00] (10.668.00) (21 ,706.63) [21.421.24) 9 ,706 .00) 17,288.49) (13.701.06 2 ,742.42) (17 ,443 .40 (16 ,626.27) 3 ,403 .12 3 .330 .00 4 ,239 .60 2 , 6 7 0 . 0 0 5 ,426.66 14,991.24 4 ,633 .00 21 .612 .43 7 ,987.00 2 ,119 .80 6 .398 .00 5 ,426 .66 4 , 8 5 3 . 0 0 16 ,626.27 2 ,000 .00 1,600.00 3,426.66 2 ,742.42 1 .059.90 3 ,236 .05 17 .188 .49 1 7 . U 3 . 4 0 6 .430 .00 13 ,701 .06 J . 1 7 9 . 7 0 2 .170.60 Ship Coata (7 .316 .28 ) 33 ,600.00 2 .611.44 21 .030 .00 751.80 2 .631.44 1.503.60 T o t a l P r o j a c t Coata Without Owarfaaad . 19 ,104 .00 91.126.SO 92 ,302 .30 24 ,716 .68 19,240.84 7 ,933.60 11 ,701 .06 3 ,439 .25 Ovarfcaada 20.360.37 (18,249.74 13.360- 31 12.700.00 3 .460.00 3 .360 .00 1.090.00 1.940.00 700.00 P r o j o c t Coat* 104.486,81 103.202.30 18 .178.68 44.600.84 9 .023 .60 15 .641.06 6 .139.23 Secondary Stop Down Of Pr Araa 7-Fro Ratod o j a c t 2 .198 .25 2 .040 .00 546.00 870.00 172.00 313.00 6 .139.25) F I l A L PaOJECr COSTS 1 106 .685 .06 107.242.30 28 .724 .68 43.470.84 9 .193 .60 13 .954 .04 * Education Laava-Aaaaaaad Aa Ova rha ad PROJECT COST SUMMARY PROJECT 1 - Howe Sound $106,685.06 2 - Strait of Georgia 107,242.30 3 - Babine Lake 28,724.68 4 - Arctic Project 45,470.84 5 - Review of Effects of 9,195.60 Thermal Pollution 6 - Lighthouse Programme 15,954.06 -261-A) OCEAN CHEMISTRY - COLLATOR 3154 APPORTIONMENT OF SERVICE UNIT COSTS a) Administration (3130) Library Apportionment $604.00 Telephones - paid by Fisheries Research Board $9,421.00 b) NIL OTHER DIRECT APPORTIONMENTS NIL PROJECT IDENTIFICATION 1. Hydrocarbon Analysis 2. Nutrient Analysis 3. Station "p" Chemical Data 4. C-14 Air Sea C02 Exchange 5. Carbonate Chemistry 6. Hudson-70 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. i i ) 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 EG ESS 4 EG ESS 3 CR 2 SO 1 ELE 3 EG ESS 3 EG ESS 3 TOTAL Adj usted Salaries Telephones Library (1<?$604.00) Travel $15,623.51 604.00 1,255.14 9,114.00 , 291.04 8,186.00 253.08 5,320.00 2,532.00 1,975.00 721.00 2,157.00 46,628.51 NIL 604.00 1,799.26 Total Personnel Costs 17,482.65 9,405.04 f 8,439.08 6,320.00 2,532.00 1,975.00 721.00 2,157.00 49,831.77 Remaining Ledger Categories (including Field Account) TABLE IV-10 CATEGORY TRAVEL FREIGHT PROF. AND SPECIAL SERVICES RENTALS REPAIRS AND UPKEEP OF EQUIPMENT MATERIALS AND SUPPLIES MACHINERY AND EQUIPMENT CAPITAL EXPEN-DITURES TOTAL Field A/C Ledger Amounts Library Allocation (2,000.00) 3,799.26 (500.00) 558.99 11,186.84 (911.30) 911.30 (500.00) 500.00 (5,000.00) 32,139.60 (2,887.79) 5,796.23 61,625.94 8,911.30 Totals for Apportionment 1,799.26 58.99 11,186.84 0 0 24,251.81 5,796.23 61,625.94 cn ro -263-REMAINING LEDGER CATEGORIES: have been assigned to projects or apportioned based on "rules" given by Dr. C. S. Wong. TABLE IV-11 CATEGORY RELEVANT TOTALS APPORTIONMENT Freight $ 58.89 . 3) 100% Prof and Special Services 11,186.84 1) 20% 2) 20% 3) 20% 4) 20% 5) 20% Materials and Supplies 24,251.81 Expenditures identified Machinery and Equipment 5,796.23 Expenditures identified • Capital Expen-ditures * 31,159.74 Expenditures identified *N0TE: Furniture Costs $30,466.20 Not apportioned Personnel Cost Apportionment Table TABLE IV-12 TOTALS 1. HYDRO-CARBON ANALYSIS 2. NUTRIENT ANALYSIS 3MEASURE-MENT AND DATA PRO-CESSING 4. C-14 AIR-SEA C02 EXCHANGE 5. CARBONATE CHEMISTRY 6. 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% 0 EG ESS 3 8,439.08 5% 35% 60% 0 0 0 CR 2 6,320.00 5% 5% 50% 5% 5% 30% SO 1 2,532.00 0 0 20% 0 20% 60% ELE 3 1,975.00 0 0 50% 0 0 50% EG ESS 3 72J..00 0 35% 35% 0 30% 0 EG ESS 3 2,157.00 0 35% 35% 0 30% 0 F i n a l Apportionment TABLE IV.13 Total Project 1 Hydrocarbon Analysis Project 2 Nutrient Analysis Project 3 Station 'P' Chemical Data Project 4 C-14 A i r Sea CO2 Exchange Project 5 Carbonate Chemistry Project 6 Hudson-70 Personnel Costs Step Down SE RES 1 $ 17,482.65 1,748.30 1,748.30 1,748.30 3,496.60 5,244.55 3,496.60 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 3,160.00 316.00 316.00 1,896.00 SO 1 2,532.00 - - 506.40 - 506.40 1,519.20 ELE 3 1,975.00 - - 987.50 - - 987.50 EG ESS 3 721.00 - 252.35 252.35 - 216.30 -EG ESS 3 2,157.00 - 754.95 754.95 - 647.10 -F i e l d Account 8,911.30 - - 7,000.00 - 1,911.30 -Freight 58.89 - - 58.89 - - -Prof. & Special Serv. 11,186.84 2,237.37 2,237.37 2,237.37 2,273.37 2,237.36 -Materials & Supplies 24,251.81 1,700.00 2,425.20 5,580.00 9,699.61 4,120.00 727.00 Machinery & Equip. 5,796.23 53.00 53.00 165.00 888.00 4,584.23 53.00 Capital Equip. 31,159.74 2,235.00 7,700.00 11,885.00 3,539.74 5.800.00 -Sub Total 130,396.58 9,180.92 19,385.75 42,687.55 21,117.82 . 29,345.24 8,679.30 O/H To Be Apportioned 9,421.00 660.00 1,395.00 3,075.00 1,530.00 2,120.00 641.00 Fi n a l Project Cost $139,817.58 9,840.92 20,780.75 45,762.55 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 C02 Exchange 22,647.82 5 - Carbonate Chemistry 31,465.24 6 - Hudson - 70 9,320.30 

Cite

Citation Scheme:

        

Citations by CSL (citeproc-js)

Usage Statistics

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
https://iiif.library.ubc.ca/presentation/dsp.831.1-0093099/manifest

Comment

Related Items