Activity-Based Budgeting in the Public Sector

 Introduction

Activity-Based Budgeting (ABB) in the public sector is a powerful tool for enhancing fiscal transparency, improving resource allocation, and driving performance-based planning. Unlike traditional budgeting methods that focus on historical spending patterns, ABB focuses on the actual cost of activities that deliver public services. This enables public institutions to allocate funds based on efficiency, impact, and strategic priorities—leading to improved governance and financial sustainability.

Public finance managers and policy implementers increasingly recognize the need for robust budgeting tools like ABB to streamline decision-making, reduce wastage, and align spending with national development plans. Activity-Based Budgeting is essential in strengthening accountability, especially in ministries, departments, and agencies (MDAs) dealing with limited budgets and high service delivery demands. ABB is also critical in donor-funded programs where transparency and performance tracking are mandatory.

This course provides comprehensive knowledge and practical skills to implement Activity-Based Budgeting in public institutions. Participants will learn how to identify cost drivers, map activities, allocate resources efficiently, and integrate performance indicators with financial planning. The course also emphasizes monitoring, evaluation, and reporting to support results-oriented management in government and nonprofit organizations.

By adopting ABB, public institutions can improve planning accuracy, minimize inefficiencies, and promote transparency across all departments. With rising global emphasis on good governance, results-based budgeting, and accountability in public financial management (PFM), mastering Activity-Based Budgeting ensures long-term value for money and optimized public service delivery.

Course Objectives

1. Understand the principles and structure of Activity-Based Budgeting (ABB).
2. Differentiate ABB from traditional and line-item budgeting systems.
3. Identify key activities and cost drivers in government operations.
4. Develop activity-based cost models for various public services.
5. Link ABB to institutional strategic objectives and performance metrics.
6. Build and implement ABB templates suitable for the public sector.
7. Apply ABB in budget formulation, execution, and monitoring.
8. Integrate ABB with performance-based budgeting and M&E systems.
9. Improve cost control, resource use efficiency, and accountability.
10. Analyze real-world ABB case studies from public institutions.

Organizational Benefits

1. Enhanced transparency and accountability in budgeting.
2. Improved alignment between budgets and organizational goals.
3. Efficient use of public resources and reduced waste.
4. Better tracking of costs associated with specific services.
5. Evidence-based decision-making and resource allocation.
6. Stronger financial control and audit preparedness.
7. Integration of performance metrics with budgeting.
8. Increased donor and stakeholder confidence.
9. Institutionalization of performance-driven financial culture.
10. Empowered staff with data-driven budgeting capabilities.

 Target Participants

• Public sector budget officers and financial analysts
• Government accountants and planners
• Donor-funded project managers
• Monitoring and Evaluation (M&E) professionals
• Internal auditors and compliance officers
• Local government finance personnel
• NGO and development sector budget managers
• Strategic planning officers in public institutions
• Policy makers and regulatory authorities
• Academic researchers in public financial management

Course Outline in Modules

Module 1: Introduction to Activity-Based Budgeting

1. What is ABB?
2. Principles and conceptual framework
3. Benefits and limitations of ABB
4. Traditional vs. Activity-Based Budgeting
5. The budgeting process in public sector settings
6. Case Study: Implementing ABB in a city council

Module 2: Identifying Activities and Cost Drivers

1. Understanding activities and outputs
2. Mapping organizational processes
3. Cost driver identification techniques
4. Activity classification for budgeting
5. Linking costs to services and outputs
6. Case Study: Cost drivers in a public hospital

Module 3: Building ABB Cost Structures

1. Creating cost pools
2. Assigning costs to activities
3. Developing a cost allocation model
4. Allocating overheads
5. Analyzing direct vs. indirect costs
6. Case Study: Activity-based costing in education services

Module 4: Performance Metrics in ABB

1. Integrating KPIs with ABB
2. Developing measurable indicators
3. Linking budgeting to performance
4. Using outputs/outcomes for planning
5. Monitoring service effectiveness
6. Case Study: Performance-based budgeting in agriculture

Module 5: ABB in Budget Formulation

1. Preparing ABB-driven budget proposals
2. Setting budget ceilings per activity
3. Participatory budgeting and stakeholder input
4. Revenue and expenditure forecasting
5. Budget approval and alignment
6. Case Study: Budget formulation for a public university

Module 6: ABB Implementation Strategy

1. Organizational change readiness
2. ABB policy and framework development
3. Staff training and capacity building
4. Developing tools and templates
5. Pilot testing and rollout plans
6. Case Study: ABB implementation in a transport agency

Module 7: ABB in Budget Execution and Monitoring

1. Expenditure tracking per activity
2. Managing variances and reallocations
3. Internal controls and compliance
4. Financial reporting using ABB
5. Activity-based procurement planning
6. Case Study: Monitoring ABB in a ministry of health

Module 8: Use of Technology in ABB

1. Digital tools for ABB
2. Integration with ERP and IFMIS systems
3. Data collection and visualization dashboards
4. ABB-compatible budgeting software
5. Real-time expenditure tracking
6. Case Study: Automating ABB in a county government

Module 9: Auditing and Evaluating ABB

1. ABB in internal and external audits
2. Budget audits and compliance checks
3. Data-driven performance audits
4. Linking ABB to M&E frameworks
5. Accountability and transparency metrics
6. Case Study: Evaluation of ABB in donor-funded projects

Module 10: Institutionalizing ABB in the Public Sector

1. Developing ABB guidelines and manuals
2. Policy support and legislative backing
3. Embedding ABB in organizational culture
4. Continuous improvement mechanisms
5. Sustainability and institutional memory
6. Case Study: National-level ABB adoption strategy

General Information

1. Customized Training: All our courses can be tailored to meet the specific needs of participants.
2. Language Proficiency: Participants should have a good command of the English language.
3. Comprehensive Learning: Our training includes well-structured presentations, practical exercises, web-based tutorials, and collaborative group work. Our facilitators are seasoned experts with over a decade of experience.
4. Certification: Upon successful completion of training, participants will receive a certificate from Foscore Development Center (FDC-K).
5. Training Locations: Training sessions are conducted at Foscore Development Center (FDC-K) centers. We also offer options for in-house and online training, customized to the client's schedule.
6. Flexible Duration: Course durations are adaptable, and content can be adjusted to fit the required number of days.
7. Onsite Training Inclusions: The course fee for onsite training covers facilitation, training materials, two coffee breaks, a buffet lunch, and a Certificate of Successful Completion. Participants are responsible for their travel expenses, airport transfers, visa applications, dinners, health/accident insurance, and personal expenses.
8. Additional Services: Accommodation, pickup services, freight booking, and visa processing arrangements are available upon request at discounted rates.
9. Equipment: Tablets and laptops can be provided to participants at an additional cost.
10. Post-Training Support: We offer one year of free consultation and coaching after the course.
11. Group Discounts: Register as a group of more than two and enjoy a discount ranging from 10% to 50%.
12. Payment Terms: Payment should be made before the commencement of the training or as mutually agreed upon, to the Foscore Development Center account. This ensures better preparation for your training.
13. Contact Us: For any inquiries, please reach out to us at training@fdc-k.org or call us at +254712260031.
14. Website: Visit our website at www.fdc-k.org for more information.