Implementation of Performance-Based Budgeting Using the Combined Technique of Best-worst Method (BWM) and Robust Optimization

Advances in Mathematical Finance and Applications

دوره 7، شماره 1، فروردین 2022، صفحه 263-288   

نوع مقاله: َApplied-Research Paper

شناسه دیجیتال (DOI): 10.22034/amfa.2020.1897499.1408

نویسندگان

Maryam Bahadori¹؛ Ghodratallah Taleb nia^{* 2}؛ Mohammad Hossein Ranjbar¹؛ Mahnaz Barkhordari Ahmadi³

¹Department of Accounting, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran

²Department of Accounting, Tehran Science and Research Branch, Islamic Azad University, Tehran, Iran

³Department of Mathematics, Bandar Abbas Branch,Islamic Azad University, Bandar Abbas, Iran

چکیده

One of the priorities of reforming the economic structure of the country is to reform the budgeting of state-owned companies. Performance-based budgeting (PBB) emphasizes the importance of identifying measurable results from costs and can enhance the transparency and accountability of public sector budgeting. The main purpose of the research is to present a model of budgeting in Hormozgan Province Gas Company that maximizes the desirability of budget allocation in terms of budgeting constraints. The present study, by investigating the theoretical foundations and factors affecting the PBB, uses the linear programming problem by the BWM with robust optimization approach. To achieve this goal, the linear programming mathematical model was applied to implement PBB and the executive units officials (administrators) survey and interview tools and questionnaires based on the Best Worst Method (BWM) was used to solve the problem of budgeting and to determine short-term goals, executive programs and products. The research results showed that the model can reduce the budget deviation index and improve the performance of the company by forecasting the budget of operational activities. Regarding the uncertainty of the company's resources, the model is capable of predicting the optimal budget for the coming years.

کلیدواژه‌ها

Performance Based Budgeting (PBB)؛ Activity Based Costing(ABC)؛ Best Worst Method(BWM)؛ linear programming problem؛ Robust Optimization(RO)

مراجع

[1] Amini, M.A., Azar, A., Dehghan Nayeri, M., and Bayat, K., Developing a Performance-Based BudgetingMaturity Model and Constructing a DEA-BasedComposite Indicator to Measure It’s Score, Industrial Engineering & Management Systems, 2019, 18(1), P.143-153. Doi: 10.7232/iems.2019.18.1.143.

[2] Aramesh, M., Moein Addin, M., and  Dehghan Dehnavi, H., Presentation The Pattern of Performance Based Budgeting By Hybrid Technique Of Fuzzy Delphi and Fuzzy Analysis Hierarchy Process, Management accounting and auditing knowledge, 2017, 7(26), P. 175-188, (in persian).

[3] Azar, A.,  and Amirkhani, T., Public Budgeting: Local Budgeting and Budgeting Institutions, Tehran, Iran, Second Edition, Samat, 2012 (in Persian).

[4] Azar,A., Khadivar,A., Amin Naseri.,M.R., and Anvar Rostami,A.A., Providing Performance-Based Budgeting System Architecture with Intelligent Decision Support System Approach, Management Research in Iran, 2011, 15( 3), P. 1 – 22. (in Persian).

[5] Azar, A., Khadivar, A., Amin Nasser, MR, and Anvar Rostami, A., A Linear Programming Model With Robust Approach For Performance Based Budgeting (PBB), Journal of Public Administration (JPA), 2011, 3(8) , P. 93-120. http://ensani.ir/file/download/article/20120427085413-8063-51 (in Persian).

[6] Bastian, I., Public sector accounting, Akuntansi Sektor Publik: Suatu Pengantar.Jakarta: Erlangga, 2006. Corpus ID: 168611059.

[7] Behn, R.D., Why Measure Performance? Different purposes require different measures, Public Administration Review, 2003, 63(5), P. 586-606. Doi: 10.1111/1540-6210.00322.

[8] Ben-Tal, A., and Nemirovski, A., Robust solutions of linear programming problems contaminated with uncertain data, Mathematical Programming, 2000, 88(3), P. 411- 424. Doi: 10.1007/PL00011380.

[9] Berman, E., Performance and Productivity in Public and Nonprofit Organizations, Second Edition, Armonk, New York: M.E. Sharpe: 226, 2006.

[10] Bertsimas, D., and Sim, M.,  The Price of the Robustness, Operations.Research, INFORMS, 2004, 52(1), P. 35- 53. Doi: 10.1287/opre.1030.0065.

[11] Comprehensive Guidelines for Performance-Based Budgeting in the Framework of the Two-Year Operational Plan, Plan and Budget Organization of Iran, 2019, (in Persian).

[12] Denhardt, R.B., and Denhardt, J.V., The New Public Service: Serving Rather Than Steering, Public Administration Review, 2000, 60(6), P. 549-559. https://www.jstor.org/stable/977437.

[13] Foltin, C., State and Local Government Performance: It’s Time to Measure Up!, The Governments Accountants Journal , 1999 , 48(1) , P. 40–47.

[14] Giovanna Mauro, S., Cinquini, L., and Pianezzi, D., New Public Management between reality and illusion: Analysing the validity of performance-based budgeting, The British Accounting Review, 2019, In Press. Doi: 10.1016/j.bar.2019.02.007.

[15] Guzman., M.J., Can Centralized Performance Budgeting Systems Be Useful For Line Ministries? Evidence From Chile, Public Budgeting & Finance, 2019, 39(2), P.23-43. Doi: 10.1111/pbaf.12214.

[16] Hartanto., M.R, and Busaini, A., Implementation of Performance-Based Budgeting: A Phenomenological Study on National Land Agency, International Journal of Scientific Research and Management (IJSRM), 2018, 6(2), P. 122-131. Doi:10.18535/ijsrm/v6i2.em06.

[17] Haryanto, S.A., Public sector accounting. Semarang: Diponegoro University Publishing Agency, 2007.

[18] Hassanabadi, M., and Najjar Sarraf, A., Comprehensive Model of Operational Budgeting System, Tehran, Iran,  Fourth Edition, Industrial Research and Training Center of Iran, 2009, (in Persian).

[19] Hatry, H.P., Epilogue: The many faces of use, Performance Information in the Public Sector: How It Is Used, Palgrave Macmillan: Basingstoke, Governance and Public Management (GPM), 2008, P.227-240. Doi: 10.1007/978-1-137-10541-7.

[20] Hawke, L., Performance Budgeting in Australia, OECD Journal on Budgeting, 2007, 7(3). Doi: 10.1787/16812336.

[21] Hawkesworth, I., Melchor, O.H., and Robinson, M., Selected budgeting issues in Chile: Performance budgeting, medium-term budgeting, budget flexibility, OECD Journal on Budgeting, 2013, 2012(3). Doi: 10.1787/budget-12-5k44tpx5bl48.

[22] Hesrini, E., Analysis of Performance-Based Budgeting At Gresik Customs Control and Service Office, e-Jurnal Ilmu Manajemen MAGISTRA, 2015, 1(1).

[23] Izadikhah, M., and Khoshroo, A.R., Energy management in crop production using a novel fuzzy data envelopment analysis model, RAIRO-Oper. Res., 2018, 52(2), P. 595-617. Doi: 10.1051/ro/2017082.

[24] Izadikhah, M., Improving the Banks Shareholder Long Term Values by Using Data Envelopment Analysis Model, Advances in mathematical finance & applications, 3(2), 2018, P.27–41.Doi: 10.22034/AMFA.2018.540829.

[25] Juszczak., TH., federal performance budgeting the budget's new clothes, The journal of Government Financial Manangement, 2004, 53(4).

[26] Kalantari, N., Mohammadi Pour, R., Seidi, M., Shiri, and A., Azizkhani, M, Fuzzy Goal Programming Model to Rolling Performance Based Budgeting by Productivity Approach (Case Study: Gas Refineries in Iran), Advances in mathematical finance & applications, ,2018, 3(3), P. 89 -101. Doi: 10.22034/AMFA.2018.544952

[27] Mardiasmo, A., Public sector accounting, Edisi Ke-4, Yogyakarta: Penerbit Andi ,2009.

[28]  Nasrabadi1, M.M.,  Sharifi Rasouli, Elham., and Sharifi, M., Robust Optimization for Performance-Based Budget Allocation at Payam Noor University, American Journal of Applied Mathematics, 2016, 4(6), P. 310-315. Doi: 10.11648/j.ajam.20160406.17.

[29] Organisation for Economic Cooperation and Development (OECD), Performance Budgeting in OECD Countries, OECD Publishing, Paris, 2007.

 [30] Organisation for Economic Cooperation and Development (OECD), Performance Budgeting: A Users’ Guide, Policy Brief, 2008.

[31] Peykani, P., Mohammadi, A., Farzipoor Saen, R., Sadjadi, S.J., and Rostamy-Malkhalifeh, M., Data envelopment analysis and robust optimization: a review, Expert Systems, e12534, 2020, 37(4). https://onlinelibrary.wiley.com. Doi: 10.1111/exsy.12534.

[32] Peykani, P., Mohammadi, E., Emrouznejad, A., Pishvaee, M. S., and  Rostamy-Malkhalifeh, M., Fuzzy data envelopment analysis: an adjustable approach, Expert Systems with Applications, 2019,  136, P. 439-452. Doi: 10.1016/j.eswa.2019.06.039.

[33] Peykani, P., Mohammadi, E., Pishvaee, M. S., Rostamy-Malkhalifeh, M., and Hosseinzadeh Lotfi,  F., Fuzzy data envelopment analysis approach for ranking of stocks with an application to Tehran stock exchange, Advances in Mathematical Finance and Applications, 2019, 4(1), P.31-43.Doi: 10.22034/amfa.2019.581412.1155.

[34] Peykani, P., Mohammadi, A., and Seyed Esmaeili, F.S., Stock evaluation under mixed uncertainties using robust DEA model, Journal of Quality Engineering and Production Optimization, 2019, 4(1), P. 73-84.Doi: 10.22070/JQEPO.2019.3652.1080.

[35] Peykani, P., Mohammadi, A., Pishvaee, M. S., Rostamy-Malkhalifeh, M., and Jabbarzadeh, A., A novel fuzzy data envelopment analysis based on robust possibilistic programming: possibility, necessity and credibility-based approaches, RAIRO-Operations Research, 2018, 52(4-5), P. 1445-1463. Doi: 10.1051/ro/2018019.

[36] Peykani, P., Mohammadi, A., Jabbarzadeh, A., and Jandaghian, A., Utilizing robust data envelopment analysis model for measuring efficiency of stock, a case study: Tehran stock exchange, Journal of New Research in Mathematics, 2016, 1(4), P. 15-24. http://jnrm.srbiau.ac.ir/article_8791.html.

[37] Rezaei, J., Best-worst multi-criteriadecision-makingmethod, The International Journal of Management Science, OMEGA, 2015, 53, P. 49-57. Doi: 10.1016/j.omega.2014.11.009.

[38] Rezaei, J., Best-worst multi-criteria decision-making method: Some properties and a linear model, Omega, The International Journal of Management Science, 2016, 64, P. 126-130. Doi:10.1016/j.omega.2015.12.001.

[39] Robinson, M., and D. Last., A Basic Model of Performance-Based Budgeting, International Monetary Fund, Technical Notes and Manuals, 2009, 9(1), https://www.imf.org/~/media/Websites/IMF/imported-full-text-pdf/external/pubs/ft/tnm/2009/_tnm0901.ashx.

[40] Robinson, M., Connecting Evaluation and Budgeting, Independent Evaluation Group, The World Bank Group: Washington DC, 2014, 1(3), http://documents.worldbank.org /curated/en/176101468315318860/ Connecting-evaluation-and-budgeting.

[41] Rostamy-Malkhalifeh, M., and Mollaeian, E., Evaluating performance supply chain by a new non-radial network DEA model with fuzzy data, Journal of Data Envelopment Analysis and Decision, 2012, P. 9.Doi: 10.5899/2012/dea-00005.

[42] Sadjadia, S.J., and Karimi, M., Best-worst multi-criteria decision-making method: A robust approach, Decision Science Letters, 2018, 7, P. 323–340. Doi: 10.5267/j.dsl.2018.3.003.

[43] Sancoko, B., Review of Performance-Based Budgeting in Indonesia. Financial Education and Training Agency, Ministry of Finance of the Republic of Indonesia, 2008.

[44] Schick, A., Performance Budgeting and Accrual Budgeting: Decision Rules or Analytic Tools?, OECD Journal on Budgeting, 2007, 7(2), P. 109-138. Doi: 10.1787/budget-v7-art11-en.

[45] Shah, A., and Shen, CH., A Primer on Performance Budgeting, En: A. Shah, Budgeting and Budgetary Institutions, The World Bank: Washington, DC, 2007, P. 137–177. Corpus ID: 41841789.

[46] Soyster , A. L., Technical Note-A Duality Theory for Convex Programming with Set-Inclusive Constraints, Operations Research, INFORMS,1974, 22(4). Doi: 10.1287/opre.22.4.892.

[47] Tat‐Kei Ho, A., From Performance Budgeting to Performance Budget Management: Theory and Practice, Public Administration Review, 2018, 78(5), P. 748–758. Doi: 10.1111/puar.12915.

[48] Widodo, T., Performance-Based Budgeting: Evidence from Indonesia, PhD. thesis, University of Birmingham, Birmingham, England, 2016.

[49] Zamfirescu, L., and Zamfirescu, C.B., Goal Programming as a Decision Model for Performance-Based Budgeting, Procedia Computer Science, 2013, 17, P. 426-433. Doi: 10.1016/j.procs.2013.05.055.