Budget Analysis Workshop

Budget Analysis Workshop

Participant Guide, Version 5.0

Graduate School USA

Washington, DC 20024

(888) 744-GRAD

www.graduateschool.edu

Portions of this manuscript, exclusive of public domain materials, are protected by an additional copyright. All rights reserved to those portions by FedTrain, Inc. 2451 Cumberland Pkwy, MS 3698, Atlanta, GA 30339. No portion of this manuscript may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage or retrieval system without the permission in writing from FedTrain, Inc. Said permission is conveyed, herein, exclusively to the Graduate School USA.

This manuscript has been reprinted by the Graduate School USA for use in BUDG8100D with permission of FedTrain, Inc.

BUDG8100-M

Introduction

Table of Contents

Module 1

Transition to New Duties

Module 2

Performance Measurement

Module 3

Trend and Variation Analysis

Module 4

Data Relationship Analysis

Module 5

Cost Analysis

Appendix A

Blank Worksheets

Appendix B

GAO Glossary of Terms September 2005

Appendix C

OMB Circular A-11: Part 6

Preparation and Submission of Strategic Plans, Annual
Performance Plans and Annual Program Performance Reports
(July 2010)

Appendix D

OMB Memo M-08-13 (2008)

Welcome

Graduate School USA would like to congratulate you for being selected to attend this very meaningful, informative, and useful program of instruction. We sincerely hope you will be able to improve your analysis of diverse aspects of your professional career, and personal endeavors as well. As you will see in this course, all of the techniques you will be taught can be used in untold opportunities both professionally and privately. For example, the course incorporates a case study of a fictitious organization and you will be assigned various analytical tasks to accomplish. To prepare you for many of those tasks, the course will ask you to complete the analysis of a typical nongovernment situation. For example, in
Module 5 you will be asked to decide whether you would personally pay cash, lease, or finance a new car, or keep your old clunker. It is our hope that, by using analytical techniques that one might encounter in a private setting, the participant can overcome learning obstacles and allow focus on the real benefits and uses of the particular technique being employed.

You will also learn that all analysis is not exclusively about the bottom line numbers. One need only tune to a business news program on cable TV and observe experts commenting, and even prognosticating, on the future of a particular stock or of the market in general to realize this truth. Two presumably competent analysts can conduct independent analyses of data on the same company and emerge with entirely different conclusions and recommendations. One says, “Buy!” while the other urges, “Sell!” Which advice should one rely upon in making a decision? Some would say to trust the analyst with the highest credibility. Others would focus on the presentation, leaning toward the analyst who made the best case. Still others would reject both and seek their own path. Thus, analysis is far more than just the numbers. In many cases, a person’s tendencies, experience, intuition, and even feelings play a major part in a decision. This course will help to illustrate this point.

The course was designed as an integrated case study. The participant will note that each of the six modules can stand alone, although they are incorporated into a scenario that will enable the participant to role-play his or her involvement in the exercise. No single analytical technique is given more or less weight than others. However, the participant will find that certain analytical techniques tend to be used more frequently than others, both in the fictional case and in the practical applications in the workplace. This four-day course combines lecture, small group exercises, individual work, and class discussions. Each module will begin with a lecture by the instructor focusing on the learning objectives, the background, and the key points of the subject matter. The participant will then be required to read the case-study exercise assignment for that module. Generally, there will be a practice exercise to prepare the participant for the assignment. The instructor will assist the participants through the practice exercise, if used, to ensure that the participants are acquiring the required skills and knowledge. At times, the participant will work individually. But, frequently, the final assignment will be a group effort.

Finally, a comment should be made on math skills. Some participants in the past have enrolled in this class unprepared. The published prerequisites for the class should be observed if at all possible. Having said this, Graduate School USA recognizes that some attendees will need additional tutoring in certain mathematical techniques to enable them to complete the exercises. The instructor therefore will take time to assist participants in these techniques as the course proceeds. Participants requiring such assistance should not hesitate to ask for it. Participants who do not need the assistance are requested to be patient as we equip all participants to participate successfully in this very important learning opportunity.

Course Overview

A synopsis of each module is included below, so that you may familiarize yourself with the material before diving in.

Module 1: Transition to New Duties (The Case Study)

This module introduces the participants to the hypothetical organization that will be featured throughout the course, the Federal Service Center. It discusses the structure, mission, funding, and relationships within the organization. This module will teach the participants how to transition quickly to a new set of duties, whether they are in a completely new assignment or just temporarily picking up tasks in a vacant position.

Module 2: Performance Measurement

In this module, the participants will use the Government Performance and Results Act (GPRA) of 1993 as it was enacted, implemented to focus on one of the most important components of the act: performance measurement. Students will focus on how effective performance measurement is a valuable tool for analysis of program accomplishments. The participants will learn how to identify key program-measurement indicators and related financial data to enable correlation of diverse data to enhance the analysis. The participants will learn how to use the performance measurement tools to better develop GPRA performance measurement indicators and to analyze performance against those indicators.

Module 3: Trend and Variation Analysis

Trend analysis is the most widely used form of analysis in the world today. The participant will learn the various types of trend analysis, how to detect patterns in data population, and how to display the data in a manner that enhances decision-making. In the context of a case study, the participants will conduct a trend analysis of data. The participants will prepare recommendations for adjustments to the current year budget execution and forecast requirements for next year’s budget.

Variation analysis is a close second to trend analysis in popularity with today’s professional analysts. In Module 2 the participants learned how to relate performance objectives to resource consumption. The second part of Module 3 focuses on analysis of the data as it relates to expectations. For example, a manager projects to accomplish 200 workload units. At the conclusion of the period he produced only 185 units. What was the variance? What factors contribute to a variance, favorable and unfavorable? How significant are they? What does the variance say about future performance? The participants will learn to use variation analysis as a tool for analyzing results and making predictions for future outcomes.

Module 4: Data Relationship Analysis

Information overload contributes to faulty analysis. Additionally, too much intertwined but disconnected data inhibits analysis. In this module the participants will be taught how to recognize the key data elements. In the context of a case study, this module will ask the participants to analyze various budgetary information and performance data, and provide estimates regarding the creation of a new organizational unit. This module will demonstrate how these sources of related data can be assimilated and used to make effective analysis and projections for the future.

Module 5: Cost Analysis

Module 5 introduces the participants to the complexities of cost analysis. It discusses the terms and techniques used in a simple cost analysis. The participants will be required to answer the question, “Is it better to purchase, lease, or lease-to-own a new piece of equipment; or to keep the old machine?” The participant will learn how present value analysis can have a significant impact on the decision.

Agenda

Day 1

Welcome and Introductions

Module 1: Transition to New Duties

Lunch

Module 2: Performance Measurement

Day 2

Module 2: Performance Measurement (cont.)

Lunch

Module 3: Trend Analysis

Module 3: Variation Analysis

Day 3

Module 3: Variation Analysis

Module 4: Data Relationship Analysis

Lunch

Module 4: Data Relationships (cont.)

Day 4

Module 4: Data Relationship Analysis (cont.)

Module 5: Cost Analysis

Lunch

Module 5: Cost Analysis (cont.)

Wrap-up and Dismissal

Each class day consists of 7 hours of instruction, an hour for lunch with appropriate morning and afternoon breaks as determined by the instructor. A class-day is credited as 8 hours for Continuing Professional Education (CPE) purposes. The last half-hour each day will be set aside for the students to complete assignments for the next day. The student will be free to complete the outside assignment in the classroom following dismissal or at a time and place of their choosing that evening. The following table outlines the outside assignments:

What / Book / Pages / Complete by
Practice Exercise 2-1 / Workbook / 14 / Start—Day 2
Practice Exercise 3-1 / Workbook / 20 / Start—Day 3
Module 4, Read / Participant Guide / 4-1 to 4-7 / Noon—Day 3
Module 4, Quiz / Workbook / 28 / Noon—Day 3
Module 5, Exercises 5-1 to 5-5 / Participant Guide / 5-6 to 5-10 / Start—Day 4

Module 1

Transition to New Duties

Module 1 • Transition to New Duties

Module Objectives

At the successful completion of this module, you will be prepared to quickly analyze the past and present status of an account, program, project, organization, or activity.

· Objective 1: How to recognize and collect relevant data for the new environment.

· Objective 2: How to recognize critical data elements.

· Objective 3: How to recognize relationships between data elements and organization/mission objectives.

· Objective 4: How to format data to make the analysis easier, more accurate, and comprehensive.

Case Study: To Do Today!

This case study centers on the imaginary Federal Service Center (FSC), of the Federal Management Agency (FMA).

General Situation

· Mission: The FSC is a field-operating agency of the FMA, both fictitious organizations. It is located in a General Services Administration (GSA) office building in Long Branch, Arkansas. It has a national mission of providing three broad support services to various non-military agencies of the U.S. Government.

The agencies are required by Presidential Executive Order and Office of Management and Budget (OMB) circular to acquire their services from one of the five FSC regional offices. In all, the FSC supports nearly 830,000 federal civilian employees in the United States.

These services are grouped by the following major categories:

· Human Resources Management: These services include official personnel record keeping; position management, including job descriptions, classification, and grading of positions; personnel recruitment; and training.

· Logistical support: These services include procurement and supply actions, facilities management, and administrative vehicle support.

· Financial management: These services include broad comptroller functions, including accounting, disbursing, reporting, and payroll processing housed in five finance centers. In addition, the FSC headquarters provides a variety of management services, which are available to the customers on a non-reimbursable basis. They include management analysis, manpower analysis and internal review and audit.

Background: The FSC was formed seven years ago to fill an emerging need
caused by the broad downsizing of the federal government. Hundreds of relatively small federal agencies found that they could not continue to provide their own stand-alone support services. Consequently, they were directed to transfer some of their functions and a limited number of full-time equivalent (FTE) authorizations to the newly created FSC.

There are five regional offices reporting directly to the FSC. Each region has a number of satellite offices, which are located in areas where there are large concentrations of supported activities. There are twenty-four satellites throughout the U.S.

The FSC is funded in two ways:

· Appropriated funds: The FSC headquarters receives annual funding for salaries and operating expenses. These funds are provided through annual Congressional appropriations acts.

· Reimbursable funds: The regions and their satellites are wholly dependent on reimbursable funds for their existence. Each supported activity reimburses for the support services provided by the regions and their satellite activities.

Specific Situation—Your Role

You are a budget analyst in the Budget Division, Chief Financial Officer Directorate, FSC HQ. You were recently promoted to this Budget Analyst position. You have almost five years experience in budgeting, most of which was at the region level. Formerly, you worked as a Budget Assistant in the Tulsa region office. At Tulsa, most of your time was spent reconciling accounting reports and following up on errors. You did not do in-depth analysis of the programs. This new job will require you to analyze budgets at higher levels using more sophisticated techniques than you previously experienced. Your supervisor is the Budget Director, Mr. Jim Johnson, who is also new to the organization, having preceded you by only four months.

For the next few months, Mr. Johnson has assigned you to be the primary budget analyst for the Management Analysis Teams (MATs), which are in the management analysis division. It’s part of the Chief financial Officer (CFO) Directorate. Mr. Johnson wants you to focus on just one account to help you learn about the headquarters and the internal administrative procedures. You know you will be assigned additional accounts in the near future.