Electrokit | IADB

Accounting and Financial Practices Performance-informed budgeting

Performance-informed budgeting

It is important to promote the use of performance indicators in budgetary decision making, that is, the use of the estimated budget must be linked to technical and commercial indicators that measure the investment objectives and costs used. Processes whose indicators are within the target must be prioritized in the allocation of the budget, while processes in which performance indicators are below the target must be constantly reassessed. The main results of this practice are: (i) improving the setting of objectives and the monitoring of performance; (ii) emphasis on planning; (iii) improving management, transparency, and efficiency. Performance budgeting is useful to improve performance orientation, including program evaluation and spending reviews.

Accounting and Economic Analyses

Individual annual accounting analyses are carried out for operating and maintenance costs as a whole and for system. Also, individual monthly accounting analyses are carried out for main system facilities, these comprise, at the very least, the technical service units, customer service, units/crews of new investments and corrective maintenance. For these evaluations, individual and segregated accounting analyses are carried out for the main components of these operating costs.

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Cost Efficiency, transparency, and optimization

Characterization of all the processes necessary for the activity of electricity distribution, with description of the main activities of each one of them

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Procurement

Procurement policies and procedures must be competitive, non-discriminatory and maintain high standards of transparency and technical quality. To this end, in general, companies tend to always choose the same providers, as this results in traditional economies of scale. However, it is important to have a mechanism that encourages the search for new suppliers, albeit on a smaller scale and with less capacity to meet the needs of the company, as a way of seeking solutions in the market. Some practices can help optimize operating and maintenance costs:

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