Extending a fuzzy network data envelopment analysis model to measure maturity levels of a performance based-budgeting system: A case study

Adel Hatami-Marbini, Mehdi Toloo, Mohamad Reza Amini, Adel Azar*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Performance-based budgeting (PBB) aims to formulate and manage public budgetary resources to improve managerial decisions based on actual performance measures of agencies. Although the PBB system has been overwhelmingly applied by various agencies, the progress and maturity of its implementation process are not satisfactory at large. Therefore, it warrants to find, evaluate and improve the performance of organisations in relation to implementing a PBB system. To do so, the composite indicators (CIs) have been proposed to aggregate multiple indicators associated with the PBB system, but their employment is contentious as they often lean on ad-hoc and troublesome assumptions. Data envelopment analysis (DEA) methods as a powerful and established tool help to contend with key limitations of CIs. Although the original DEA method ignores an internal production process, the knowledge of the internal structure of the PBB systems and indicators is of importance to provide further insights when assessing the performance of PBB systems. In this paper, we present a budget assessment framework by breaking a PBB system into two parallel stages including operations performance (OP) and financial performance enhancement (FPE) to open up the black-box structure of the system and consider the indicator hierarchy configuration of each stage. In situations of the hierarchical configuration of indicators, we develop a multilayer parallel network DEA-based CIs model to measure the PBB maturity levels of the system and its stages. It is shown that the discrimination power of the proposed multilayer model is better than the existing models with one layer and in situations of relatively small number of DMUs the model developed in this paper can be a good solution to the dimension reduction of indicators. Moreover, this research leverages fuzzy logic to surmount the subjective information that is often available in collecting indicators of the PBB systems. The major contribution of this research is to examine a case study of a PBB maturity award in Iran, as a developing country with a myriad of financial challenges, to adopt a PBB maturity model as well as point towards the efficacy and applicability of the proposed framework in practice.

Original languageEnglish
Article number116884
JournalExpert Systems with Applications
Volume200
DOIs
Publication statusPublished - Aug 15 2022

Keywords

  • Data envelopment analysis
  • Fuzzy logic
  • Maturity level
  • Network structure
  • Performance-based budgeting

ASJC Scopus subject areas

  • Engineering(all)
  • Computer Science Applications
  • Artificial Intelligence

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