PPBS are extensions and refinements of cost-effectiveness analysis, in which each governmental activity is evaluated according to what it accomplishes for a given expenditure. In PPBS, governmental functions are classified into a hierarchy of programs, subprograms activities and sub-activities, which may or may not correspond to the organization of government. For example, C West Churchman describes A H Schainblattâ€™s case of a state government alcoholism program, in which 13 different state agencies participate. Goals are defined for each level of the hierarchy; and goal attainment per dollar spent is the measure of activity and program value. One sub program in an alcoholism program might be rehabilitation and the agencies which participate and their activities might include:
1. The courts, which either jail or fine those arrested for alcohol related offenses (such as drunken driving).
2. A state social agency, which provides counseling to those arrested as well as to those who seek aid.
3. A state hospital, where people may go or be sent for â€œdrying outâ€.
A PPBS system would attempt to determine the combinations of those agencies and activities which would provide the maximum number of rehabilitated cases at the lowest cost.
Although PPBS is useful in evaluating alternative approaches to attaining the same goals within a single program, it is less useful for comparing program themselves. How can you compare the impact per dollar spent on higher education with the impact of spending on criminal justice, for example, when their goals are measured in different terms? The answer provided by PPBS is that such a comparison and the resulting allocation if funds among programs is a political decision, not subject to the rational approach of PPBS.
The overlapping of programs ad generates and agencies n PPBS provides difficulties for governmental accounting. Traditionally, each agency recommends a budget with line items for each staff memberâ€™s salary, for each item of equipment and for each type of supply, for each classification of travel, and for capital expenditure. In PPBS, staff members from several agencies may spend part of their time on a given program, so program budgeting must allocate agency expenditures among programs. Although some proponents of PPBS have argued that government should be reorganized so that agencies coincide with programs, this has proved unfeasible, because programs change much more rapidly than agencies could be reorganized. Thus two budgets must be created when PPBS is used: a line item budget and a program budget, with crosswalks to explain which parts of which line-items appear in each program, and vice versa.
When President Johnson ordered federal agencies to adopt PPBS it was embraced by several state governments and even some cities,. But because of the extra paperwork required of the executive branch by PPBS, the need for elaborate information systems to provide feedback on goal attainment and the difficulty that some legislators experienced in following the crosswalks, PPBS has decreased in popularity in recent years. Benefit/cost analysis is an economic technique used to evaluate individual projects as well as to decide among alternatives. It is used mainly in the Department of Defense and water resources projects, but has been experimentally applied to programs in education, transportation, and environmental protection. Each of the products and services or â€œbenefitsâ€ of a public program or project is measured in terms of its dollar value to society for each year of the projectâ€™s proposed or expected life. Benefits are summed for each year, then discounted to present value and divided by total project cost. If the resulting benefit/cost ratio exceeds unity, the project is considered worthwhile. If sufficient resources are not available to fund all worthwhile projects, those with the highest benefit/cost ratios are funded.