Plan audit Audit Plan
2.7 CHAPTER SEVEN: Performance Evaluation & Controlling of Projects in AAB
Performance evaluation is very important for the organizational goal achievement. This is true for both profit and non profit oriented organizations. Because it shows the gap between the present and future position of an organization. Performance evaluation is not directly involved with the financial management but it has a close link to financial activities. Donors are financing for the development projects and actually whether their objective is fulfilled or not can be measured by performance evaluation.
2.7.1 Performance Evaluation of Projects in AAB
For the evaluation of performances of any proposed project by the partner AAB organizes some field visits to evaluate the performance. After the field visit the visitor have to submit a report to the immediate supervisor. The partner organization has to submit their financial report to AAB. All the expenditures have to shown with appropriate supporting documents which ensure the expenditure are properly utilized. The financial statements of partner organization are also monitored to evaluate their performance. AAB also evaluate the performance of the project based on the Terms of Reference (TOR) of agreement.
Figure 14: Steps of Performance Evaluation of Projects
In the above figure, only the steps under the blocked area are maintained to evaluate performance of projects in AAB.
Feasibility study for monitoring by donor
Agreement between donor and NGO
Letter of Intent by donor
Fund approval letter by NGO affairs bureau
Quarterly financial and progress report to donor and NGO affairs bureau
Visit by donor and NGO affairs bureau and audit
Performance Evaluation
2.7.2 Responsibility for the Controlling of Projects
The controlling of various projects is done by sector heads. There are various themes under each sector. The theme leader is liable to the sector head for the controlling of his/her theme.
For controlling of projects the terms and conditions of agreement is maintained. Regular field visit is done to see the activities of partners. The theme leader is liable to the sector head about control of the project. For the controlling of projects the authority matrix is as follows:
Figure 15: Responsibility Matrix for the controlling of Projects
2.7.3 Proposed Performance Measurement Record Sheet for Balanced Scorecard
AAB can improve its performance evaluation and control by using a standard evaluation technique. The following is a proposed Balanced Scorecard for measuring AAB’s projects performance evaluation. This balanced scorecard will measure the performance of any project from four perspectives. They are: Financial perspective, Partner perspective, Internal process perspective, and Innovation & learning perspective.
The objective of this Balanced Scorecard is to maximize the service provided to marginalized people within the constraints of the available finances. AAB will perform better by using this Balanced Scorecard in three aspects such as: it will be able to provide better service with limited funds, provide higher output and make the project very adapting in nature with any change.
Table 10: Performance Measurement Record Sheet for Balanced Scorecard Country Director
Sector Head
Theme Leader
Program Officer
Associate Program Officer Associate Program Officer
Measure Work progress
Purpose To measure the percentage of work progress within the allocated fund for this period.
Relates to The need to fulfill the project objective
Target To provide maximum service with minimum fund
Formula Number of people participating in the project
Total fund spent X 100 Frequency To be measured monthly, to be reviewed quarterly Who measures? Project Officer
Source of data Monthly financial and field report of the project Who acts on the data Program officer, Associate program officer
What do they do? Visit field for monitoring, direct partners to use the resources efficiently, ensure financial transparency
Notes and comments
Table 10.2: Partner Perspective
Measure Partner performance
Purpose To measure the performance of the partner NGO
Relates to The need to track the contribution of partner in the project objective
Target Increase the partner’s efficiency Formula Partner’s output in the project
Total output of the project X 100
Frequency To be measured monthly, to be reviewed quarterly Who measures? Project Officer
Source of data Monthly financial report of the partner, Qualitative report of the project
Who acts on the data Program officer, Associate program officer
What do they do? Visit field for monitoring, direct partners to use the resources efficiently, ensure financial transparency
Notes and comments
Table 10.3: Internal Process Perspective
Measure Service quality
Purpose To measure rate of improvement in service Relates to The need to reduce waste, minimize rework Target Achieve a first time transfer of goods
Formula Number of goods processed to DA
Number of goods purchased X100
Frequency To be measured monthly, to be reviewed quarterly Who measures? Finance officer-Project
Source of data Material requisition form, Monthly cash ledger Who acts on the data Finance officer, Administrative officer
What do they do? Ensure quality goods are purchased, give adequate logistics and
administrative support Notes and comments
Table 10.4: Innovation & Learning Perspective
Measure Employee development
Purpose To measure the improvement of the employee Relates to The need to increase the employee effectiveness
Target Achieve the project objective 100% on time and if possible perform extra ordinary performance
Formula Number of employee participating in the training, and cutting better in appraisal
Frequency Once in a year
Who measures? Trainer
Source of data Appraisal submitted by the employee Who acts on the data Sector head, HR head
What do they do? Conduct the appraisal of the employee, take necessary action for improvement
Notes and comments
Note: From this four perspective, performance can be measured for other criterion, based on the need of the project. This BALANCED SCORECARD has prepared as a sample by which AAB can measure performance of its projects.
In profit oriented organization, generally performance is measured by ratio analysis. In case of NGOs they measure their performance by the actual utilization of project cost of total cost.
Their attempt is to minimize the support and fundraising cost as well as maximizing project cost with quality output.
A profit oriented organization exists primarily to generate a profit, that is, to take in more money than it spends. The owners can decide to keep all the profit themselves, or they can spend some or all of it on the business itself. A non profit oriented organization is organized under rules that forbid the distribution of profits to owners. "Profit" in this context is a relatively technical accounting term, related to but not identical with the notion of a surplus of revenues over expenditures. So, there exist lots of differences in the activities of these two types of organizations. In this chapter, how non profit differ from profit oriented organization and how their financial management differ is described.
2.8.1 How does a nonprofit organization differ from a profit oriented organization Here are some of the differences between a nonprofit and a profit oriented organization: