One of the main reasons that government is so inefficient compared with private companies, besides their bureaucratic structure, is found in the way that funding and budgeting is done. When private companies need to fix a problem they select the Department of the company that “owns” the problem and asks them to come up with the most satisfactory solution. That is, to find the least costly solution that can be implemented quickly. Once the Department has identified the solution it is costed-out by industrial engineers or budget personnel, funded by the companies’ management and implemented.

When government encounters a problem it is usually first brought to the attention of the legislature by this time the problem is considered to be significant. There becomes an immediate political problem when each political party may or may not consider the problem worthy of consideration. A specific agency may be thought to have responsibility for the problem but they may or may not be asked to come up with a solution. One party may develop a solution to the problem and those against may come up with their own solution. Nearly all government problems are thought to require funding. Therefore there is an immediate effort to determine the funding needed for the solution even before the most satisfactory solution is known. The amount of funding is dependent on the party in power and their perception of the funding required not on the actual funding needed for the most satisfactory solution which may or may not even be known. Once the “solution” is funded it becomes a part of the budget by law. If the problem is thought to be large enough the Legislature may create a whole new agency as the solution. Otherwise the funds are passed to the most likely agency and the matter is thought solved unless the problem arises again at some later date. Note that once the funding becomes law the state’s budgeting personnel have little or no role in determining the level of funding required.

I call this government process Top-Down budgeting where little effort is put into finding the most efficient and effective solution before funding it. This is the opposite of that done in private industry which I call Bottom-Up budgeting finding the most appropriate solution before funding it. The bottom-up solution is based on Work Measurement meaning that the actual costs in labor and other expenses are known at the time of approval by private companies’ management.

Now let’s examine the same government funding problem after the government reforms I have recommended are put into place. The reforms consist of first breaking down all departments and agencies into Functions followed by implementing Total Quality Management (TQM) and Work Improvement Teams (WIT) for each Function. Later several bureaucratic levels of management are removed and replaced by a two tier organization consisting of a Steering Management team and Functional Management teams.

Problems in the new government organization will be identified first by a WIT within Functional Management which has been trained in TQM techniques for continual improvement of the function’s processes. The WIT “owning” the problem will then develop the most cost effective solution. This solution is then presented to Steering Management. If funding is required budgeting personnel from Steering Management will cost-out the solution. If no funds are available state funds are sought. And if they are not available only then is the solution with the funding required presented to the state legislature. This process provides for solution of all problems big and small and for continuous improvement in the way government operates.

As a side note, when current agencies are funded there is a tendency to assign work by labels. For example John is responsible for Pubic Safety and Harry is responsible for Public Accountability and the budget is automatically charged for two people plus those who work for John and Harry. The amount of work that is to be done in each of these functions is not known leading to over staffing. Under the reformed government, Public Safety and Public Accountability are identified as Functions each with a WIT which actually does the work of the Function. The actual work of each Function is costed-out and staffed using work Measurement resulting in a much reduced budget.

A current example:
Senate Democrats decided to pull $80 million from the war spending request — money Obama had requested to close the Guantanamo Bay detention facility by Jan. 22, 2010. Democrats say “we are not going to do anything until we get a detailed plan from the president”.