The completion of Five Year Program Evaluation Plans has been a requirement for selected NSW public sector agencies over a number of years. As part of the Government's commitment to managing for results, the Five Year Plan process has recently been reviewed by the Office of Public Management in the Premier's Department. Findings from that review indicate that it is time to change the approach to performance monitoring and evaluation in the NSW public sector, in line with the guiding principle of management "downstream autonomy" as well as some significant management reforms which have been initiated by the Government.

Program evaluation will continue to be an important evaluation and review mechanism in the NSW public sector. Procedures for program evaluation have been revised to encourage agencies to integrate program evaluation in their corporate and strategic planning processes and conduct evaluations that are useful to agencies and Government.

The new procedures are to take effect from 1 March 1991.

All agencies will be required to undertake an annual Program of Evaluations. This includes agencies not previously involved in formally reporting program evaluations.

Agencies will no longer be required to submit Five Year Program Evaluation Plans to the Office of Public Management. In accordance with the recommendations of a number of Chief Executive Officers, the annual Program of Evaluations will be negotiated between Ministers and their Chief Executive Officers and will be included as part of CEO Performance Agreements.

It would be anticipated that agencies would use the annual corporate plan review process to identify the Program of Evaluations. The annual Program of Evaluations should be included in agencies' corporate plans and in the Premier's Annual Ministerial Portfolio Review Reports.

Agencies are advised to prepare for internal use, rolling plans for program evaluation. The planning horizon for these internal plans will depend on individual requirements of agencies. Some agencies may choose to prepare five year plans while other agencies may find three year plans more appropriate. It is anticipated that all agencies would prepare three to five year rolling plans.

Previous evaluation practice in respect of the size of programs to be evaluated, will continue. In total, the programs nominated for the annual Program of Evaluations should represent at least ten per cent of the agency's total annual recurrent expenditure.

Agencies will no longer be required to submit reports on evaluations to the Office of Public Management. Results of evaluations will be included in the Premier's Annual Ministerial Portfolio Review Reports. Reporting evaluation results in this way, in the context of other corporate achievements, will provide the Government with more comprehensive information about performance management.

Agencies will continue to include results of evaluations in their annual reports.

These new procedures will replace former program evaluation procedures included in the Premier's Memorandum C/24 of 27 May 1986 and page 6 of the NSW Treasury '1nternal-Audit Guidelines for Government Organisations' May 1990.

It may take up to twelve months before the new program evaluation process is synchronised with agencies' corporate planning cycle and the Premier's Annual Ministerial Portfolio Reviews. Agencies should determine for themselves how they wish to incorporate the new requirements into their planning and review cycles. It is expected, however, that all agencies will conduct evaluations during 1991 and will report on progress or results of evaluations in their 1990/91 annual reports and in the Premier's Annual Ministerial Portfolio Review Report for 1991 (in the case of agencies already undertaking program evaluations) and 1992 (for all agencies).

Information designed to assist Ministers and Chief Executive Officers in selecting programs for evaluation and reporting performance is attached. The Strategic Management Division of the Office of Public Management will publish a Brief in February 1991 to assist agencies in responding to the new requirements. Further assistance can also be provided by experienced consultants in the Strategic Management Division. For information please contact the Division on (02) 228 4364.

Yours sincerely

R.G. Humphry 
Director-General
Premier's Department.

Branch: Strategic Management Division (OPM)
Date: 24 December 1990