DOES VALUE FOR MONEY WORK?
(An evidence of City Walk Program in Surakarta)
THESIS
A thesis submitted in partial fulfillment of the
requirement for the degree of Magister Sains
by
Emi Indrawati
SRN: S 4307064
PROGRAM STUDI MAGISTER AKUNTANSI
FAKULTAS EKONOMI
UNIVERSITAS SEBELAS MARET
SURAKARTA
DEDICATION
My beloved Father who passed away……
……speechless…...regret……
When I realize ……I have done nothing……
…..to make you happy
Just my pray is hopefully will make you happy
Ever after…..
My struggling Mother……
Even there has been a distance ….
Have made our life so colorful…..
Black…Red…
Yellow
…
Gr
een
You are the best mom in the world…
My Soulmate…..
Precious moment to turn around our life…
With all my Aura …as Ray of me….makes my
life so Bright
To accomplish great things…
We must not only act...but also dream
ACKNOWLEDGEMENT
Assalaamu’alaikum Wr. Wb.
Alhamdulillah, Researcher thanks to presence of ALLAH SWT for the overflows of blesses, grants, and guides so that Researcher able to finish this thesis well. This thesis is compiled to equip the duties and fulfill the preconditions to get the Master of Science degree in Faculty of Economics, University of Sebelas Maret Surakarta.
Researcher realizes that during the thesis process, there are many helps from other parties, directly and indirectly. Herewith, Researcher says many thanks to various the following parties:
1. Minister of National Education of Indonesian Republic, for the willingness to give grants in the form of scholarship “Beasiswa Unggulan Diknas”, in order to complete the study in Master of Accounting Study Program, Faculty of Economic, University of Sebelas Maret Surakarta.
2. Prof. Dr. Bambang Sutopo, M.Com., Ak., as The Dean of Faculty of Economics, University of Sebelas Maret Surakarta. I am proud to study in this faculty and have Mr. Bambang as the dean.
4. Mr. Djoko Suhardjanto M.Com (Hons), Ph.D, Akt., as the main supervisor, for all the guidance, inspiration, help, motivation, critique, and suggestion that help the researcher to achieve the best result.
5. Christyaningsih B, S.E., M.Si., Ak., as the co-supervisor, for all the guidance, help, motivation, critique, and suggestion that help the researcher to attain the maximum result.
6. Dr. Hasan Fauzi, MBA. Ak, for opening the gate for me to study in this faculty by accepting me in MAKSI International Class. I also want to say my deeply thanks and appreciation for all your guidance, support, and motivation during study in MAKSI.
7. Drs. Jaka Winarna, M.Si., Ak as my “behind the scene” supervisor and my savior.
8. My beloved Bapak (Alm), why I could not make you happy……that was my deepest regret…….Mama……..the great supporter in my life…….. I have to make your dreams come true…… Mas Har…something feels missing…….Aura, Ray, Raafiko…..all my angels, the only reason that make me survive…..
9. Manda……Mbak Uut what should I say about you……my savior……Novi Tri Astuti, thanks for being my financial advisor, Umi, Mas Chalik……let’s pray for our prosperous life after combating our “terrible” life….I can’t forget what we have had that experiences…..
the content, grammar, or any other. Finally, researcher wants to apologize if there are mistake and weakness in this thesis.
C. Research Objective ………..…… 3. Performance Measurement at Public Sector…….….. 4. Value for Money Concept...……….….... 5. City Walk Program... B. Framework... CHAPTER III. RESEARCH METHOD...
B. Suggestions...
LIST OF FIGURE
Page Figure 1.
Figure 2.
Value For Money Elements Framework
LIST OF APPENDIX
Page Appendix A.
Appendix B. Appendix C.
ABBREVIATION
LKPD : Laporan Keuangan PemerintahDaerah (Local Government Financial Statements)
LKPJ : Laporan Keterangan Pertanggungjawaban (Accountability Report)
PERDA : Peraturan Daerah (Local Government Regulation) PP : Peraturan Pemerintah (Government Regulation) SK : Surat Keputusan
ABSTRACT
DOES VALUE FOR MONEY WORK? (An evidence of City Walk Program in Surakarta)
by Emi Indrawati SRN: S 4307064
This research explores the evaluation of City Walk Program done based on the Value For Money concepts. The objectives of this research are: to examine how the evaluation of City Walk Program is done based on the Value for Money concepts and to examine the implication of the City Walk Program to society.
The design used in this research is exploratory study. Through the exploration, researcher will be able to develop concepts more clearly. Populations used in this research are the stakeholder of Surakarta. Stakeholders of this report are divided into internal and external users: executives, the civil servants as the preparers are the internal users and the others including legislatures and public in common are the external ones. Numbers of respondents are 30.This qualitative research uses an inductive data analysis technique, with Value for Money (VFM) approach to define the element of economy, efficiency and affectivity. To analyze with Value for Money (VFM) approach which are rationale, economy, efficiency, effectiveness, impact and continuous relevancy.
agreed that City Walk is a project that logically can be accepted by the
Efficiency aspect gives facts interviews with some respondents said that the program is quite efficient; however, some others said it is not. The fact that the value of Rupiah used to finance this program is felt quite inadequate and almost all respondents agreed that the output of this development is equal with the rupiah spent.
The effectiveness of the program is not fully achieved. Short-term goal has been reached that is the arrangement of the city in several segments along the City Walk. Long-term goal for managing all aspects of urban areas has not been reached, including problems in the parking area on City Walk.
The construction of City Walk has positive and negative social impact. The increased community interaction in the area of City Walk is one of the positive examples. In other one, various violations and unpleasant actions in the area are the negative impact felt by the society. Economically presence of cadgers there, not so much contribute income to the government of Surakarta, also the case with the income of the vendors themselves did not change significantly due to the construction of City Walk. Impacts on cultural aspects, the development of City Walk which managed to make the city look better has contributed to the increasing number of tourist visits along the City Walk tourist destination.
The successful arrangement of the city through the construction of City Walk managed to change the look of the city, organize street vendors, although its effectiveness is still not fully achieved sinc the project has been running for several years, enough to make the intention of the Government of Surakarta to continue the arrangement of the city through the City Walk development in other areas.
Some recommendations are the socialization of performance measurement using Value for Money should be done soon both in the level of central government or local government, specially for the City Walk improvement Especially for the development of City Walk, by anticipating road users in the area of City Walk for cyclists and rickshaws should be made a special point at the location of City Walk to provide comfort and safety (because they do not have to cross to the north side of the road Slamet Riyadi).
ABSTRAKSI
DOES VALUE FOR MONEY WORK? (An evidence of City Walk Program in Surakarta)
oleh Emi Indrawati NIM: S 4307064
Penelitian ini bertujuan untuk mengeksplorasi evaluasi Program City Walk berdasarkan konsep pendekatan Value For Money. Tujuan penelitian ini adalah untuk mengetahui bagaimana evaluasi Program City Walk dijalankan berdasarkan konsep Value For Money dan bagaimana dampak program ini terhadap masyarakat.
Berdasar interview dengan responden, beberapa aspek Value For Money dapat diterima. Dilihat dari aspek Rasionalitas, mayoritas responden setuju bahwa secara logika dan nalar program ini dapat dipahami dan diterima oleh stake holder kota Surakarta. Secara ekonomi, bahwa pembiayaan untuk program telah mencapai taraf paling ekonomis yang diperoleh dari sistem lelang yang telah dijalankan sebelumnya. Aspek efficiensi menunjukkan bahwa tidak semua responden sepakat bahwa program telah berjalan efisien, meskipun semua responden sepakat bahwa hasil fisik pembangunan City Walk telah sepadan dengan nilai rupiah yang telah dikeluarkan. Berbeda dengan efisiensi, aspek efektifitas program belum tercapai. Dalam jangka pendek tujuan pembanguan City Walk tercapai dengan adanya wujud fisik City Walk, namun untuk tujuan jangka panjang terkait penataan perparkiran di sepanjang City Walk.
Pembangunan City Walk memiliki dampak positif maupun negatif. Interaksi masyarakat yang terjadi di area tersebut bukti dampak sosial yang positif dari program ini, namun juga ternyata berdampak negatif yaitu dengan adanya perusakan serta tindakan tidak terpuji lainnya terhadap perlengkapan di area City Walk. Dampak secara ekonomi dilihat dari kontribusi pedagang kaki lima tidak terbukti secara signifikan. Dampak dari aspek budaya, memperlihatkan penataan kota berkontribusi terhadap peningkatan jumlah kunjungan wisata terlebih di lokasi kunjungan wisata sepanjang City Walk. Penataan kota melalui pembangunan City Walk termasuk didalamnya penataan pedagang kaki lima, cukup membuat perhatian pimpinan daerah untuk terus melanjutkan penataan kota di wilayah yang lain.
Rekomendasi yang dapat disajikan adalah sosialisasi tentang penilaian dan pengukuran kinerja dengan menggunakan pendekatan Value For Money yang dapat dilakukan oleh pemerintah daerah maupun pemerintah pusat. Khususnya untuk pengembangan City Walk, perlu dibuatkan jalur khusus di area tersebut bagi para pengendra becak maupun motor sehingga pejalan kaki tetap merasa nyaman dan aman.
CHAPTER I
INTRODUCTION
This research explores the evaluation of City Walk Program done based on the Value For Money concepts and the implications of the City Walk Program to society. Chapter I explains research background; problem statement; research objective; and research benefit.
Public sector reforms are occurring throughout the world in an effort to improve the efficiency, effectiveness, responsiveness and accountability of the public service. Local government reform, as a subset of the overall reform process, has been implemented in an attempt to increase transparency of those agencies empowered with providing essential services to our communities (Pilcher, 2005).
In today’s society both public and private organizations, and their citizens, are required to be “accountable”. Pilcher (2005) suggested that customer satisfaction, quality management and cost effectiveness all affect how accountability is defined and measured. Accountability relies on the ability to provide an account of one’s actions – whether it be via a financial report or some other method. The public governance accountability has been a major concern in all societies and civilizations, although there are variations in the criteria, means, and agents of such accountability. Those variations are based on the nature of the policy ranging from traditional to modern, conservative to liberal, capitalist to socialist. Even the connotations of accountability often differ among societies depending on their unique socio-historical formations, ideological inclinations, and cultural beliefs (Haque, 1994).
Accountability of public sector management can be achieved through performance appraisal. Performance appraisal or performance measurement is a management tool to improve the quality of decision making and accountability (Bastian, 2006). Through performance measurement, the decision making will be more reasonable and accountable. Measuring performance must be associated
with the vision and mission that has been defined and conducted on an ongoing basis. This is intended to provide feedback so that improvements can continually be done for the future success. By knowing the importance of public sector accountability on performance measurement, it creates the motivation for researcher to explore in more detail.
An important insight from institutional theory is that performance may be viewed as institutionally defined, as institutional factors determine the interests being pursued by organizations (Scott 1987 in Brignall and Modell 2000). More succinctly, the definition of performance are as follow:
Generally, performance will be defined narrowly to the extent that (a) elites dominate an organization, (b) a high degree of professionalization exists, and (c) the organization performs a technical function, outputs of which are measurable. Performance will be construed much more broadly, by contrast, to the extent that (a) the norm of participative democratic governance operates, sometimes in the formal structure or rules of an organization, (b) the interests of multiple constituencies are given recognition, and (c) the organization’s function is non-technical and outputs elude measurement. Meyer and Zucker (1989, p. 111 in Brignall and Modell 2000)
In addition to these determinants of what is regarded as ‘good’ performance, it is important to consider the dependence of the organization on different groups of stakeholders. Even if the existence of multiple and conflicting interests increases the need to balance these by establishing some trade-off between them, organizational dependence on a particular constituency reduces the likelihood of balance (Oliver, 1991).
Urban Official of Surakarta (Dinas Tata Ruang dan Perkotaan). The end of evaluation on public sector is to determine the continued action in order to give the satisfaction to different groups of stakeholders related to the public facilities or public programs. Besides that, the evaluation on the such programs will give the public trust about the accountability governance.
The City Walk Program is selected for several reasons. First, City Walk is one of the strategic programs that implemented by the government of Surakarta. In developing the quality of urban space, strategic area is the vital thing. The space area is formed by a series of components or characteristics of the region. It becomes an important focus in the development of urban space, particularly in supporting the living space for its citizens (Pemkot, 2006). Surakarta city has a strategic area that potential for social resources, cultural, and economic backgrounds.
can pass the City Walk comfortably. Moreover, the area of City Walk can be used to hold various events that directly impact the productivity of economic sectors.
Related to the importance of accountability in public sector management, it is necessary to evaluate the City Walk program that was announced by the Local Government of Surakarta. Evaluation of the program need to do even there was no problem on its implementation. Evaluation can be done independently in managing the program as a part of internal management process. Furthermore, evaluation is a periodic assessment involving the exercise of judgement of policy or program implementation by reference to predefined performance criteria. The approach to enhance the public sector accountability that used in this research is the Value For Money concept. More over until this time the Local Government of Surakarta has not run such evaluation yet. According to Central Expenditure Evaluation Unit (2007), the Government’s Value For Money is part of a framework introduced to secure improved Value For Money from public expenditure. The objectives of the Value For Money are to analyze exchequer spending in a systematic manner and to provide a basis on which more informed decisions can be made on priorities within and between programs (CEEU, 2007).
Value For Money is one of a range of modernization initiatives aimed at moving public sector management away from the traditional focus on inputs to concentrate on the achievement of results. Grimsey and Lewis (2005) stated that Value For Money is defined as ‘the optimum combination of whole life cost and quality (or fitness for purpose) to meet the user’s requirement’, is that
2. Economic appraisal techniques, including proper appreciation of risk, be rigorously applied, and that risk is allocated between the public and private sectors so that the expected Value For Money is maximized;
3. Comparisons between publicly and privately financed options be fair, realistic and comprehensive.
These considerations are normally examined on a case-by-case basis that risk allocation depends on each project’s risk profile, while the competitiveness will vary from project to project and from one time to another.
Doing some evaluation by using Value For Money concept on the public sector is rarely done. It is not commonly used as tools to measure the performance. That is why the researcher chooses the topic, besides it seldom to be examined by other, its one of new topic and much important idea on the public sector. Moreover by this research will give another freshly atmosphere on performance measurement on public sector.
B. Problem Statements
Related the importance of program evaluation to create accountability, there are some problems that need to be disclosed and solved related to City Walk Program. Some problems that would be disclosed and solved are
1. How is the evaluation of City Walk Program done based on the Value For Money concepts?
2. What are the implications of the City Walk Program to society?
C. Research Objectives
In line with the problem statements, there are two objectives of this research. The objectives are
1. To examine how the evaluation of City Walk Program is done based on the Value For Money concepts.
2. To examine the implication of the City Walk Program to society.
D. ResearchContributions
There are some contributions for local governments and literature enrichment taken from this research. Those contributions are as follow
1. It describes the implementation of Value For Money concept in public sector area, especially in Local Government of Surakarta.
CHAPTER II LITERATURE REVIEW
Chapter II reveals literature review, and conceptual schema in this research. Literature review explains about previous research, New Public Management, Performance Measurement, Value For Money, City Walk Program, and Framework. The detail of this chapter is explained in the following section:
1. Previous research
There are some researchers like Solikhin (2006), Mardiasmo (2005), Bourn (2000), ANAO (2004) studied the performance measurement on public sector as well as Value For Money. Solikhin (2006) has done some exploratory research on how important for government to make a financial report and performance report as stated on PP No. 8 year 2006. Before the enactment of Government Regulation Number 8/2006, Accountability Report and Financial Report are disclosed separately. In order to implement performance budgeting, it is mandatory to combine governmental accounting system and performance management system. Since those systems are in the early step of development in Indonesia, such combination resulted into several problems. This research elaborate problems of current system and try to offer recommendations derived from the literature reviews.
Solikhin (2006) concludes that the reports they made has several main purposes, they are
1) Creating the accountability of government practice and being responsive to the society ideas.
2) Creating the transparency. 3) Creating the participative society. 4) Creating the society trust to government.
The other research related to performance measurement on public sector is done by Mardiasmo (2005). He said that currently, the regional autonomy and fiscal decentralization in Indonesia has evolved to reflect its response to increasing demand in good governance. The development and implementation of public sector accounting as a tool to create transparency and public accountability
are acknowledged as a matter of urgency. Mardiasmo paper emphasizes on the importance of a responsive, communicative, transparent, and accountable government both in central and regional level as a realization of good governance. He also discusses the tools and mechanisms needed to reach that particular level.
Mardiasmo (2005) reveals also about the role of management accounting in public sector, which has evolved from traditional administration to New Public Management (NPM), incorporating Public Expenditure Management (PEM) to ensure correct implementation. This paper also recognizes the significant trust from society and investors towards the government in the accountability sense. Thus concepts such as dimensions of public accountability, private and public sector risk management, are strengthening the Value For Money (VFM) audit, and dual horizontal accountability is discussed in depth.
A recognized tool within the paper is the need to develop a measurement system based on a balanced scorecard specifically designed for the public sector that is relevant to accountability and the NPM. As debates have existed in what governments should incorporate from accounting techniques, this paper analyses the change in public sector financial accounting, management accounting, financial statements as a tool towards public accountability, and the importance of government audit to ensure Indonesia’s path in improving the implementation of good governance.
is understandable because if the reliability of processes and procedures fail, there will be risk of financial loss, poor Value For Money or impropriety increases.
Ultimately, Value For Money depends on the outputs and outcomes – improvements in health care, better education, more reliable transport systems – delivered by public money. This is what parliament and taxpayers are most interested in. The Modernizing Government program in the UK is encouraging departments to give much more attention to longer term sustainable outcomes in their development of policies and programs. The VFM examinations also now focus on outputs and outcomes rather than the processes involved in delivering them. This does not mean that they will not assess whether there is scope to improve procedures but our starting point is intended outputs rather than the delivery process.
Another research about implementation of Value For Money is conducted by Australian National Audit Office (ANAO) in 2004. The independent auditor has tried to conduct performance audit using the Value For Money approach in some Australian National Audit Office. In considering “Value For Money” they focused on the Performance Management Principles and on the following criteria
1). Effectiveness - the extent to which the Performance Audit Services Group (PASG) reviews achieve the desired outcomes.
2). Efficiency - the extent to which the PASG maximizes the outputs produced from a given set of inputs or minimizes the input cost of producing a given set of outputs.
3). Economy - whether the PASG provides input in the most economic manner.
1). Identifying the key stakeholders, discussing the approach, deciding the timing of review and agreeing on specifics of the review.
2). Agreeing a definition of what constitutes “Value For Money”.
3). Reviewing where the context of “Value For Money” fits within the overall objectives of the ANAO.
4). Reviewing the mechanisms to measure “Value For Money”.
5). Reviewing the role of the JCPAA, parliamentarians and agencies in the assessment of the provision of “Value For Money”.
6). Reviewing the background information around the selection and conduct of performance audits within the ANAO.
The conclusion of this research is these review indicated that the ANAO’s over riding objective through the conduct of a performance audit. The Performance Audit Services Group (PASG) seeks to achieve this in a cooperative fashion with the bodies being audited and welcomes suggestions and comments at any time. The ANAO facilitates this interaction through regular meetings during audits, post-audit surveys for a significant cross-section, and consultation on audit programs.
2. New Public Management (NPM)
NPM shifts the emphasis from process accountability towards a greater element of accountability for results (Hood, 1995). Although the term NPM appeared recently, it is actually predicated on a set of ideas that have been in public administration since its earliest beginnings (Hood, 1995). While there is considerable diversity about the specific components and purposes of NPM across jurisdictions (Pollitt and Bouckaert, 2000), it is generally seen as advocating that governmental organizations be split into business units and assigned performance targets for which managers are held accountable.
the public sector has “learnt” from a corporate sector that has shifted towards “leaner, flatter structures, with a smaller central organization and a series of subcontracting relations with external bodies”. NPM may be partially explained by structural adjustments by the state to accommodate its new role in a globalize economy. An alternative perspective is to treat NPM as an instance of policy convergence, rather than the product of globalization.
to be more closely costed and evaluated by accounting techniques. The ideas of NPM were couched in the language of economic rationalism, and promoted by a new generation of “econocrats” and “accountocrats” in high public office.
Most commentators have associated NPM with approximately seven dimensions of change, together with their associated doctrines, and some speculative ideas about their implications for accountingization. The seven elements are as follows:
( 1) A shift towards greater dissemination of public organizations into separately managed “corporatized” units for each public sector “product” (each identified as a separate cost centre, with its own organizational identity in fact if not in law, and greater delegation of resource decisions, in a movement towards “one-line” budgets, mission statements, business plans and managerial autonomy). (2) A shift towards greater competition both between public sector
organizations and between public sector organizations and the private sector.
(3) A move towards greater use within the public sector of management practices which are broadly drawn from the private corporate sector.
costly ways to deliver public services, instead of laying the emphasis on institutional continuity.
( 5) A move towards more “hunds-on management” (that is, more active control of public organizations by visible top managers wielding discretionary power) as against the traditional one.
(6) A move towards more explicit and measurable (or at least checkable) standards of performance for public sector organizations, in terms of the range, level and content services to be provided, as against trust in professional standards and expertise across the public sector.
(7) Attempts to control public organizations in a more “homeostatic” style according to pre- set output measures (particularly in pay based on job performance rather than rank or educational attainment), rather than by the traditional style of “orders of the day” coming on an ad hoc basis from the top.
2000). Thus, Mintzberg (1996 in Gendron, Cooper, and Townley (2001) argues that there is no universal governance recipe. Each mode of public management has its strengths and weaknesses (Dunleavy and Hood, 1994). Hence, when assessing public-sector management, policy-makers must identify the circumstances under which each mode of public management, and their possible combinations, is likely to work. This should be followed by a careful debate about the nature of the public sector's core competencies and what are the desired outcomes (Dunleavy and Hood, 1994).
3. Performance Measurement at Public Sector
Ghobadian and Ashworth (1994), there is a growing awareness that financial measures are no longer sufficient for planning and control purposes. Decision makers in both the private and public sector need to look beyond financial measures and reporting to the wider perspectives of total performance. This signals a radical shift from treating financial figures as the foundation for performance measurement, to treating them as one among a broader set of measures.
The public sector has not escaped this general trend and has been under
pressure to introduce a more comprehensive performance measurement system Ghobadian and Ashworth (1994). Hyndman and Anderson (1991) quote from two
whenever possible measure, outputs or performance in relation to those objectives”. The “Next Step ”initiative stated that “there was a need for greater precision about the results expected of people and of organization and a need to focus attention on outputs as well as inputs”. Furthermore, this document stated that “there was too much emphasis on spending money and not enough on getting results”.
Currently, there are many governments trying to improve their performance by creating systems to measure and assist them in understanding their public service performance. Public sector performance measurement system is a system that aims to help public managers to assess the strategy achievement through the financials and non financial measurement (Mardiasmo, 2005). Mackay (1998) revealed that the system for monitoring and evaluating public sector performance are used to measure the quantity, quality and target of goods and services output. Moreover, this system is also a tool to help government understand the causal effect of its performance. Mardiasmo (2005:122) says there are three purposes of public sector performance measurement, namely
a. It helps to improve government’s performance and helps to focus on goal congruence.
b. It helps the resources allocation and decision making.
c. It describes public responsibility and improves the communication among government units.
is concerned with the three kinds of audits, they are economy, efficiency and effectiveness.
a. Audit in economy area examines the administrative activities in accordance with administrative principles and practices, as well as management policies;
b. Audit in efficiency area examines the utilization of human, financial and other resource. It includes the examination of information systems, performance measures and monitoring arrangements;
c. Audit in effectiveness area examines the performance related to the goal achievement of audited entity. It also audits the actual impact of an activity compared to the intended impact.
Performance measurements provide many benefits for public sector. According to the Bastian (2006:275), the benefits of performance measurement are
a. Ensuring the executor to understand its duties.
b. Ensuring that the scheme of performance achievement is agreed by all employees.
c. Monitoring and evaluating the implementation of performance. It can also be used to compare the implementation with the work schemes in order to take action to improve performance.
d. Providing rewards and penalties for performance objective.
e. Using the performance measurement as a communication tool between subordinates and leaders.
f. Examining the problems that occurred in the public sector organization. g. Ensuring that the objective of decision-making has been taken.
h. Examining the actions to improve the performance of public sector organization.
There are some differences between the benefits of performance measurement according to Bastian (2006) and Mardiasmo (2005). The benefits of implementing performance measurement according to Mardiasmo (2005:122) are
a. Giving the comprehension knowledge related to the management performance measurement.
b. Giving the direction to attain the performance target. c. Monitoring and evaluating the actual performance. d. As a basic reason for giving reward and punishment.
f. Helping the identification of customer satisfaction.
g. As a guarantee that all decision making are done objectively.
Mainly both two statement are the same, even there are some different impressions. In Bastian views, he adds the benefit on performance measurement are examining the problems and also to examine the improving actions. On the other hand, Mardiasmo says about the satisfaction of customer (Society). On the researcher point of view, the out put of performance measurement on public sector doing by auditor is not an opinion but more in the recommendation on the next action in improvement the programs. So that’s way the researcher agrees with Bastian opinions.
Auditor should not concentrate solely on past criticism in doing its duties. The auditor's conclusions and recommendations are important aspect of the performance audit and, where appropriate, are written as a guide for action. Generally, the recommendations suggest the improvements needed rather than how to achieve the intended performance. In performance audits, the judgments made by auditor will be more subjective since the report does not related directly to financial or other statements. Consequently, the auditor may find that materiality by nature or by context is more important consideration than materiality by amount (ISSAI 400).
4. Value For Money Concept a. Definition
output itself, but must consider other variables such as input, output and outcome. Moreover, it needs to pay attention to equity and service coverage (VFM Guidance, 2007).
VFM reviews the evaluations of major spending programs and other priority areas of government activity. The VFM examination of the programs/areas in question and consider whether or not a robust rationale exists for the allocation of public monies. Where such rationale exists, VFM reviews will examine alternative (more efficient or effective) means of delivery without detracting from the quality of the results and impacts achieved. VFM reviews also propose arrangements for the better management of the program into the future (VFM Guidance, 2007).
The VFM reviews contain elements of process, result and impact evaluation. VFM reviews may be carried out at three basic levels (VFM Guidance, 2007)
1). Policy – e.g. Cross Departmental Review on Road Safety (lead Department, Transport); Review of Social Welfare Payments to Orphans (lead Department, Social and Family Affairs);
2). Program – e.g. Review of IDA Property Portfolio (lead Department, Enterprise, Trade and Employment); Compensatory Allowance Scheme (lead Department, Agriculture and Food);
Source: Mardiasmo (2005: 135)
Figure 1. Value For Money Elements
put will meet with the outcome target. Once again the end of VFM measurement is to distribute the benefit of public programs to society.
b. Differences between Audit and Evaluation
Audit is an independent examination carried out to reach an opinion on certain specified matters. In the public sector, there are two types of external audit – regularity audit and Value For Money examinations (Bastian, 2001). Regularity audits collect evidence to support an audit opinion on the fairness of presentation of financial information, the underlying regularity of transactions, compliance with authority and the proper conduct of public business. The independent Value For Money examinations of the Comptroller and Auditor General (C&AG) collect evidence to support reports on the economy and efficiency of departmental operations or on the systems employed to ensure the effectiveness of operations (Bastian, 2001).
Based on the Guideline of Value For Money, definition of evaluation involves evidence exercise based on judgement to reach conclusions related to the value of public programs and projects. It requires the collection and analysis of information to reach conclusions on specific questions known as the evaluation criteria. Evaluation can be done independently in managing the program/area of organization as a part of internal management processes.
Monitoring is the continuous and routine collection, as well as presentation of information in the program implementation. Evaluation, on the other hand, is a periodic assessment, involving the exercise of judgement, of policy or program implementation by reference to predefined performance criteria such as efficiency and effectiveness (VFM Guideline, 2007).
d. Evaluation criteria for VFM Reviews
The evaluation criteria are reflected in the specific questions that the evaluation will have to answer. In the case of a VFM review, the specific questions are set out in the template Terms of Reference and cover the evaluation criteria: rationale, efficiency, effectiveness, impact and continued relevance. The criteria encompass the established Value For Money criteria (economy, efficiency and effectiveness – note that VFM reviews address ‘economy’ under the ‘efficiency’ heading). Other public policy evaluation criteria may also be relevant depending on the nature of the review. Each of the five evaluation criteria (rationale, efficiency, effectiveness, impact and continued relevance) is discussed in the following paragraphs.
1). Rationale
perspective. A practical example of market failure is the need for subsidized bus services on socially desirable yet uneconomic routes. The rationale criterion usually also extends to whether the design of the program or project is the most appropriate means in achieving the identified public policy objectives (VFM Guideline, 2007).
2). Efficiency and economy
Efficiency and economy look at performance in terms of outputs, acquisitions, and use of inputs. It is common for economy and efficiency to be studied together in an evaluation report, although in many cases, it is worthwhile to study them separately (VFM Guideline, 2007).
Economy means securing the appropriate quality of inputs at the best price, while on the frame work or logic model describes as inputs. According to Bastian (2001), economy means the relationship among the market and input on the purchasing goods or services with certain quality and quantity at the best price. Meanwhile, efficiency means optimizing the ratios of inputs to outputs, while on the frame work or logic model describes as Inputs, Activities, and Outputs. Efficiency can be viewed in two different ways:
a). whether the same level of output and result could be achieved with fewer inputs, i.e. at a lower cost; or
b). whether a higher quality or quantity of outputs might be delivered from a fixed amount of input.
Bastian (2001) said that the effectiveness is defined as the extent to which the objectives have been achieved and the planned benefits have been delivered. It should be kept in mind that the results can be positive or negative, and intended or unintended. In terms of the program logic model, the study of effectiveness is the relationship between outputs and results. 4). Impact
Impact is concerned with the wider effects of the program for a larger group of persons (e.g. a sector) or for society as a whole (it includes the medium to long term effects on targeted beneficiaries); the successes and failures in achieving the wider objectives; and the main causes of this. In the study of impact, the same basic performance questions used for effectiveness are applied to the medium and long term sector objectives of policy interventions and programs. The impact of a program is the difference it has made. As with effectiveness, it should be kept in mind that impacts can be positive or negative, and intended or unintended (VFM Guideline, 2007).
5). Continued relevance
In a VFM review, the evaluation of the continued relevance of the program covers the following issues as the table below:
Table II.1. Issues on VFM
that can arise
that can arise Effective Issues
The extent that the
objectives were achieved
The way that the
achievement of objective is assessed
Continued relevance What is the justification for the continued allocation of
Solo City Walk is a project based on the opinion to lift Solo existing and potential grows with peace slogans Solo Past as Solo Futures. This project aims to restore the public space that ever existed in the Solo activities in the past. Noble civilization values Solo not necessarily be included in the existing city walk because of the socio-cultural conditions of contemporary society's diverse should also be considered. This is important so that the presence of city walk to highlight the romance of the past Solo could merge with other development policies do governments and private parties (www.surakarta.go.id).
Slamet Riyadi road corridor selected has many interesting points which strongly support the planning of city walk. Track tours start from Purwosari Station culminate in the region Vastenburg fortress and Pasar Gede, filled with heritage buildings, which some still standing. On this path can be found of modern shopping centers, conservation areas Sriwedari, Radya Pustaka Museum, Museum of Ancient Danarhadi Batik, Regions Ngarsopuran Mangkunegaran, Kampung Kauman (who currently also announced as one of the tourist village of batik in Solo, which also offers tours of Islamic religious atmosphere thick ), Gladhag, North Square, the Great Mosque of Solo, square area, Vastenburg fortress, which can then proceed to the traditional market of Pasar Gede (Pemkot Solo, 2006).
atmosphere, with attractive public spaces. But at the same time can be established a good relationship between these activities with the activities of public services and facilities owned by individual communities along this route.
B. FRAMEWORK
This research is conceptualized in explaining through literature review on the importance of Value For Money Concept on performance measurement on pulic sector. Next, to gain focused and deep insights of the implication of Value For Money Concept on Planology and Urban Official of Surakarta, convergent interviews are conducted including a range of respondents. Analysis will be conducted on the bases of Value For Money Concept including on the strategy, input, output, result and the impact of the program. Finally, findings of this research are formulated at main components of Value For Money these are Economy, Effectiveness and Efficiency, so that a whole conclusion can be drawn up. The conceptual framework that this research problem statement is based on is described in figure 2
Data Collection
Analysis
Strategic Planning
Strategic Objectives
Program Evaluating
Input Activities Output Result Impact
Conclusions
Economy Efficiency Effectivity
Source:VFM Guideline
Figure 2. Frame Work
The framework can be explained as follows: 1. Setting the Program
It means the researcher must define what program that will be measured. Each program has different performance measurement. The differences are depends on the objectives of each program. Related to this research, the program that will be evaluated is City Walk Program. The City Walk Program is selected for several reasons: (1) City Walk is one of the strategic programs that successfully implemented by the government of Surakarta and (2) The City Walk development is to increase productivity of regional potential sectors that leads to an optimal interaction between sectors.
In the qualitative research, most of the data is taken from observation and interview. As Bungin (2006) says, the use of two methods is considering the phenomenon and also the researcher can explore some different interpretation. Besides that the data will be accomplished by getting other related documents.
3. Analysis
This is the main part in which all data will be elaborate with other data or facts through logical step. The data analysis is run in the same time as the data collection begun. Data analysis can be done by some approach, first using three-stage water model of data reduction, data presentation and verification on simultaneously progress, content analysis, quantitative content analysis (Bungin, 2006).
4. Strategic Objectives
It describes the desired outcome at the end of the strategy period. The objectives should ideally be described in both qualitative and quantitative terms. These strategic objectives related to the City Walk strategic. It can be achieved by using document literature or interviews with some informants. The informants are local legislatures in Surakarta, the civil servants in relevant units such as those working in Market Department (Dinas Pasar) and Planology and Urban Official of Surakarta (Dinas Tata Kota), also public in common that will be represented by academicians, historians, local communities and local business representatives who get involved in playing business.
There are many inputs to programs – physical inputs like buildings and equipment, data inputs like information flows, human inputs (grades of staff) and systems inputs like procedures. The financial input is the budget made available to the program. Inputs are sometimes referred to as resources, meaning that any physical or virtual entity of limited availability that needs to be consumed to obtain a benefit from it. In most cases, commercial or even non-commercial factors require resource allocation through resource management.
6. Activity
Activities, also called processes, are the actions that transform inputs into outputs. Process or processing typically describes the act of taking something through an established and usually routine set of procedures to convert it from one form to another, as a manufacturing or administrative procedure. Activities are collections of tasks and work-steps performed to produce the outputs of a program. In project management, an activity is a task that needs to be accomplished within a defined period of time. An assignment is a task under the responsibility of an assignee which should have a start and end date defined. One or more assignments on a task put the task under execution. Completion of all assignments on a specific task should claim the task as completed.
7. Output
The output means what the program are produced. The output may be in the form of goods or services. Usually, output is represented in the short term, while outcome if presented in the long term.
The results are the effects of the outputs on the targeted beneficiaries in the immediate or short term. In other words, result is the conclusion or end to which any course or condition of things leads, or which is obtained by any process or operation; consequence or effect; as, the result of a course of action; the result of a mathematical operation. Results can be positive or negative, depends on the measurement used.
9. Impact
Impacts are the wider effects of the program, from the sector or national perspective, to the medium term and long term effects on the targeted beneficiaries. Each program has different impact, which can also be categorized into positive impact or negative impact. The positive impact is closely related with the program beneficiaries, while the negative impact is closely related with the disadvantage or loss of the program.
10. Conclusions
A conclusion is a proposition which is reached after considering the evidence, arguments or premises. The conclusions are determinations made by studying the results of previous work. The conclusion in this research is related to the means of Value For Money evaluation on the program, conclude the means of economy, efficiency and affectivity.
RESEARCH METHOD
Chapter III explains the research methodology used in this research. This chapter discuss about research method, population, sample, and sampling technique, data collection, and data analysis techniques.
A. Research Method
The researcher intends to do the qualitative research since it can be used to explore the unknown phenomenon (Strauss, 2007). According to Deeptee and Roshan (2008), the qualitative research allows the explorations of people's beliefs, experiences, behaviors, interactions, perceptions, attitudes, feelings and motivations and to understand how they are formed. It provides in depth information which can be used in its own right or to determine what attributes will subsequently be measured.
The design used in this research is exploratory study. According to Sekaran (2003), some qualitative studies where data are collected through observation or interviews are exploratory in nature. Through the exploration, researcher will be able to develop concepts more clearly, establish priorities, develop operational definitions and improve the final research design. Exploratory research objective may be accomplish with different technique both qualitative and quantitative are applicable. Marshall (1996) stated that the greatest advantage of qualitative research methods is in the ability to analyze naturalistic environments. The
qualitative research is able to examine more complex research questions, without sacrificing the richness or complexity of the natural environments.
B. Population, Sample, and Sampling Technique
Population defined a group of individuals, persons, objects, or items from which samples are taken for measurement. Populations used in this research are the stakeholder of Surakarta. Stakeholders of this report are divided into internal and external users: executives, the civil servants as the preparers are the internal users and the others including legislatures and public in common are the external ones (Wisnu 2007).
very important, cause he will give the definition on a such problem or case (Spradley, 2006).
This research conducts a snowballing sampling (chain referral sampling) to gather which is considered as a type of purposive sampling. In this method, participants or informants use their social networks to refer the researcher to other people who could potentially overview participate in or contribute to the study. Snowball sampling is often used to find and recruit hidden populations. The hidden population means groups that are not easily accessible to researchers through other sampling strategies.
Therefore, samples of this research are specifically the local legislatures in Surakarta. The ones chosen are those who sit in governmental affairs commissions and legislative assumed that they cope with the knowledge of city walk program. Next, the civil servants in relevant units such as those working in Market Department (Dinas Pasar) and Planology and Urban Official of Surakarta (Dinas Tata Kota) in Surakarta are chosen as the second sample. This is done assuming that such sampling criterion will drive to a holistic view of this research issue. The last ones are public in common that will be represented by academicians, historians, local communities and local business representatives who get involved in playing business.
numbers depend on the steadiness and the need of the researcher in acquiring the data (Sutopo, 2006). The number of required subjects usually becomes obvious as the study progresses, as new categories, themes or explanations stop emerging from the data (data saturation). As consequences, this requires a flexible research design and an iterative, cyclical approach to sampling, data collection, analysis and interpretation.
The sample sizes in this research should not be too small or too large, so researcher will be able easy to achieve data saturation, theoretical saturation, informational redundancy and undertake a deep case analysis. Those participants can increase the quality of the data gathered in each interview.
C.Data Collection
The data sources used in this research are primary and secondary data. The primary data is collected from the survey, while the secondary data is collected from the Financial Report of Surakarta. The data can be obtained by conducting:
1. Observation
This observation also conducts both direct observation and indirect observation. Direct observation occurs when the observer is physically present and personally monitors the object. Indirect observation occurs when the recording is done by mechanical, photographic, or electronic means. On doing the observation, it must use the non intervention strategic (Bungin, 2006).
2. Interview (Survey)
A survey is putting (by post, telephone or otherwise) of a structured or semi-structured questionnaire to a selected group who may or may not be representative of a wider target audience. Surveys enable the VFM reviewer to gather data efficiently, but for the more standardized form, it would be more possible doing the survey through interviews (VFM Guidelines, 2007). The interview is a useful means for obtaining information from beneficiaries or target audiences of Government programs/ schemes. Survey is an important primary data fieldwork instruments for several reasons:
a. A survey is an efficient evaluation method to collect information from respondent outside the reviewed program. It also efficient to evaluate medium to long term effects. This is necessary for the consideration of effectiveness, impact, and continued relevance;
reviewer to strengthen the basis for his/her conclusions. A survey is a good way of reaching independent evidence sources.
D. Data Analysis Technique
The data analysis technique is a method of putting together facts and figures to solve research problem in a systematic process of utilizing data to address research questions and breaking down research issues through utilizing controlled data and factual information (http//www.freelibrary.com/). This qualitative research uses an inductive data analysis technique, with Value For Money (VFM) approach to define the element of economy, efficiency and affectivity. This technique examines a series of specific symptoms to be concluded in general. It is also provides a clearer, a sharper, and a more comprehensive description of the problem area (Moleong 1991). Data analysis conducted simultaneously with data collection, and theory development.
To analyze with Value For Money (VFM) approach which are rationale, economy, efficiency, effectiveness, impact and continuous relevancy, it can be traced as the follows:
1. Rationale
benefits to public and public must know the program well. The kind of the data need based on the response of the respondents about the program background.
2. Economy
It involves about the money. Economy means the relationship among the market and input on the purchasing goods or services with certain quality and quantity at the best price. The best price among the market can be interpreted the best price that derived from the auction process. Moreover, from the auction process, the committee will find some participant with each offering price at the certain quality and quantity.
3. Efficiency
Efficiency means optimizing the ratios of inputs to outputs. What kind the input and what kind of output are knowable from Description Accountability Report (LKPJ) or Work Plan and Budget Report. Besides that, it stills some supporting data from respondents according to this issue.
4. Effectiveness
5. Impact
Impact is concerned with the wider effects of the program for a larger group of persons for society as a whole (it includes the medium to long term effects on targeted beneficiaries); the successes and failures in achieving the wider objectives. The effects are classified in to economic effects, social effects and culture effects. The data sources are based on interviews results and other secondary data.
6. Continue Relevancy
CHAPTER IV DATA ANALYSIS
This chapter will discuss the performance evaluation of City Walk program conducted by the Planology and Urban Official of Surakarta and using the approach of Value For Money. In this chapter also will present a background on the City Walk development, the selection of respondents as a resource and performance appraisal process with the approach of Value For Money.
A. City Walk Program Settings
In developing the quality of urban space, the strategic area is a potential vital. The space area that is formed by a series of components or the character and image become an important focus in the development of urban space, particularly in supporting the vitality and city’s attractiveness as a space for the life of its citizens.
such a way as to create a neat view of the city. The road users are very organized and the building background is arranged neatly. It is clearly seen how the government have been succeed in planning and creating the beautiful urban concepts. This condition inspired The Mayor of Surakarta to adopt the concept of City Walk that is applied in the city of Surakarta.
Furthermore, Surakarta city has a strategic area with potential social resources, culture, and diverse economy. They are: Mangkunegaran Regions, Triwindu Market, Gatot Subroto Street, Coyudan, Klewer, Kauman Batik Tourism
Village, Kampung Batik Laweyan, Sriwedari Regions, Kasunanan , Regions,
Gede Market Area, as well as Keprabon. In addition, there is a linear area along Slamet Riyadi street to the east until Pasar Gede. The area mentioned above, in the discourse of the government and society, has directed the development of themed areas of open space in a friendly environment for pedestrians, known as "Solo City Walk" (City Government, 2006).
The hope to develop a number of open spaces in the city of Surakarta is based on the fact that the city of Surakarta in the years prior to discourse to build the City Walk area has a lot of lost open space. Also, it is meant to recall the ancient tradition of Surakarta city that are now become obsolete. As stated by one respondent from the Planology and Urban Official of Surakarta (G1), he said that the background of the City Walk construction area is associated with the return of function space in urban areas:
street vendors .... then residing in the green belt was also partly used by street vendors because perhaps the space .... what is it…. leafy... not so hot ... cool ...like that.... so it was used by street vendors. So, with that condition, the city government wanted to restore the function of that space .... if it green space, that it would be returned as a green space .... if that is pedestrian space ... than we would return as a pedestrian space ... and so on .... that’s one of them. "
”Salah satunya pada waktu itu kan kota surakarta, itu kan kehilangan public space, baik lapangan yang merupakan ruang terbuka hijau untuk olahraga, dan juga anak-anak bisa untuk berkumpul bersama-sama, kemudian slamet riyadi sendiri pada waktu itu juga dapat dilihat muncul banyak sekali PKL-PKL yang menggunakan public space yang khususnya itu untuk pedestrian, pejalan kaki tapi digunakan untuk PKL....kemudian yang berada di jalur hijau itu juga sebagian dimanfaatkan oleh PKL....karena mungkin ruangnya....apa itu ...idum....tidak begitu panas...sejuk ...gitu ya ....lha itu dimanfaatkan oleh PKL disana. Sehingga dengan kondisi itu ingin sekali pemerintah kota mengembalikan fungsi daripada ruang tersebut ....kalau itu ruang hijau ya....dikembalikan sebagai ruang hijau....kalau itu ruang pedestrian.... ya kita kembalikan sebagai ruang pedestrian .... dan lain sebagainya .... salah satunya itu. ”
Related to the maintenance of the existing culture or tradition:
"Then from the other backgrounds, we also want to raise or maintain the existing cultures in the city of Surakarta. Suppose that such…uhm.. gatherings...walking culture.. that culture can be said extinct right? The Javanese people is usually walks and then make gathering…talking about something... that’s is already gone…. the space is already gone.... In that way, when we wanted to accommodating the arts, we did’t have space yet... well, perhaps there is a representative place at the hotel room and so on… that kind of things needs cost …and if there is an active public space, the people can use it ... the proof is batik carnival, there is probably what it is called... . e. ... cheap bazaar .... it presents batik-batik, and then reog art, and so on. "
apa itu ....e...pasar murah....menyajikan batik-batik trus ada kesenian reog dan sebagainya.”
The facts that open space are getting less and the desire to restore the tradition and culture, reinforce the concept to develop an open area. That area can be used to enhance social interaction as well as the economic community of Surakarta. This discourse is also supporting the jargon of Surakarta city, that is “Solo Past as Future".
Once the concept is formed in the internal government of Surakarta, and long before the development program "Solo City Walk" was held by the City of Surakarta, the discourse or discussion followed by representative stakeholders Surakarta was held. The occasion was conducted in Ndalem Wuryaningratan on June 6th, 2006 with the theme "THE CONCEPT OF CITY WALK IMPLEMENTATION IN THE CREATION OF THE QUALITY CITY.”
The discussion was conducted in order to figure the opinion of the stakeholders based on issues and strategic issues in Solo area development, especially development of the idea of "Solo City Walk". Moreover, it needs the commitment and togetherness from all of stakeholders, such as the government (across sectors), the public and private sectors to harmonize regional development vision of Surakarta.
A number of important issues were discussed and agreed upon in the formulation of a deal that would form the basis of departure for the preparation of action plan development. The issues were especially regarding the alignment of vision for the future perspective, cross-sector cooperation in its development as well as a more important area of sustainable development management.
On that discussion or discourse, number of important figures and also the city of Surakarta speakers from academia, consultants, Planology, entrepreneurs, community leaders and others were attended. In essence, the stakeholders who attended the ceremony were very interested and fully support the idea of building City Walk. Finally, by seeing the result of socialization through various activities and mass media, also supported by the results of discussions with a number of stakeholders, the City Walk development program successfully scheduled to be done starting from 2007 until 2010.
B. City Walk
City Walk planned area is divided into several segments. Those segments are as follows
1. Purwosari - Brengosan.
2. Brengosan – Gendhengan
The object here includes Ancient Buildings (Building Lowo); Restaurants (Diamond, Pizza Hut); Hotels (Riadi, Diamond); Office Shop (Megaland). The character of road space is wide. The events done in this area are: Street furniture culinary tour that focused on group seating facilities around the restaurant and hotel (seat cafe).
3. Gendengan - Sriwedari
The objects in this area are Ancient Buildings (Churches, Loji Gandrung, ex Kodim); Shops (SGM); Office Restaurants (Adem Ayem, Wong Solo). The road space character is wide. The events processed are architecture and shopping tours. Street furniture focused on the facilities information about Ancient Buildings.
4. Sriwedari – Ngapeman
The object in this area are art and culture (Sriwedari Park, Radyapustaka Museum); Ancient Buildings (Radyapustaka Museum, Wuryoningratan Batik Museum); and Restaurants (Regions Pujasari). The events available are cultural tourism, attractions art, and architecture. Street furniture focused on facilities art and culture attractions such as stage entertainment and information on arts events and seating group.
