NPM i den offentlige sektor på Færøerne

Hugin Skaalum & Dany Højgaard

Student thesis: Master thesis


NPM in the public sector in the Faroe Islands The Faroese Treasury has in § 7 of promulgation no. 22 of 14 March 2007 regarding accounting system in the State etc. adopted statutory objective- and performance management of the ministries and the underlying institutions in force from 1 January 2010th. This case is based on the institution Havstovan (marine department), which has implemented some parts of the NPM in preparation of goal- and performance contracts. The thesis statement is: How is the implementation of NPM in the public sector in the Faroe Islands performed? The thesis is split up in chapters that try to answer the thesis statement: 1. How is the reform implemented? 2. Which effects does it generate? 3. Do the goal- & performance contracts generate the intended consequences regarding the prospectus? The most important result of the thesis 1. How is the reform implemented? As a result of the global economic crisis the public sector in the Faroe Islands has sought to implement the goal- and performance contracts with expectations about a more efficient public sector. A steering committee was formed in the spring 2006 to produce a prospectus whose functions among other things was to develop guidelines for implementation of goal- and performance contracts to ensure quality and consistency of the various institutions in preparation of these contracts. According to the legislation the Treasury was responsible for implementation of these contracts, and intervened with the Ministry of Fisheries to have launched a pilot project in this respect. The Ministry of Fisheries selected Havstovan to participate in this project, and became the first goal- and performance contract between the Ministry of Fisheries and Havstovan signed on 7 December 2007 - applicable to fiscal year 2008. 2. Which effects does it generate? The purpose of implementation of goal- and performance contracts was that they should help to generate a more efficient public sector, with an increased focus on transparency and relevant targets, with focus on output rather than the size of grant itself. According to empirical evidence the director and the head of department are of the opinion that contracts have generated greater transparency within the institution, but there is a lack of anchorage in the Finance Act to provide external stakeholders with the necessary transparency. The experts' ambition is to prepare goal- and performance contracts for all institutions. In the long term is to ensure anchoring in the Finance Act. With regard to relevant targets, the experts have not put specific requirements on the targets to be included in the contracts, but that those in larger degree must be in accordance with priorities and reflecting the activities of which the institution pursuant to statutory authority. The employees believe that the contracts tend to lead the management's attention on whether they controls in the right direction compared to the targets. The Ministry of Fisheries' opinion is that contracts are a good tool for use towards the institutions, but that the contracts in the future are to be designed differently. The contracts are contributing to greater focus on output and which effect generated by the targets. The experts estimate that many institutions are good at producing goods and services but the question is whether they are producing the right "stuff". In this area, the contracts contribute increase the focus on output. The head of department perception is that goal- and performance contracts create more efficient institutions, and the possibility of rationalizing the tasks performed according to the new priorities. The employees are questioning whether the contracts increases the efficiency at the output, but believe that the reason that the goals are not reached may be found within the managements prioritization of the resources according to the goals. 3. Do the goal- & performance contracts generate the intended consequences regarding the prospectus? From this case we can deduce that the approach by implementing the goal- and performance contracts do not meet the criteria that were originally intended under the prospectus. Despite that the Treasury and the Ministry of Fisheries considers that the implementation of the contracts has created a more effective institution and greater transparency, we have not been able to substantiate these contentions. In return, the Director of Havstovan and the employees are not so positively charged, and do not believe that the institution has become more efficient, but that they nevertheless have become more aware of what resources are needed to perform the various tasks. We can conclude that the approach to the implementation of the contracts in the Faroe Islands at this time may be considered on a trial basis, where the objective is to get all the institutions to implement these contracts, which initially must reflect the statutory authority, they have reference to. It is therefore not the Treasury first priority, which targets the institutions is prioritating at this moment, but that they get implemented the contracts, which in the long term could be developed so they better can generate the desired information. We will finish with the head of department's statements that underline these observations: "Havstovan has not been able to illustrate the goals specifically. Particularly, it is a shortcoming that is not specific enough in its evaluating. Thus it is important to define some procedures, particularly according to evaluating a general illustration of the targets. It is extremely crucial that the contract contains specific objectives that really can be measured as a result, and later may be evaluated. This part of the process has not been good enough."

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2011
Number of pages187