Transcript Document

PERFORMANCE MANAGEMENT SYSTEMS
DISTRICT CLUSTER WORKING SESSION
February 2006
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LGSP is financed by USAID and is being implemented under the technical guidance of Research Triangle Institute, http://www.rti.org.1a
Contents
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Legislative and policy context of performance management (PMS)
Why performance management
PMS concepts
Good and bad indicators – you be the judge
PMS models
Performance reviews and reporting
Performance auditing
Linking organisational and individual performance management
Closure
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Legislative and Policy Context
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The Systems Act requires all municipalities to:
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Develop a performance management system
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Set targets, monitor and review performance based on indicators linked to their IDP
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Publish an annual report on performance for the councillors, staff, the public and
other spheres of government
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Incorporate and report on a set of general indicators prescribed nationally by the
minister responsible for local government
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Have their annual performance report audited by the Auditor-General
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Involve the community in setting indicators and targets and reviewing municipal
performance
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Municipal Planning and Performance Regulations
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Performance Management System entails a Framework that describes and
represent how the municipality’s cycle and process of performance
management, including measurement, review, reporting and improvement, will
be conducted
PM System must inter alia comply with the requirements of the Systems Act,
relates to the municipality’s employee performance management processes
and be linked to the municipality’s IDP.
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A municipality must
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set key performance indicators (KPIs) including input, output and outcome indicators in
consultation with communities.
annually review its KPIs
for each financial year set performance targets
measure and report on 9 nationally prescribed KPIs
report on performance to Council at least twice a year
as part of its internal audit process audit the results of performance measurement
annually appoint a performance audit committee
provide secretarial support to the said audit committee
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Municipal Finance Management Act
The Municipal Finance Management Act contains various important
provisions related to performance management. It requires all
municipalities to:
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Annually adopt a service delivery and budget implementation plan with
service delivery targets and performance indicators.
When considering and approving the annual budget set measurable
performance targets for revenue from each source and for each vote in
the budget.
Compile an annual report which must amongst others include a
Municipality’s performance report compiled in terms of the Systems Act.
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Why performance
management?
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What gets measured gets done.
If you don’t measure results,you can’t tell success from
failure.
If you can’t reward success, you are probably rewarding
failure.
If you can’t see success, you can’t learn from it.
If you can’t recognise failure, you can’t correct it.
If you can demonstrate results, you can win public
support.
Osborne L. Gaebler, 1992
Do we know where we want to go?
How will we measure our progress along the way?
How will we know if we have arrived at our destination?
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Benefits of an Organisational
PMS
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Benefits of an Organisational PMS
• Provides appropriate management information for
informed decision-making.
• Manages expectations and ensuring increased
accountability between the role-players within and
external to the municipality.
• Provides early warning signals .
• Identifies major or systematic blockages and guides
future planning.
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Benefits of an Organisational PMS
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Encourages the direction of resources
Checking that the delivery is happening as planned.
Promotes the efficient utilization of resources.
Promotes the delivery of the envisaged quality of
service.
• Assists municipalities in making timeous and
appropriate adjustments in the delivery and
management of resources.
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Benefits of an Organisational PMS
• Identifies capacity gaps in both human and nonhuman resources, assists in determining right-sizing
requirements.
• Identifies communities and areas that lag behind
others in terms of development and thus assists in
spatial and sectoral integration.
• Assists municipalities in their “developmental”
role/focus.
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Performance Management
Concepts
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What is performance management
DPLG defined performance management as a strategic
approach to management, which equip leaders, managers,
employees and stakeholders at different levels with a set of tools
and techniques to regularly plan, continuously monitor,
periodically measure and review performance of the
organisation in terms of indicators and targets for efficiency,
effectiveness and impact
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PMS is a strategic approach to
management which equips
leaders and managers on
different levels with a set of
tools and techniques to do the
following
in
terms
of
performance:
Results
 Regularly plan
 Continuously
monitor
 Periodically
measure
 Review
All of these are done in terms
of indicators and targets to
measure the following :
 Improved service delivery
 Value for money
 Meet needs of people
 Create performance culture
 Organisational
transformation
 Efficiency
Accountability
on all levels
 Effectiveness
 Impact
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What is performance measurement?
– Performance measurement is the use of indicators to show how the
organisation is performing on its objectives
– It means setting clear objectives and indicators and gathering
information to use these indicators to see how well the municipality
is doing
– Review of performance against targets happens regularly
– Refines the Key Performance Areas (KPA’s) of the Municipality to
assist with monitoring and evaluation of KPA’s
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Key Performance Areas (KPA’s)
– 5KPA’s were identified nationally, these are:
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Infrastructure and services.
Social and economic development.
Institutional transformation.
Democracy and governance; and
Financial management
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Indicators + Targets
Priority
A
Objective
Indicator
Baseline
Target
Priority
B
Objective
Indicator
Baseline
Target
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What are objectives?
• Objectives need to be clear, concise and
measurable
• It is useful to have a timeframe attached to
objectives
• Objectives should be outcome and impact
focused
• Objectives should indicate the scope and nature
of desired change
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Examples of good objectives
• To provide every dwelling in the municipal area
with a weekly door-to-door refuse collection
service from July 2002
• To ensure that there is a health clinic, equipped
to dispense chronic medication and providing
reproductive health services, open for 12 hours
a day, within 10 kilometers of every dwelling in
the municipal area
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What are indicators
• Indicators are measures that tell us whether progress
is being made in achieving our objectives
• An indicator is a statement with a quantitative value
(number, percentage, ratio) that allows progress to be
quantified
• Quantitative and qualitative
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What are indicators (cont)
• Indicators are important because they:
– enable the review of objectives
– provide a common framework for measuring and reporting
– translate complex concepts into simple operational
measurement variables
– help to provide feedback to organisation and staff
– help when comparing the municipality's performance to
that of others
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Criteria for good indicators
• Measurable
– easy to calculate from data that can be generated speedily,
easily & at reasonable cost
• Specific
– measure only those dimensions that the municipally intends to
measure
• Relevant
– measure those dimensions that enable measurement of
progress on its objectives
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Criteria for good indicators
• Simple
– avoid combining too much in one indicator
• Reliable
– degree to which repeated measures under exactly the same
conditions will produce the same results
• Minimises perverse consequences
– do not alter actions in an unintended manner
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Type of indicators
Input indicators
These are typically related to costs or inputs in terms of human resources. It measures
what inputs have been made towards achieving a objective
Process indicators
These indicators describe process issues around an objective. They cover the activities
and operations that converts inputs into outputs
Output indicators
These refers to the ‘products’ produced by processing inputs for example the number of
houses built or the number of electricity connections made
Outcome indicators
These measure the extent to which strategic goals or outcomes are being met.
Outcomes are usually based on the results of different variables acting together
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Baseline Measurements
• Baseline measurements measure the status quo
before a project or programme is implemented
• Baseline
measurements
should
precede
finalisation of targets
“Where am I starting from?”
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What are targets?
• Targets are the planned level of performance or
the milestones that are set for each indicator
• Targets are usually expressed in terms of
quantity
• Targets need to be challenging, realistic,
measurable and in line with the resources and
capacity of the organisation
• “SMART” targets
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Targets (cont)
• Targets need to take into account seasonal or other
fluctuations
• Targets should be set for a series of timeframes e.g.
quarterly
• Example of targets:
– Indicator: Number of houses built
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Quarter
Quarter
Quarter
Quarter
1: 100 (high rainfall)
2: 100 (builders holiday)
3: 200
4: 300
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National KPIs
• 9 KPIs
– Basic services
– Free basic services
– Capital budget
– Jobs created through LED initiatives
– Employment equity plan
– Workplace skills plan
– Finances (x3 KPIs)
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Application of Measures
by Means of an
Appropriate Model
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What is a Performance Model?
A performance model can be defined as the
grouping together of indicators, often based on the
type of indicator into logical categories or groups
(often called perspectives), as a means to enhance
the ability of an organisation to manage and analyse
its performance
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Why do we need a model
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Balance
Simplicity
Mapping of inter-relationships
Alignment to strategic planning methodology (IDP)
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Model 1: Spreadsheet/KPA Model
KPA
Objective
Indicator
Type of
indicator
Target
Q1
Target
Q2
Target
Q3
Target
Q4
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Key Performance Areas Model
Outcome
% Growth in
Local
Economy
Process
Number of ward
meetings held to
discuss the provision
of basic services
LED
Input
Number of law
enforcement
officers
Input
% of
management
that are from
the designated
group
SAFETY
Output
Number of
LED projects
in progress
Output
% decrease
in crime rates
Outcome
%
satisfaction
with
provision of
basic
services
Output
%
households
with access
to basic
services
BASIC
SERVICES
EE
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Model 2: Municipal Scorecard
The Municipal Scorecard
Inputs
Outputs
Resource
Management
Perspective
Outcomes
Service
Delivery
Perspective
Municipal
Development
Perspective
Governance Process Perspective
The Municipal Organisation
The Municipal Area
Process
Source : Palmer Development Group (2001)
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Municipal Scorecard Model
LED
LED
% Growth in
Local
Economy
SAFETY
Number of
LED projects
in progress
Number of law
enforcement
officers
EE
BASIC SERVICES
Number of ward
meetings held to
discuss the provision
of basic services
INPUT
(Resource
Management
Perspective)
% of
management
that are from
the designated
group
PROCESS
(Governance
Perspective)
SAFETY
% decrease
in crime rates
OUTPUT
(Service
Delivery
Perspective)
BASIC
SERVICES
%
satisfaction
with
provision of
basic
services
BASIC
SERVICES
%
households
with access
to basic
services
OUTCOMES
(Development
Perspective)
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Municipal Scorecard
Cause-Effect Hypothesis
4. … and then will our combined
efforts have the desired
developmental impact
3. …then we will be able to render
quality and affordable services in a
sustainable manner….
2. …and if we involve all our
stakeholders and citizens as equal
partners in development …….
1. If we use our financial
resources in an efficient manner
and if we invest in and capacitate
our staff …...
DEVELOPMENT PERSPECTIVE
(OUTCOMES)
SERVICE DELIVERY
(OUTPUTS)
GOVERNANCE PERSPECTIVE
(PROCESS)
RESOURCE MANAGEMENT
(INPUTS)
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Model 3: The Balanced
Scorecard
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Balanced Scorecard as a PM Model
Developed in 1992 by Kaplan and Norton as a result of problems experienced with only using financial
indicators
Measurement
and Reporting
Alignment and
Communication
1992
1996
Articles in Harvard Business Review:
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“The Balanced Scorecard —
Measures that Drive Performance”
January - February 1992
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“Putting the Balanced Scorecard to
Work” September - October 1993
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“Using the Balanced Scorecard as
a Strategic Management System”
January - February 1996
Enterprise-wide
Strategic Management
2000
Acceptance and Acclaim:
 “The Balanced
Scorecard” is translated
into 18 languages
 Selected by Harvard
Business Review as
one of the “most
important management
practices of the past 75
years.“
1996
2000
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Model 3:The Balanced Scorecard
The Strategy
Financial Perspective
"If we succeed, how will
we look to our
shareholders?”
Customer Perspective
"To achieve my vision,
how must I look to my
customers?”
Internal Perspective
"To satisfy my
customers, at which
processes must I excel?”
Organization Learning
"To achieve my vision, how
must my organisation learn
and improve?”
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The Balanced Scorecard Adopted for the public sector
Stakeholder Perspective
The Mission of the organization is to fulfill Public
Policy expectations
Customer Perspective
Budget / Financial Perspective
“To achieve our mission, how must we look to our
customers?”
“If we succeed, how will we look to our financial
donors?”
Internal Perspective
“To satisfy our customers, financial donors and mission, what
business processes must we excel at?”
Learning & Growth Perspective
“To achieve our mission, how must our people learn,
communicate, and work together?”
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Balanced Scorecard Model
LED
Outcome
% Growth in
Local
Economy
BASIC SERVICES
Process
Number of ward
meetings held to
discuss the provision
of basic services
Learning &
Growth
Perspective
("To achieve my
vision, how must my
organisation learn
and improve?”)
HR
Input
% of budget
spent on staff
training
FINANCE
Input
% increase in
rates revenue
Internal
Perspective
("To satisfy my customers, at
which processes
must I excel?”)
LED
Output
Number of
LED projects
in progress
SAFETY
Output
% decrease
in crime rates
Customer
Perspective
("To achieve my vision,
how must I look to
my customers?”)
BASIC
SERVICES
Outcome
%
satisfaction
with
provision of
basic
services
BASIC
SERVICES
Output
%
households
with access
to basic
services
Financial
Perspective
("If we succeed,
how will we look to
our shareholders?”)
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Performance reviews and
reporting
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Resource
Management
Service
Delivery
Development
Governance
Resource
Management
Service
Deliverables
Service
Outcomes
Audience:
•Public
•Council
•EXCO
Audience:
•Management Team
•Portfolio
Committee
Stakeholder Relations
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Performance management cycle
Performance
Planning
Performance
Review
Performance
Monitoring
PERFORMANCE
MANAGEMENT
Performance
Reporting
Performance
Measurement
Performance
Analysis
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Council
Public
Audit by
Committee
twice yearly
Strategic Scorecard
Strategic Scorecard +
Citizens’ Report
Executive Committee
Strategic
Scorecard
Summary of
Services
Portfolio Committees
Management Team
Service Scorecards
Departments
Quality Control
and Co-ordination
by PM Team
Departments
Departments
Twice -yearly
review
by Council
& Public annually
Review and
Adoption of
Improvement
Measures by
EXCO
Quarterly
Evaluation by
Management
Team
and Portfolio
Committees
Monthly
Service Scorecard
Departments
Departmental
Evaluation
(Monthly)
Linking organisational and
individual PMS
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Cascading the Strategy
IDP
Reduce expenditure12 % per annum
Strategy
Objectives
Measures
Municipality
Department
Team/
Individual
Source: Howard Rohm
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Auditing and Quality Control
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Role of Internal Audit Section of a municipality (1)
SECTION 165 OF THE MFMA
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All municipalities must have an internal audit section (may however be
outsourced or shared with the District)
SECTION 45 OF THE SYSTEMS ACT
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The results of a municipalities performance measurements must be audited
(a) as part of the internal auditing processes
(b) annually by the Auditor-General
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Role of Internal Audit (2)
MUNICIPAL PLANNING AND PERFORMANCE REGULATIONS
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A municipality must develop and implement mechanisms, systems
and processes for auditing the results of performance
measurements as part of internal auditing process
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Any auditing must include an assessment of (a) the functionality of
the PMS, (b) whether the PMS complies with the Act and ( c) the
extent to which the performance measures are reliable in measuring
performance on indicators (Regulations).
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Municipality’s internal auditors must (1) on a continuous basis audit
the performance measurements of the municipality and (2) submit
quarterly reports on audits to the MM and Audit Committee
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Role of Audit Committee (1)
COMPOSITION
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Minimum of three members, the majority of which may not be
employees
No Councillor is allowed to serve on an Audit Committee (MFMA)
At least one person must have experience in performance
management (Regulations), MFMA only talks of appropriate
experience.
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Role of Audit Committee (2)
TERM OF OFFICE
• Council must appoint and budget for Audit Committee (Regulations –
annually, MFMA silent)
RENUMERATION
• Public members may be remunerated taking into account the tariffs
determined by the South African Institute of Chartered Accountants in
consultation with the Auditor-General (Regulations).
NUMBER OF MEETINGS
• Must meet at least four times during a financial year (Regulations twice
p/a).
• A special meeting may be called by any member (Regulation)
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Role of Audit Committee (3)
ROLE AND FUNCTION OF THE AUDIT COMMITTEE (Regs)
• Review the quarterly reports submitted to it by the Internal Audit
Section
• Review the municipality’s PM System and make recommendations in
this regard to Council
• At least twice a year submit an audit report to the Council
ROLE AND FUNCTION (General)
• Could commission in-depth performance investigations where there is
either continued poor performance, a lack of reliability in information
provided or on an ad hoc basis
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Role of Audit Committee (4)
ROLE AND FUNCTION (General continued)
• Must in reviewing performance management systems focus on
economy, efficiency, effectiveness and impact in so far as the key
performance indicators and targets set by the municipality are
concerned.
ACCESS TO INFORMATION/COMMUNICATION
• Regulations - Audit Committee may (1) communicate directly with
the Council, MM or the internal and external auditors of the
municipality, (2) access any municipal records needed to perform
its duties, (3) request any relevant person to attend any of its
meetings and to provide information requested and (4) investigate
any matter it deems necessary for the performance of its duties
and the exercise of its powers (MFMA only talks of access to
financial and other relevant information).
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Role of Audit Committee (5)
GENERAL
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Council must provide secretarial services to the Audit Committee
(Regulations)
Audit Committee may determine its own procedures after consultation
with Exco (Regulations)
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RESOURCES
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Department of Provincial and Local Government’s Guide on
Performance Management (available at www.pimss.net)
South African Local Government Association’s Guide for individual
performance contracts
KwaZulu-Natal Best Practices Guidelines for Performance Management
(available athttp://devplan.kzntl.gov.za/General/
Guidelines/2003Jul21/Best_Practice_no_graphics_with_cover.pdf)
www.balancedscorecard.org
www.better management.com
www.2GC.co.uk
www.sustainablemeasures.com
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