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Ag pres changing_our_stripes_can_the_public_sector_push_the_boundaries_of_private_performance_april_2015
This document discusses improving key performance indicators (KPIs) in the public sector. It notes that current KPIs focus too much on financial accountability and inputs rather than outcomes, efficiency, and effectiveness. The document outlines how governments have tried to shift from measuring inputs to outputs to outcomes over time. It argues KPIs need to assess the entire service delivery process, including economy, efficiency, cost-effectiveness, and service effectiveness. High-level KPIs that are transparent and publicly available could help push public sector performance boundaries by supporting, informing, and challenging operational models.
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Ag pres changing_our_stripes_can_the_public_sector_push_the_boundaries_of_private_performance_april_2015
- 1. "Changing our stripes– Can the public sector push the boundaries of private sector performance?" Grant Hehir Auditor-General IIA - Asia Pacific Public Sector Conference
- 2. Agenda Are there issueswith public sector KPIs? Is this important to internal audit? How have governments tried to improve KPIs? A way forward
- 3. Parliament’s needs Section 38Bof the New South Wales Public Finance and Audit Act 1983 “Audit of all or any particular activities of an authority to determine whether the authority is carrying out those activities effectively and doing so economically and efficiently and in compliance with all relevant laws.” Section 3A 1(b) (i) Audit Act 1994 Victoria - Objectives “To determine whether authorities are achieving their objectives effectively and doing so economically and efficiently and in compliance with all relevant Acts.”
- 4. National Commission ofAudit “Current arrangements make it difficult for the community to determine whether money is being well spent … delivering on ... objectives and how efficiently and effectively …” “Most performance information is focused on financial accountability – particularly whether the money was actually spent or spent on time” “The quality and usefulness of current reporting of performance in budget-related documents … varies markedly” The Report of the National Commission of Audit, Phase Two, March 2014
- 5. NSW Commission ofAudit “Reporting on outcomes and results is not enough. Accountability to the public and the Parliament also requires a full integration between: commitments made to the public by government on resource inputs to fund service delivery objectives resource allocation decisions made by government in the budget process, consistent with the public commitments transparent reporting by government of how the public commitments made on investment into inputs will translate into service delivery outcomes. “ NSW Commission of Audit Interim Report: Public Sector Management , January 2012
- 6. Queensland Auditor-General "... thewidespread lack of service standards and targets for the efficiency of services is of particular concern." "... measuring and monitoring the ongoing performance of the business is a core governance responsibility. Not knowing whether major government services are cost- efficient hampers effective decision making," Monitoring and Reporting performance, QAO, June 2014
- 7. NSW Auditor General’sReports “More transparency is needed on the performance and cost of services delivered to the public” NSW Auditor-General’s Report Vol 1 , March 2014 2014
- 8. Internal audit "Internal auditingis an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes" International Professional Practices Framework (IPPF), The Institute of Internal Auditors Research Foundation. Florida, USA, January 2011
- 9. Governance Measuring and monitoring performanceis a key governance responsibility
- 10. Service delivery Outcomes External influences Service objectives InputProcess Output Efficiency Cost effectiveness Service effectiveness Economy Adapted from ROGS
- 11. Pre-1970s – InputManagement Outcomes External influences Service objectives Input Process Output Efficiency Cost effectiveness Service effectiveness Economy Adapted from ROGS
- 12. 80s – Programmanagement and budgeting Outcomes External influences Service objectives Input Process Output Efficiency Cost effectiveness Service effectiveness Economy Adapted from ROGS
- 13. 1990s – Outputmanagement Outcomes External influences Service objectives Input Process Output Efficiency Cost effectiveness Service effectiveness Economy Adapted from ROGS
- 14. Now – Outcomes(programs?) Outcomes External influences Service objectives Input Process Output Efficiency Cost effectiveness Service effectiveness Economy Adapted from ROGS
- 15. A way forward– Setting service objectives Outcomes External influences Service objectives Input Process Output Efficiency Cost effectiveness Service effectiveness Economy Adapted from ROGS
- 16. Outcomes External influences Service objectives Input ProcessOutput Efficiency Cost effectiveness Service effectiveness Economy Adapted from ROGS A way forward – Assess whole service delivery process
- 17. Outcomes External influences Service objectives Input ProcessOutput Efficiency Cost effectiveness Service effectiveness Economy Adapted from ROGS A way forward – Setting KPIs
- 18. KPIs - Economy Demonstrateinputs are purchased at best value From competitive markets Use of benchmarking Financial controls
- 19. KPIs - Efficiency Demonstratethat the process for transforming inputs to outputs (or delivering programs) is efficient Procured through competitive process Benchmarked against similar delivery Time series demonstrates improvement
- 20. “Budget underspend doesnot demonstrate efficiency, as overspend does not demonstrate inefficiency. It is simply the direct measure of input cost; and at best it could be a proxy indicator of activity …” “Similarly, completing projects and initiatives on budget, on time, or delivering activities when planned … are simply activity standards” Efficiency Queensland Audit Office
- 21. KPIs – Costeffectiveness Demonstrate that the method chosen to achieve the outcome is best value Quality business case Regular evaluation – benefit realisation Benchmarking
- 22. KPIs – Serviceeffectiveness Reflect how well the actual outputs of a service achieve the agency’s stated purpose of the service and contribution to whole-of-government outcomes
- 23. “A propensity bydepartments … to use output-based standards of the quality and timeliness of their services as proxies for service effectiveness” “Measure of service quality are, at best, indirect indicators of effectiveness. The quality of a service can be quite high but still not be effectiveness; eg clients of a weight loss clinic may be very satisfied with the service but not have lost any weight” Effectiveness Queensland Audit Office
- 24. Focus on KPIs Indicators Important/key High-level Economy,Efficiency & Effectiveness
- 25. KPIs and youroperational model Support Inform Challenge
- 26. Improve KPIs throughtransparency Publish KPIs Make all data publicly available
- 27.