Performance Measurement and Benchmarking in Value for Money

Before us today is the third pillar of Value for Money, having dealt with the second in our last treat..Performance measurement and Benchmarking, among others are core to the Value for Money measurement techniques.

Performance Measurement provides strategic management post mortem by which polices, systems, procedures, outcomes are evaluated. Further to that, it provides diagnostic and investigative tools not only to determine how performance compares in due course over time but how with others in similar circumstances. A prerequisite of performance measurement is the determination of the output of an activity or a process. Output is measured for managers to fully appreciate what has been achieved, for governments and leaders to see what their policies delivered, and then, for the public to appreciate what they are getting for their taxes as they evaluate the results of Government policies and those in leadership positions.

To ensure that this becomes entrenched and the norm, the drive for efficient and effective allocation and utilisation of resources had long assumed the centre stage in the application of performance measurement. Performance measurement in this process, as an important tool for evaluating value for money in the public sector, generates performance measures or key indicators and induces resources to become better efficiently and effectively allocated . In the private sector, on the other hand, where profit is the yardstick for performance evaluation, performance measures and indicators are applied as diagnostic and investigative tools to determine how their performance compares overtime and with those of their peers in the industry.

On the whole, the effectiveness of performance measures is influenced among others by how well they are integrated into a benchmarking system. Integrated horizontally and  vertically  to indicate that the measures are balanced, they provide complete assessment of how a project is managed and made combinable across projects to assess the performance of a programme and across programmes to gauge the impact of department-level policies and procedures.

Benchmarking identifies performance gaps when gauged against comparators. Through an organisation’s commitment to process improvement, it closes such gaps, catches up and beat the best in

Benchmarking along with value analysis, a look back evaluation process, is a potent force for improved efficiency and productivity. Through encouragement of organisations to continuously look at themselves, analyse their internal processes and performance and implement improvement opportunities as may be highlighted by benchmarking, it is made possible.

Benchmarking and value analysis in reviewing results against plans and best in class readily highlight deviations from plans, the norm or acceptable level of performance. These tools are veritable pillars of value for money that can help to reverse the tide of poor outcomes or performance, low productivity, corruption, and fraud, among others and lay the foundation for economic renewal for a floundering corporate entity or nation.

Performance refers to useful outputs, results and outcomes obtained from processes, products, and services. Measurement refers to numerical information that quantifies input, output and performance arising from processes, products and services.   Performance measures could be indicators.

A case in point is a survey by Jackson (1988) of public sector managers in central government, local authority and health sector departments in the UK, which identified the best features of performance measures to be ability to measure and make comparisons of actual performance against targets, ability to highlight areas of interest and  relevant questions to ask, ability to provide a broad range/comprehensive picture of a service, identification of trends over time and development of benchmarks.

Benchmarking, on its part, plays a key role in underpinning performance and the attainment of results and as has been established, Value for Money is not guaranteed without the use of some performance measurement and benchmarking.

Benchmarking is famed for facilitating continuous improvement, stimulation of process efficiency and effectiveness, addition of a much-needed external perspective to internal processes and focus on what really matters.

It’s no gainsaying anymore that as individuals, private and public organisations we must join the benchmarking bandwagon to improve processes, enhance productivity and obtain value for money in the utilisation of scarce resources.

As a Chinese proverb would say, “the end of a 1000-mile-journey is the first step taken.

Performance Measurement and Benchmarking assist to “Do More with Less by Doing Things Right and Doing the Right Things” Apply the Value for Money Principles and you will.