Politicians need to prove they can boost performance levels to maintain public support and confidence.
In a recent survey by KPMG’s Global Government practice and the Economist Intelligence Unit, more than half of the government bodies surveyed have either already implemented a wide array of performance measures or plan to do so by mid-2009. These range from smarter procurement to increased private sector partnerships, and measures aimed at improving financial accountability and management.
Many governments are borrowing ideas from large commercial enterprises to improve services and are using commercial terminology, such as ‘the customer experience’. They know citizens want value for money and refuse to accept stagnating service levels. Although there is generally no competitive market for the services they provide, governments understand they can benefit from constant review and improvement of their activities.
Applying commercial acumen: linking financial and performance data
A good example of using private sector ideas in government is the linking of financial and performance data to determine the true costs of projects. In our survey this was cited as the main difficulty in financing and funding projects, ahead of raising funds in the first place.
Many governments feel they cannot communicate the true benefits of their programs and the costs of individual projects often remain obscure. One of the best ways to overcome such problems is to integrate financial and performance information. Some governments also cite re-engineering the reporting process and putting in place comparative financial performance measures as helping.
But few believe that more regular financial reporting is the answer. A majority agree that funding for public services should be determined by performance.
KPMG’s experience in the Government sector supports our understanding of the challenge faced by officials in clearly defining and communicating benefits and costs of public projects. We also understand that elected sponsors, citizens and clients demand clarity and transparency about the core rationale for public investments.
Our experience suggests that governments must create and integrate appropriate financial and performance data about the implications of public programs and projects to respond to this challenge. This can be achieved through the following approaches.
- Investing in creating the data, addressing the strategic objectives of projects and programs and fully analyzing the expected financial and performance outcomes.
- Communicating the business case for public investment within and across departments, with elected representatives and, most importantly, with citizens, stakeholders and clients.
- Managing project implementation, by linking financial and performance data about the outputs of government efforts and the outcomes they deliver for a demanding public. Being informed helps government officials be better managers, more attractive employers and deliver better quality services. Understanding the financial and performance dimensions of their decisions, and investing in and linking together the requisite data over time, is one of the strongest tools they have.
KPMG is experienced in these areas
We have extensive experience conducting business process performance evaluations and assessing supporting information technology infrastructures and their applications. We have also conducted efficiency reviews, including the review of data from financial systems with an analysis of the value chain and activity.
Other examples of how governments can use developments in the private sector to raise performance levels include: risk management, balanced scorecards and other management applications.
An important first step in raising performance levels is to select the right projects to deliver improvements. Governments sometimes run too many performance-related projects concurrently; investment and resources are not channeled into areas that could deliver the greatest benefits.
This is partly because public sector organisations may not be good at analysing the cost/benefit ratio across a range of prospective projects. With better project analysis and performance measurement, governments could channel resources into those initiatives that are most likely to deliver the greatest returns.
This has been adapted from a KPMG International article.