Measures of outputs, efficiency & effectiveness

PGPA Rule section 16EA(e)

The performance measures meet this requirement when they include measures of the entity's outputs, efficiency and effectiveness if those things are appropriate measures of the entity's performance.

An entity’s performance measures must include measures of the entity’s outputs, efficiency and effectiveness, if these are appropriate measures of the entity’s performance in the context of its purposes or key activities.

Historically, output measures have been the dominant means by which entities have measured their performance. However, there is a reasonable expectation that, where appropriate, performance measurement would include measures of effectiveness and efficiency of the key activities undertaken to achieve entities purposes.

In some cases it may be appropriate to use a proxy measure, that is, an indirect measure of the activity which is strongly correlated with the activity to measure effectiveness and efficiency of the activity. For example, this may occur when data is not available or cannot be collected at regular intervals, or when the cost of gathering and analysing information is prohibitive or outweighs the potential benefits of collecting and reporting on it.

Where impact of activities is difficult to assess, output measures may be an appropriate assessment proxy for whether services have reached their intention, at the right time and cost.

For an entity with key activities involving the development and provision of policy advice to government, the development of output measures may be sufficient as effectiveness and efficiency measures may not be appropriate when the cost and reliability of data collection and the needs of stakeholders are taken into account.

If proxy measures are used, it is good practice for entities to include in their corporate plan an explanation of why they are being used, and demonstrate why the proxy measure is suitable.

What is an output measure?

Output measures assess the quantity and quality of the goods and services produced by an activity (including their volume or quantity).

Some common types of output measures are:

  • Product of inputs and activity - measures the outputs resulting from inputs and activity.  For example, this may be the number of services provided, the number of service recipients, or the number of goods produced.
  • Access - measures how easily the intended recipients can obtain a good or service. There are several dimensions to access, such as timeliness of access (for example, measured in waiting times, processing times, time taken to produce an output), affordability of access (for example, the out-of-pocket cost of medical services), and service availability (for example, 24/7 availability of online services).
  • Quality - measures how fit for purpose a good or service is. For example, this may be the extent to which outputs conform to certain standards (such as legislative or service standards). There are several dimensions to quality, such as accuracy (for example, accuracy of payments, decisions, etc.), safety of the good or service, and responsiveness to customer needs (for example, levels of customer satisfaction).

    What is an efficiency measure?

    Efficiency is generally measured as the price of producing a unit of output, and is generally expressed as a ratio of inputs to outputs. A process is efficient where the production cost is minimised for a certain quality of output, or outputs are maximised for a given volume of input. In a public sector context, efficiency is generally about obtaining the most benefit from available resources; that is, minimising inputs used to deliver the policy or other outputs in terms of quality, quantity and timing.

    Examples of efficiency measures may include:

    • Cost per benefit payment;
    • Cost per inspection/audit/project;
    • Processing cost per grant.

      Key activities that are transactional in nature (such as the processing of welfare or grant payments, the operation of call centres or revenue collection functions) lend themselves to efficiency measurement, in addition to the measurement of outputs and effectiveness to provide a complete picture of the performance of the entity.

      What is an effectiveness measure?

      Measures of effectiveness assess how well an entity has delivered on its purposes; that is, whether the activities of the entity have had the intended impact/policy objective/achieving the purpose.

      Measures of effectiveness might include:

      • the change in literacy rates as a result of activities focused on raising the national reading standards in primary school children; or
      • the change in the number of workplace injuries as a result of work health and safety regulation aimed at reducing workplace injuries.

        Although the examples of effectiveness measures offered above are quantitative in nature, effectiveness will not always be able to be measured in quantitative terms. For many activities undertaken by the public sector, qualitative measures will complement quantitative measures. For example, people receiving education to improve literacy skills might be surveyed to understand the impact that an increase in literacy had on their quality of life.

        The following are a number of examples of output, efficiency and effectiveness measures reported on by entities in their corporate plans. These examples are provided to inform entity thinking in the context of their particular circumstances and are not intended to be prescriptive.

        Output measures

        •  Services Australia, 2019-20 Corporate Plan (pp 14-15):
          • Customer satisfaction with their service delivery experience (quality)
          • Customers receive payments free of administrative and/or processing errors (social security and welfare) (accuracy/quality)
          • Face-to-face service level standards - average wait time (timeliness)
        • Strategic objective: advise and assist everyone to understand their rights and obligations (Australian Building and Construction Commission, 2019-20 Corporate Plan, p 9)
          • Number of site visits undertaken nationally (activity)
          • Surveyed stakeholders who are satisfied or highly satisfied with the quality and timeliness of advice and assistance provided (quality of service)
        • Strategic priority: Assist the Minister for Industrial Relations to foster safe, fair and productive workplaces (Attorney-General’s Department, 2019-20 Corporate Plan, p 9)
          • Average processing time of Fair Entitlements Guarantee claims is 14 weeks (timeliness)
          • 95% of Fair Entitlements Guarantee claim payments are correct (accuracy/quality)
          • 80% of claimants are satisfied with the department’s administration of the Fair Entitlements Guarantee (quality)
            • 80% of insolvency practitioners are satisfied with the department’s administration of the Fair Entitlements Guarantee (quality)

        Efficiency measures

        • Levy collection processes cost no more than 1.2% of levies disbursed (Department of Agriculture, 2019-20 Corporate Plan, p 18)
        • Claims administration cost as a ratio of all claims expenses is 17 per cent or lower for each injury year (Comcare, 2019-20 Corporate Plan, p 11)
        • Costs per $1000 of assets supervised by APRA (Australian Prudential Regulation Authority, 2019-20 Corporate Plan, p 26)

        Cost per employee outcome (measured as the number of jobseekers employed three months after participation in jobactive) (Department of Employment, Skills, Small and Family Business, 2019-20 Corporate Plan, p 30)

        Effectiveness measures

        • Proportion of job seekers employed three months following participation in employment services (Department of Jobs and Small Business, 2019-20 Corporate Plan, p 12)
        • Number of road fatalities; serious injuries due to road crashes (Department of Infrastructure, Transport, Cities and Regional Development, 2019-20 Corporate Plan, p 9)
        • Increased proportion of employees who have returned to work, measured by duration on incapacity benefits (this complements the survey-based measure of return to work for the Comcare scheme) (Comcare, 2019-20 Corporate Plan, p 11)

        Regulated entities report that our regulatory approach improves WHS outcomes (Comcare, 2019-20 Corporate Plan, p 13)


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