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 performance measurement would include measures of effectiveness and efficiency of the key activities undertaken to achieve entities purposes, where appropriate.

In some cases, it may be appropriate to use a proxy measure. A proxy measure is an indirect measure of the activity which is strongly correlated with the activity to measure effectiveness and/or 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.

Example – The use of proxy measures to assess effectiveness

"Measuring effectiveness, or impact, can be challenging for arts and cultural institutions. It is not always possible to directly connect cultural work to tangible impacts. However, research from the Australia Council for the Arts and A New Approach indicates that engaging with culture and creativity has a range of benefits for audiences. Accordingly, we use proxy measures to assess our effectiveness, including visitors and online engagement. We extrapolate that those who engage with our collection and content will benefit from the experience, though we aren’t able to quantify these benefits". - Explanation in the National Film and Sound Archive (NSFA) 2022-23 Corporate Plan. 

The National Film and Sound Archive (NSFA) 2022-23 Corporate Plan, includes the use of proxy measures to assess its effectiveness, including visitors and online engagement.

For more information on corporate plans please visit the Transparency Portal or the relevant entity’s website.

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, or contributed to achieving the purpose.

Example of measures of effectiveness 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.

Effectiveness can be measured in quantitative or qualitative 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 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 circumstances. They are not intended to be prescriptive.
Output measures
  • Services Australia, 2022-23 Corporate Plan
    • Customer satisfaction (p 20)
    • Customer trust (p 20)
    • Payment quality (p 21)
    • Customers served within 15 minutes (p 21)
    • Work processed within timeliness standards (p 21)
Efficiency measures
  • Department of Agriculture, Fisheries, and Forestry 2022–23 Corporate Plan
    • Equal or reduced cost of levies administration compared with levies disbursed (p 14)
  • Comcare Corporate Plan 2022–23 
    • Our scheme is sustainable as evidenced through outcomes achieved by scheme participants (including financial and return to work outcomes) (p 13)
Effectiveness measures
  • Department of Employment and Workplace Relations 2022-23 Corporate Plan
    • Proportion of participants in work or study three months after existing services (p 18)
  • Department of Infrastructure, Transport, Regional Development, Communications and the Arts 2022–23 Corporate Plan
    • Reduction in the number of road fatalities and fatality rate per 100,000 population (p 33)​​​​​​
  • Comcare Corporate Plan 2022–23
    • We build and embed better regulatory practice into our work health and safety regulatory activities (p 13)

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