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Last updated: 12 June 1996

Raising the standard: Benchmarking for better Government

Please note: This document is for reference purposes only and is no longer considered by the APS Commission to be current. It may contain good practice advice and/or advice on the transitional arrangements between the 1922 and 1999 Public Service Acts.

Updated 12 June 1996 "Benchmarking" is the use of systematic methods to compare yourself with others and find better ways to do your work.

MAB/MIAC REPORT NO. 21 - JUNE 1996

Foreword

The Management Advisory Board (MAB) is charged under the Public Service Act, with advising the Commonwealth Government, through the Prime Minister, on significant management issues for the Australian Public Service (APS).

The Board established the Management Improvement Advisory Committee (MIAC), a representative group of senior public servants who discuss and develop detailed advice for MAB. This Committee is broadly representative of the Service as a whole and includes representation from the regional offices of departments and agencies.

In examining issues MIAC looks particularly for models of current best practice and information about what better managers are achieving. A line department perspecitve is emphasised.

This paper is one of a series being published from MIAC's reports to the Board. The present paper concerns benchmarking - the practical skills and tools for essential tasks of comparing your performance with current best practice. Benchmarking involves finding better ways of using scarce resources to deliver more efficient and effective services.

The paper illustrates current best practice in Commonwealth, State and local government benchmarking. It is a self help guide that documents APS networks and illustrates problems and solutions through the use of case studies.

Raising standards through the use of benchmarking is an essential part of raising the excellence of the Service. Benchmarking is particularly important in large APS agencies that manage the delivery of many important services to the broad Australian community.

Nevertheless, all APS agencies can benefit from a clear understanding of how their costs and quality of service compare to current standards of best practice and from the continual effort to improve their performance.

All APS agencies are encouraged to review the report and to make strategic use of benchamrking to raise their standards of planning and performance. Staff are encouraged to join the networks and build the partnerships that will lead to better measurement and more rapid improvement of programmes.

MAB and MIAC would like to express their appreciation to Steve Saunders and Rebekah Gupte for their work on this project and for presenting a report which has addressed many key issues and points the way forward for benchmarking in the APS.

 

M.W. Moore-Wilton Chair Management Advisory Board

Russell Higgins Chair Management Improvement Advisory Committee

The key messages

1. The key messages in this report are that:

• Benchmarking is an increasingly important tool in the kitbag of APS management improvement techniques. APS agencies and managers can use it to review their existing performance to reset priorities, reallocate scarce resources, and promote substantial improvements in APS quality and service.
• Benchmarking delivers the best results when used as a straightforward diagnostic tool. The techniques can give you powerful comparisons of your business results and processes with APS organisations, with State and local government and with the private sector.
• The most persuasive APS benchmarking work delivers practical recipes for demonstrable and measurable improvements in outcomes.
• To be effective, benchmarking must be handled with care and forethought, as an integral part of the organisation's corporate and business planning processes. But, for effective managers, measurement, analysis and improvement go with the job and are not extra tasks.
• Benchmarking is more than "an old technique under a new name". Agencies often collect the data inputs that are useful for benchmarking. Less often do they follow through on benchmarking to deliver visible improvements in their businesses - new organisational arrangements, new ways of using resources and getting the best out of people.
• APS agencies are now making practical efforts to lift the levels of information, cooperation and mutual learning among APS organisations and with the private sector. There is no need for new benchmarking players to start from scratch.

Introduction

Background

2. Since the 1980s, the main reforms in the APS resource management framework have been the new aggregate expenditure framework (e.g. new forward estimates and running cost arrangements); managing for results (e.g. improved program management and budgeting); and a better framework for public accountability (e.g. improved arrangements for portfolio reporting to Parliament). These changes in the budget-funded sector are complemented by new commercial disciplines for government business enterprises.

3. Building a Better Public Service (MAB/MIAC, 1993) took stock of progress. Setting further directions for APS reform, it emphasised three main points: making performance count; leadership; and the culture of continuous improvement.

4. The brochure Benchmarking: Improving Performance in the APS (MAB/MIAC, 1994) outlined the importance of benchmarking for APS reform.

5. Benchmarking is internationally accepted in business and government. Consistent with these trends, benchmarking is important for reform at all levels of Australian government - Commonwealth, State and local.

The Best Practices

6. Benchmarking is giving us:

• new frameworks for improving Commonwealth, State and local program delivery and achieving more effective government services in the Australian community
• better ways of comparing Australian industries and infrastructure services to international best practice, and improving performance in our government trading enterprises (GTEs)
• new methods for managing running costs and delivering more effective policy advice and corporate services in the APS
• the means to free up significant staff and resource savings in the APS, by reviewing core businesses.

7. Good APS benchmarking uses straightforward methods to determine practical answers for worthwhile improvements. Managers can choose from a broad range of techniques. Benchmarking need not be complex. With perseverance, benchmarking can succeed and deliver practical recipes for measuring programs and improving their outcomes.

8. This MIAC project and its case studies at Attachment A highlight important cultural factors. In successful APS benchmarking organisations, a common theme is flexible, inquiring structures that encourage comparison to peers and to best practice.

9. These "good benchmarking" organisations are more likely to share the benchmarking responsibilities around the organisation and will be more likely to adopt the results, because they:

• understand the benefits, costs and limitations of benchmarking, with management judging carefully when to deploy the techniques
• prefer to benchmark the programs and processes that use the larger amounts of resources and that matter for clients
• recognise the links between benchmarking, best practice standards and continuous improvement
• make benchmarking integral to organisational improvement, through the use of appropriate resourcing arrangements, consultation and performance agreements with staff.

Defining benchmarking

10. Benchmarking is where you systematically measure and compare the products, services and processes of your organisation - internally and against other relevant organisations - and take the best practices into your organisation.

11. All kinds of APS agencies can benefit from the appropriate application of benchmarking. To participate, your agency need not have direct equivalents in the public or private sectors. Part of benchmarking is to break down results and processes into elements that can be compared across a number of different types of organisations.

12. There are various forms of benchmarking that may be used in conjunction with one another. The case studies illustrate these forms:

• "results" benchmarking, where program managers look at comparative performance within and between organisations, against performance indicators that represent certain measures of efficiency and effectiveness
• "process" benchmarking is concerned more with analysing the activities and tasks that turn resource inputs into outputs and outcomes
• "best practice standards" take the form of goals and benchmarks to which the organisation aspires as part of its planning and continuous improvement.

13. The case studies also illustrate the ways in which benchmarking may be conducted inside and outside the organisation:

• internal benchmarking compares across different branches or units of the organisation. For example, an APS client service agency benchmarks client service standards or processes among the agency's regional outlets
• external benchmarking compares across different organisations with similar or different businesses, products or services. For example, APS agencies benchmark their personnel or information technology services with other APS agencies as benchmarking partners
• generic benchmarking is a term used to describe external benchmarking to compare across organisations which may be producing quite different products or services. For example, APS agencies may benchmark their client registration and processing standards, with diverse private sector companies.

14. For the various forms of benchmarking, the practical steps are summarised in a number of ways. For our Quick Guide (Box 1) on the benchmarking steps, we posed the questions like this:

• Why choose benchmarking? What are the particular management and business issues and is benchmarking the right tool for you to address them?
• When to benchmark? Is your organisation prepared and resourced and is the timing right for benchmarking?
• What to benchmark? What are the key processes, programs and outcomes for your organisation's success?
• How to do benchmarking? How do you establish a benchmarking project, compare performance measures to best practice, and apply the lessons to your own organisation?

BOX 1
Benchmarking - A Quick Guide
The Benchmarking Audit

Why choose benchmarking?	When to benchmark?	What to benchmark?
If there is a desire to review current best practices, and bring your business and programs up to standard. If there is growth in demand for services, or pressure on budget resources. If there is major restructuring, or opening up of some business to competition. If demands for better services, or better service standards, are major concerns	When strategic plans are in place and benchmarking supports them. When management and staff are committed to the process, and resources and systems support it. When there may be a need for a "circuit breaker" to introduce new ideas to your organisation.	What you need to benchmark depends on the strategic objectives and the critical success factors of your organisiation. Examples of what you can benchmark are: quality of advice to government and community. resource costs of programs and services. the quality of programs and services. outputs and outcomes of programs. productivity and financial performance.

The Benchmarking Cycle (How to do Benchmarking)

1. Complete the Benchmarking Audit Why choose benchmarking? When to benchmark? What to benchmark?	2. Start the Project Consider which forms(results, process, best practice) of benchmarking you will use. Identify the stakeholders and staff involved, in the program or service to be benchmarked. Form a suitable project team, including key internal/external stakeholders and/or staff from the area involved. Prepare your team for benchmarking - in the basics of research, measurement, customer and staff surveys, analysing work flows.
3. Analyse Current Plans and Performance Review current organisational strategies, plans and processes. In the area to be benchmarked, identify key performance measures and your current performance against them. See how your performance compares to what you currently know about "best practice" levels. Identify the greatest opportunities for improvement.	4. Establish Benchmarking Partners Review relevant organisations, networks, case studies. Identify interested organisations and known "best practice" providers who could be partners (or identify internal units for internal benchmarking). Review the published "best practice" data and plan what data you will need to collect for proper comparisons. Make contact with identified benchmarking partners. Model how your organisation carries out its work in the area to be benchmarked, do customer/site visits, gather data.
5. Get the Data and Analyse Differences Review the relevant research and survey findings. Analyse costs, quality and outcomes. Can the critical processes or services be made more effective or delivered more efficiently? Set new performance targets and service standards using benchmark data.	6. Identify Best Practices & Most Useful Improvements Which alternative practices identified by your team have the best chance of working, the greatest impact on key measures, and are visible in their effect? From whom does the implementation require approval and/or cooperation? Re-establish the organisational imperatives for change. Plan communication and consultation with all affected.
7. Start Improvements in Practice Involve the entire work group and the rest of the organisation in making the changes. Take the steps to improve your performance and measure it against more appropriate targets. Implement training and changes to procedures to hold the gains from benchmarking. Link the changes to your business plans and continuous improvement.	8. Assess Improvements & Re-benchmark Monitor the key performance measures to determine whether gains have been made and are being held. Re-benchmark targets periodically - remember others are moving ahead too. Consider fresh partnerships and fresh areas for benchmarking.

Why choose benchmarking?

15. Microeconomic reform has created the climate for benchmarking in Australian industry and government. Exposed to international pressures and competition, our managers must be able to measure and match the "moving targets" of national and international standards of best practice.

16. Governments, at all levels, will continue to seek the most effective means of serving communities, through accountable and productive use of resources. This drives the use of benchmarking, including its use as a tool for continuous improvement in APS enterprise and agency agreements.

17. Box 2 explores the key reasons that government agencies are choosing to benchmark, drawing examples from APS, State and local government case studies.

18. Agency program managers also need to make choices among benchmarking and other well-documented management improvement techniques - program review, formal evaluation, market testing, quality management and assurance, risk management, and so on. Each of these techniques has its strengths and weaknesses. Choosing any one does not rule out others. These are some of the signals that you should consider benchmarking:

• you need to know more about how your cost and quality levels compare to best practice
• budget resources are under pressure or necessary investments for growth in demand have to be financed
• major restructuring is possible, or there is consideration of opening businesses up to competition and outsourcing
• program revenues, or client demand in the case of spending programs, are under pressure
• client service standards are being established or require substantial improvement.

When to benchmark?

19. Benchmarking is a catalyst for major review and reform but also an effective part of ongoing improvement in programs.

20. To get the best value from the resources you invest, the timing of benchmarking must be geared to your organisation's broader environment and the current status of its major people, policy and program issues. In Box 3 are some examples.

21. These are signals that your organisation is ready to "press the button":

• the organisation has a vision, with the strategic plans to back it up, and the proposed benchmarking fits with those planning needs
• management is committed to benchmarking and the organisation's culture and people support it
• first-hand data and systems are adequate to support the benchmarking, and fruitful benchmarking partnerships are available
• interest groups and their potential conflicts are taken into account, and the organisation's reward systems will support the benchmarking outcomes.

22. If you accept the need for continuous improvement, you need not and ought not to defer benchmarking until the timing appears to be ideal. It can be the "circuit breaker" to introduce new ideas to the complacent organisation unaware of evolving best practice. There are positive ways (Box 4) to justify the time it takes to benchmark.

What to benchmark?

23. As the first substantive stage of a possible benchmarking process, your organisation and its stakeholders should discuss and agree on benchmarking requirements and information needs.

24. Then compare the resource costs of benchmarking to the potential benefits. Your organisation's "critical success factors", and the core programs that underpin them, are the best guides to areas that will give a good return on benchmarking investments. Depending on these guides, you may need to benchmark:

• the quality of the advice you give to government and to the community
• the quality of programs and services, especially as measured by clients
• the outputs and outcomes of programs, especially compared with resources invested
• the resource costs of programs and services, especially as related to overall resources available
• productivity and financial performance in programs, especially in relation to possible alternative forms of program delivery.

25. Note that the Commonwealth-State Service, and Health Ministers, reviews examine major community programs even if there are information gaps, rather than lesser programs for which information is abundant. These, and other examples of the important programs and processes to benchmark, are in Box 5.

How to do benchmarking?

26. After asking "why, when, and what", if benchmarking is appropriate and justified, your organisation may move on to carry out the "how" step illustrated in the benchmarking cycle of Box 1.

27. Start the project. Managers can use existing work teams for benchmarking, or draw together other teams from inside and outside the organisation.

28. Creative organisational arrangements can add value to benchmarking projects. The MAB/MIAC project Innovative Ways of Organising People (Box 6) demonstrates models for creative work groups and teams.

29. Analyse current plans and performance. Early in the benchmarking process, you should review your organisation's current business plans. Look at performance measures and what is currently known about best practice levels in the areas or programs that are to be benchmarked. This will point you toward gaps in current performance indicators, improving the frameworks for data collections and indicating the most significant areas for potential improvement.

30. In benchmarking, do not assume that your program already has in place an adequate range of performance measures, or that the existing measures dovetail with service standards or business plans. There may, for example, already be measures of "quality of service", but these may or may not be quantitative and may or may not be monitored regularly against best practice.

31. Critically examine whether your measures go to the heart of program objectives for efficiency or effectiveness - the relative costs and productivity of programs or the quality and the overall outcomes achieved. From the case studies, Box 7 gives examples of the practical problems you may face in analysing performance using benchmarking data.

32. Establish benchmarking partners. Your project team defines benchmarking "partners" - internal units or external organisations that you can compare to find best practices. In internal benchmarking, the internal partners should be units that appear to represent a fair range of practices. In external benchmarking, find partners to "break you out of the mould" - to represent elements of best practice rather than merely different practice.

33. You may find that the most responsive partners, whether in the public or private sector, are partners with whom you can share a code of practice and anticipate mutual corporate benefits. Information for choosing such partners may come from your internal data, from networking with other APS and client organisations, or by using the increasing range of commercial data bases and repositories of national and international best practice.

34. Examples of productive benchmarking partnerships are in this report's case studies - those among Commonwealth and State governments, among APS agencies, among APS commercial operations, and among APS and (Australian and overseas) private sector organisations. The next section, Developing the Networks, describes how your own agency can seek out information, join networks and prospect for partnerships.

35. Get the data and analyse differences. The methods of information gathering include data base and other research, measurement of performance indicators and standards, stakeholder interviews, staff surveys, analysis of work processes, site and best practice visits, client surveys, and the study of enabling technology for the process being benchmarked. The term "business process re-engineering" (BPR) may be used for a broad re-examination of a major business process, utilising benchmarking.

36. Data collection puts the spotlight on the essential information relating to your critical success factors, the levels of resource usage, the performance and productivity measures and gaps. As with any application of management information, the cost and complexity of the benchmarking and the measures used should be in line with your organisation's capacity to absorb and make meaningful use of them. Box 8 gives examples of the collection of useful, client-focused benchmarking data and the care you need to take in its interpretation.

37. Identify best practices and most useful improvements. The analysis stage should lead you to newer and simpler processes, newer and more relevant performance measures and new targets that you can use to assess your business performance. Benchmarkers have to do more than make their reports. They need to market their findings convincingly and produce practical recipes for action.

38. Benchmarking projects identify and recommend new practices that, at acceptable levels of risk, have the greatest impact on performance. Box 9 is a reminder of the importance of managing the corporate risks inherent in the benchmarking process, and in the solutions you have derived.

39. Start improvements in practice. To see projects through to implementation requires the renewal of staff commitment and training for procedural change. Your findings may suggest some quick wins, specific, practicable improvements that have early pay-offs. In successful benchmarking, the overall results ought to have an impact on your strategic and business plans. After this, you and your organisation move back into the cycle of continuous improvement, including its application to agency agreements. Managers and staff must work together to assess improvements and re-benchmark.

40. The case study examples in Box 10 close off this section. They show how diverse organisations are doing benchmarking and demonstrating its worth to meet practical management needs.

41. For more detail on how to do benchmarking, APS managers and staff can turn to a number of texts and manuals covering the practical steps in process, and pointing to useful data bases. See, for example, the Benchmarking Self Help Manual (DIST/DIR, 1995), Benchmarking for Local Government (DHRD, 1995) and the short List of Benchmarking References at Attachment B.

Developing the networks

42. The nature of benchmarking is the use of partnerships to analyse and improve your performance. The previous section defines the processes and describes current case studies. Tapping into networks, of other APS and private sector managers and benchmarking practitioners, is the next step.

43. To help you get started, Attachment C is a List of APS Benchmarking Contacts and Activities, updated to May 1996. APS and other contacts listed can introduce you to State and local government networks and to the private sector.

44. The list includes information on relevant APS Networks (Evaluation, Quality, Client Service) and related networks (Australian Quality Council) for benchmarking practitioners. Complementing agencies' internal networks, these Networks exchange information and results, developing new benchmarking partnerships inside and outside the APS.

45. MAB/MIAC encourages the development of these contacts and networks. It will sponsor activities to promote agency innovation and benchmarking practice, and can assist in reviews of progress. The Public Service and Merit Protection Commission is also sponsoring a major Innovations Exposition in 1997.

46. Information updates on agencies' promising and innovative practice, including benchmarking, will be available nationally through the Commonwealth Managers' Toolbox, the central agency quarterly Innovations and the MIAC-sponsored APS Innovations - On Line. This report itself is on line (see the addresses at page v).

47. APS Innovations - On Line is a two-way street. Agencies can use it to make contributions on their own innovative practices and to make links with their own "home pages" on the Internet.

48. Information updates may also be circulated to Departments through the APS Networks and through the benchmarking training programs developed by the Department of Industrial Relations and the Public Service and Merit Protection Commission.

49. From this point, the task is to spread the benchmarking success stories and extend the growing body of APS practice and expertise in benchmarking techniques. In working partnerships, agencies can build benchmarking into their processes of business planning and continuous improvement. They can use it to raise their standards of performance for a more productive Service.

Benchmarking case studies

Attachment A1: Report on Government Service Provision (1995)- Steering Committee for the Review of Commonwealth-State Service Provision (COAG)

Project aim

To provide a common sense approach to improving government as an important provider of services. Objectives include better client services, transparency of performance and accountability, clarification of objectives and responsibilities, and encouraging more comparisons that use appropriate yardsticks.

This is one of the major benchmarking exercises now proceeding at Commonwealth or Commonwealth-State level. Established in 1993 by the Council of Australian Governments (COAG), the Review of Commonwealth-State Service Provision is managed by a Steering Committee of representatives from the Commonwealth, State and Territory Governments and local government.

Practical applications

Important messages for APS agencies that want to build on, or apply, this major work are: the large amount of time and cooperation required; the need to build relevant performance frameworks based on effectiveness and efficiency (that include indicators of cost, quality, access, and outcomes); the likelihood that data will not always be available at first; and the probability that even imperfect, first-round comparisons of "results" will still reveal substantial areas of under and over performance that should be addressed.

In seeking to improve performance, allowances must be made for differing economies of scale and external conditions.

The results

The 1995 Report is the Review's first. At a technical level, it should be noted that the report is often in the business of establishing a proper framework for performance indicators, rather than being in the position to insert data into that framework. Some data is simply not available and will take time to build, but in such cases the Committee sought to identify useful performance indicators rather than rely on available, if inappropriate, data.

Nonetheless, the data in its current form reveals substantial variations in unit costs, response times and outcomes across the States in a number of the services that were surveyed. It is a valuable basis for further comparisons, and for action based on more detailed analyses of the effectiveness of the underlying service processes in individual States.

Following are some summary results for the services examined.

• Hospitals (acute care):
  It appears that efficiency measures are better developed than those for effectiveness. The Report looks at unit treatment costs, waiting times, and surgical intervention rates. Large States appear to have lower unit costs.
• Housing:
  Unit administration costs appear to be higher in Tasmania and the Territories. The Report looks at variations in waiting periods, affordability, and rental arrears levels. Work is under way to improve indicators on housing stock condition and customer satisfaction.
• School education (government):
  Expenditure per student varies widely around the $5100 average (Queensland $4800, NT $7700). The main conclusions focus on the urgent need to develop nationally comparable data on learning outcomes, and indicators of social and equity outcomes.
• Vocational education and training:
  The Report notes that States and Territories do plan for levels of provision and generally exceeded these planning targets in 1994. It finds significant variations in costs per curriculum hour and examines effectiveness indicators such as completion rates, graduate satisfaction levels and participation rates. A concerted approach from the Australian National Training Authority, States, and Territories, to improve inputs and outcomes data is recommended.
• Police:
  The Report compares States and Territories on police costs per capita, salary costs per sworn officer, and crime rates per capita for various types of offence. The Report recommends further development of indicators of effectiveness - in terms of increasing community confidence in police; reducing crime and its effects; and increasing community safety. In addition, indicators need to be developed for efficiency.
• Courts:
  The Report's focuses are unit costs and timeliness. While data is limited, there are some comparisons available for average costs per offender, per file, and per court day, plus data on the percentages of court cases spanning six months or less. In all these indicators, States exhibit considerable variation.
• Corrective services:
  Against a background of increasing levels of incarceration, the Report comments on measures such as cost per prisoner, prison capacity utilisation, and prisoner employment. Variations in cost and service indicators are overshadowed by very large variations in incarceration rates (Victoria 71 per 100000, average 115, NT 394). The Report recommends an integrated data base for better information on measures such as recidivism, a key outcome indicator for the criminal justice system. It notes variations in the adoption of alternative corrective options such as community service.
• Crisis support services (child protection, alternative care, supported accommodation):
  Comparable cost and outcomes data are limited for the support services. The Report does present some comparisons of complaint substantiation rates, response times, and repeat maltreatment in child protection; lengths of time in alternative care; and placement rates in supported accommodation. Preliminary frameworks of indicators for the three services are proposed.

The why, when, what and how

Why and when benchmarking?

The general rationale for the exercise is a common, and common sense, approach to improving government as an important provider of services. Objectives include better client service, transparency of performance and accountability, clarification of objectives and responsibilities, and encouraging more comparisons that use appropriate yardsticks.

The Review is set against a background of increasing demand for services; increasing the client focus of services and obtaining better value for money spent.

What to benchmark?

Eight representative areas of service chosen initially were acute care, housing, schools, vocational education and training, police, courts, corrective services and crisis support services. These represent annual outlays (1993-94) of $38bn or 9% of GDP.

How is benchmarking done?

The Review is based on "results" benchmarking where the Steering Committee's core requirements are: a framework of performance indicators covering both efficiency and effectiveness, a complete set of indicators, and high quality data.

Industry Commission provides the Secretariat to the Review and the Steering Committee is supported by Commonwealth-State working groups for each area of service provision being examined. Each working group is convened by one of the Steering Committee members.

Contacts

Main project contact

Chris Sayers, Assistant Commissioner, Industry Commission
Level 28, 35 Collins Street, Melbourne 3000
03-96532133 ph, 96532305 fax

Reports

The first report, published December 1995 through the Industry Commission

(Report on Government Service Provision, Steering Committee for the Review of Commonwealth-State Service Provision)

covers eight areas of service.

See also the related case study on the National Health Ministers'

First National Report on Health Sector Performance Indicators.

Attachment A2: First National Report on Health Sector Performance Indicators- National Health Ministers' Benchmarking Working Group

Project aim

The project aims to introduce the use of benchmarking to compare public hospital services across Australia, and to work to improve services in terms of defined national standards. National Health Ministers established the project and the Working Group in 1994.

Practical applications

This is a useful benchmarking model if you are a manager responsible for costs and quality in multi-dimensional or community-type services that are delivered through a range of outlets.

Note that the Commonwealth-State Working Group, which includes industry bodies, worked at length to develop a set of indicators for efficiency, productivity, quality and access. For other agencies seeking to benchmark community-type services, the range of indicators that the Working Group uses is of note. The report also warns that there is a considerable difference between benchmarking globally across regions (in this case, States) and benchmarking individual service outlets (in this case, hospitals).

The report, while establishing frameworks for the comparison of performance, acknowledges that data is not always available. Nonetheless, the data in its current form reveals significant variations in unit costs, service outcomes and access across the States and Territories.

The results

The first Report acknowledges that data for the chosen indicators is variable and not usually based on nationally consistent definitions. Results should, therefore, be interpreted with caution. Some of the main findings are:

• in the area of efficiency, cost per "casemix-adjusted" separation averages $2327 ranging from $2208 (SA) to $3287 (ACT)
• some indicative figures are developed for productivity measures in public hospitals - e.g. capital intensity in terms of "asset replacement values" per "patient separation"
• accreditation of public and private hospitals is used as a proxy for quality. There are limited State comparisons available in terms of rates of unplanned readmission, return to operating room, and hospital infection
• in the area of access, average clearance time for elective surgery ranges from 1.8 months (NSW) to 9.9 (NT) and there are large State variations in separation rates for selected procedures. Total admissions per 1000 range from 227 (ACT) to 283 (SA).

The why, when, what and how

Why and when benchmarking?

Developed countries face the problems of rising health costs, increasing demand for health care, and increasing consumer expectations. The project aims to develop performance indicators that will allow comparability of health sector performance across all States and Territories. The ultimate goal is to improve services in terms of defined national standards.

In 1994 National Health Ministers established a Working Group of Commonwealth, State and Territory health officials, plus the Australian Hospitals Association and Australian Institute of Health and Welfare. AIHW prepared the first Report.

What to benchmark and how is it done?

The Working Group developed a set of 17 benchmark or key indicators for Efficiency, Productivity, Quality and Access. It then sought State and Territory hospital data to fill this framework of indicators.

Following its first report, the Working Group has developed an agenda for the next 36 months to improve the indicators and establish benchmarking practices across the health sector. While the data framework is eclectic (Efficiency, Productivity, Quality, Access), a challenge is to develop the current framework to enable comparisons of particular hospitals and their particular services.

Contacts

Main Project Contact

Wendy Jarvie, Chair, National Health Ministers Benchmarking Working Group
Assistant Secretary, Health Services Outcomes Branch,
Department of Health and Family Services
GPO Box 9848, Canberra 2601
06-2896886 ph, 2897958 fax

Reports

The inaugural report of February 1996 is the First National Report on Health Sector Performance Indicators (AIHW, Canberra, available through AGPS).

A related benchmarking exercise (see case study) is in the COAG Report on Government Service Provision. One chapter of that report looks at efficiency and effectiveness measures for acute hospital services - unit treatment costs, waiting times, and surgical intervention rates. The Hospitals Working Group from the COAG exercise is represented by the Industry Commission on this Health Ministers group.

Attachment A3: Sharing Revenues Among the States - Fiscal Equalisation - Commonwealth Grants Commission

Project aim

The Commonwealth Grants Commission was established in 1933 to assess claims by States for financial assistance under section 96 of the Constitution. The aim of its main task, "fiscal equalisation", is to advise the Government on what funding is necessary to give each State (including ACT, NT) the capacity to provide an average standard of State-type services, assuming it does so at an average level of efficiency and makes an average effort to raise its own revenue.

Practical applications

Fiscal equalisation is a tool to promote social and regional equity, through the fair sharing of nationally-raised revenues, and greater national unity through the sharing of responsibility for regional areas in greater fiscal need.

This is "benchmarking" in the sense of measuring and comparing services, rather than in the sense of seeking to introduce best practice across the board. The Grants Commission's techniques enable the comparison of different States on common ground, that of an agreed "standard budget" of expenditures and revenues. They include the study of policy differences between the States and the quantification of the budgetary impact of such differences.

The Commission's techniques are internationally recognised. They are a useful reminder that benchmarking, while a useful tool for resource management and saving, also has its applications in resource sharing for the common welfare.

The results

It is important to note that the "equalisation" techniques are intended to achieve equal service capacities, not equal service results, among the States.

The Commission's work leads to the derivation of State-by-State relativities, that are used as a basis for recommending the sharing of funds to annual Premiers' Conferences. In 1994-95, these Commonwealth payments totalled $17,790m and made up 34% of States' total recurrent revenue.

According to the 1996 Update, the relativities were as follows: Victoria 0.88, NSW 0.88, ACT 0.89, QLD 1.04, WA 1.01, SA 1.19, TAS 1.55, NT 4.88.

The Commission's performance is assessed on the basis of the timeliness of its reporting, the extent to which the parties can put their views, the quality of its research, and the extent to which reports are accepted by Commonwealth, States and Territories. A 1994-95 consultant review was favourable, pointing out that consultation had improved but that internal planning could be improved. The Australian approach to equalisation has international standing and is being studied by a number of countries currently developing fiscal transfer systems.

Why, when, what and how

Why and when benchmark?

The principle of fiscal equalisation was developed by the Commission during the 1930s to assess any additional funding requirements of States claiming to have special needs. Its application to revenue sharing in 1981 arose to ensure all States were treated equitably by the Commonwealth.

What to benchmark?

The basis for the comparisons is a standard budget covering all recurrent transactions of the States, classified into 41 expenditure functions and 19 revenue sources.

How is benchmarking done?

The States' financial transactions are put into a common framework, or "standard budget", consisting of the 60 items above.

"Standards" are derived for each expenditure and each revenue function. These standards are the average per capita spending, or revenue, across all of Australia.

"Disabilities" are also measured, in terms of external (e.g. population dispersion) influences that require a State government to spend more (or less) per head to achieve the same objective; or that reduce (or increase) its relative capacity to raise revenue from the same effort.

In the equalisation process, each State's special disability factors, expressed as ratios of the national average, are applied to the standard expenditures and revenues. A State's requirement for general revenue assistance may then be expressed as an equal per capita share of the total general revenue grants, plus or minus:

• expenditure needs per capita - the difference between the per capita amount the State needs to spend to provide the standard level of services (at average levels of operational efficiency), and the Australian average (standard) per capita expenditure
• revenue needs per capita - the difference between the Australian average (standard) per capita revenue and the per capita revenue a State could raise by applying the standard charges and tax rates to its own revenue base (and collecting its revenue with the average level of efficiency)
• an adjustment for those specific purpose payments that are regarded as being available to meet part of the State's total needs - the adjustment is the Australian average per capita specific purpose payment by the Commonwealth, less the per capita amount received by that State.

Contact

Mr Bob Searle, Secretary, Commonwealth Grants Commission
5 Torrens St, Canberra 2601
06-2758012 ph, 2758009 fax

Reports

Refer to the Commonwealth Grants Commission: Annual Report 1994-95(AGPS, Canberra, 1995) for general information and the Report on General Revenue Grant Relativities: 1996 Update (AGPS, Canberra, 1996) for details of the Commission's assessments.

For a broader historical perspective, the source is the second edition of the Commission's publication Equality in Diversity:History of the Commonwealth Grants Commission (AGPS, Canberra, 1995).

Attachment A4: International Infrastructure Benchmarking - Bureau of Industry Economics

Project aim

To benchmark key infrastructure industries such as electricity, rail, telecom, ports, aviation, gas and coastal shipping against international best practice from the business user's perspective.

Practical applications

For APS managers considering industry benchmarking, the project has had a common experience in that it takes a considerable amount of time and investment to build up a credible data base and to build up willing contributions to that data base. The project managers have found that it has taken time to convince stakeholders that it is in their own interest to take an active role and contribute data.

The infrastructure project also provides an interesting demonstration of the reality of "moving targets" in benchmarking. The benchmarks are the results and standards of international industry and continual effort is required for sectors and States to maintain comparability in performance over time. The successive reports provide a number of examples of comparative improvement or comparative decline in performance over time in certain sectors.

The results

The main message is that reform is not easy - it is a long hard task that has to be sustained to approach international best practice. In some instances, there are large performance gaps that are not being closed quickly.

Some 1995 findings were:

• Australia's best observed price performance is in waterfront coal handling.
• The best performed Australian port, Adelaide, takes twice as long to work a box than the best observed comparably sized port, Zeebrugge in Belgium.
• Australia's aviation industry was performing well in terms of on time departures, but setbacks associated with Sydney's third runway saw the percentage of delays from Sydney rise sharply in 1995.
• It is in the area of operational efficiency, especially labour productivity, that Australia falls furthest behind world best practice.
• Victoria offers the cheapest "basket" of infrastructure services, South Australia the next cheapest. Queensland has the most productive infrastructure services, closely followed by Victoria.

Why, when, what and how

Why and when to benchmark?

The rationale is the microeconomic reform agenda and, in an era of falling tariffs, the fundamental importance of infrastructure costs in Australia's industrial costs and international competitiveness.

The project began with the 1992 statement Building a Competitive Australia and was extended in 1994.

What to benchmark?

The project mainly applies to the infrastructure industries although it was extended to the government services sector in 1994.

How is benchmarking done?

The project is in the nature of "results", rather than "process" benchmarking. Generally, the sectors are compared State-by-State to best practice overseas on key result indicators such as price, efficiency and service quality.

"Results" data has been collected and refined by the BIE on an ongoing basis in cooperation with industry peak bodies, State and Territory governments.

The project has influenced Government industry policy and has drawn attention to changing areas of excellence and areas of concern in Australia's essential infrastructure inputs.

Contacts

Main project contact

Dr Denis Lawrence, Assistant Director, BIE (*)
51 Allara Street, Canberra 2601
06-2762390 ph, 2762372 fax, DLawrence@dist.gov.au
(*) BIE is to join with Industry Commission in the Productivity Commission

Reports

Full details of the project and the current findings can be found in the report International Benchmarking Overview 1995 (AGPS). There are also individual sector reports.

An important related report is GTE Performance Indicators 1989-90 to 1993-94, Volume 1: Overview (Industry Commission), which, overall, finds favourable profitability and price trends in major Commonwealth and State GTEs in the same infrastructure sectors.

Attachment A5: An international comparison of performance indicators for the Australian Coal Industry - Department of Primary Industries and Energy

Project aim

To assist in the definition of appropriate measures of performance for the Australian coal industry.

Practical applications

Like the BIE International Infrastructure work, the study is a useful model for APS agencies that would like to benchmark their "results" internationally, especially in areas of Australian industry, for productivity and competitiveness.

Another transferable lesson from this study is the vital importance to industry of a well motivated workforce and an appropriate management system. The attitudinal, or cultural, component of the equation can be overlooked, but is a feature of virtually every high performance coal mine in this particular study.

The results

This study revealed that:

• Australia's saleable coal productivity per employee-hour was comparable to the USA on an industry average basis, although the range of results in the below average class was greater for Australia than for the USA. Average employee-year productivity in the US was still about 10 percent higher - achieved by working additional hours.
• The US's best performing mines were significantly ahead in tonnes per employee per year.
• The Australian productivity gains have generally been matched by safety gains. Since 1984, the Lost Time Injury Frequency Rate (LTIFR), the predominant safety index, has fallen by an average of 6.25% per annum. Australia still has room for improvement, as the absolute value for the LTIFR in the US is sixty per cent of Australia's value.

The why, when, what and how

Why benchmarking?

The New South Wales Coal Association and the Commonwealth Department of Primary Industries and Energy required a 'desk study' review in relation to key performance indicators for the Australian coal industry, relative to international competitors.

The measures defined in this project were designed to be used for comparing the Australian coal industry with the coal industries of competing countries and with other Australian mining industries, for the future viability of the industry.

What to benchmark?

The focus of the project was on labour productivity, safety and capital utilisation.

How is the benchmarking done?

The report was commissioned as a review of currently available information only. However, the amount of information available was limited, and in many cases inconsistent.

Due to the inconsistencies in the data, meaningful comparisons were difficult at best. For example, the ratio of project management staff to non-management employees was not meaningful. Some companies employ project management staff at head office, in which case they were not counted as mining employees. If, however, the same role is undertaken at the colliery, staff are counted as mining employees. This makes a big difference when trying to calculate production per employee.

It was noted that there was a need for:

• a more specific breakdown of mines relative to their processes and environments for the purposes of productivity analysis and improvement strategies;
• greater consistency or standardisation of capital utilisation indices and reporting formats;
• more specific, detailed studies into individual, high performance operations;
• identification in greater depth of the reasons behind improved safety performance elsewhere.

Contacts

Main project contact

Peter Hurley, Director, Japan/ASEAN & Industry Efficiency Section
Coal and Minerals Division
Department of Primary Industries and Energy
GPO Box 858 Canberra ACT 2601
06-272 4638ph, 272 4965fax

Reports

The report An International Comparison of Performance Indicators for the Australian Coal Industrywas published by DPIE in May 1994.

Attachment A6: GTE Performance Indicators 1989-90 to 1993-94 -Steering Committee on National Performance Monitoring of GTEs

Project aim

To develop a consistent set of indicators to allow the performance of Government Trading Enterprises (GTEs) to be monitored, and to publish these on an annual basis.

Practical applications

The data and methods used (see below) to benchmark the GTEs are a good comparison point for APS agencies who would like to develop useful indicators to benchmark across or within commercial-type operations. This especially applies if you want to look at practical "ratio" indicators or results, for measuring profit performance and labour productivity.

Note that considerable time and effort has been required to build up the working arrangements and data collections.

The results

The GTE reports influence government policy development, showing that the structural changes in the parent infrastructure industries are associated with significant trends in improvement in GTE performance.

Overall, the report results show that profitability of GTEs continued to rise, even while prices for GTE services fell. Payments to Government have risen, while debt has been reduced. Underpinning these results is a sharp increase in labour productivity.

• Operating sales margin rose to 23% in 1993-94
• Real prices have fallen by three percent since 1989-90
• Dividend, tax and tax equivalent payments by GTEs have risen in real terms, from $1.4 billion in 1989-90 to $3.5 billion in 1993-94.
• Real average debt continued to fall, declining by 7 percent in 1993-94.

Some GTEs are monopolies and the Australian results may be compared to those in the related BIE work, which depict the trends of the parent industries compared to international best practice.

The why, when, what and how

Why and when benchmarking?

Often, by virtue of their monopoly positions, GTEs are less subject than their private sector counterparts to the discipline of the market, whether imposed by customers or by providers of capital such as banks and shareholders. Public monitoring therefore assists to ensure that the managements and boards of these enterprises are held accountable for their performance.

The Steering Committee on National Performance Monitoring was established by the Special Premiers Conference in 1991 to develop the indicators to allow the performance of GTEs to be monitored. The Steering Committee operates under the auspices of the Council of Australian Governments (COAG), and consists of representatives from all the States and Territories, and from the Commonwealth Government. The Industry Commission provides the Secretariat, and chairs the Steering Committee.

What to benchmark?

The reporting looks at the performance of 60 major State authorities involved in the provision of electricity, gas, water, urban transport, rail and port services, as well as eight Commonwealth GTEs involved in communications, air and rail transport and shipping.

How is benchmarking done?

Data is collected on profitability, real prices, returns to the Government, real debt, labour productivity and service quality levels, from each of the GTEs.

Contacts

Main project contact

Chris Sayers, Assistant Commissioner, Industry Commission
Level 28, 35 Collins Street, Melbourne 3000
03-96532133 ph, 96532305 fax

Reports

Three reports have been published so far, with another one due mid 1996. Copies are available from the Industry Commission.

The third annual report, Government Trading Enterprises Performance Indicators 1989-90 to 1993-94 is in two volumes, the first being an overview and commentaries on the performance of each industry, together with explanatory appendices; the second consists of financial and non-financial indicators of the performance of each GTE and each GTE's commentary on its own performance together with explanatory appendices.

See also the related BIE report International Benchmarking: Overview 1995, which looks at benchmarking of the overall infrastructure industries in which the GTEs operate.

Attachment A7: Total Quality in the NSW Public Sector (including Corporate Services Efficiency Project) - NSW Government

Project aim

The Total Quality program is directed to the New South Wales Government's goal of a "world class public sector" that delivers value for money, quality services to its customers and the community.

Practical applications

This is an effort to build benchmarking into a "whole-of-government" approach to quality management in agencies. It combines "results" benchmarking and "best practice standards", and is a useful program to examine if you are a manager who would like to introduce benchmarking as part of a broader approach to quality improvement and resource management in your agency (or across agencies).

In this case, notable are the variations in agencies' quality practices and the time and effort needed to improve them according to a common framework of quality.

See following Corporate Services Efficiency Project for the approach to corporate services.

The results

The program began with the introduction of Guarantees of Service from 1992. As of early 1996, NSW has put whole-of-government initiatives in place for the first two stages, Creating a Customer Focus and Delivering Improved Services for Customers, of a four-stage change process.

A November 1995 First Progress Report found that the 94 agencies surveyed varied widely in their implementation of quality practices. Thirteen larger agencies were more advanced. The major concern was that "75% of agencies did not have baseline measures of the results for customers expected from improvements to core business."

From December 1995, stage three, Implementing Total Quality in Operations, took effect. From mid-1996, the intention is that agencies be required to put benchmarking in place as an element of stage four, Achieving Best Practice.

The program has created an awareness in agencies of the need for customer focus and improved services, and provides a framework for agencies to deliver quality within available financial and human resources.

The why, when, what and how

Why and when benchmark?

The background for the Total Quality program is a view that customers of NSW public agencies are entitled to, and increasingly demand, quality of service. "Customers deserve value for money from the taxes and charges they pay," as the 1992 Guarantee of Service put it, "and they have a right to consultation, courtesy, information and the opportunity to express their views."

The total quality approach started in 1992 with Guarantees of Service, seen as a crucial element of getting better value out to customers, within limited resources. The current drive toward benchmarking dovetails with the desire to instil total quality approaches across a large number of agencies, and the need for objective criteria with which to compare their progress.

What to benchmark?

The standard of implementation of quality practices and procedures has already been benchmarked across all agencies (1995). The next stage (1996) is for individual agencies to benchmark their own services as part of Achieving Best Practice.

How is benchmarking done?

NSW Premier's Department coordinates the program. Agency CEOs have the main operational responsibilities.

In the November 1995 report, agencies were "benchmarked" against five levels, from Awareness to Excellence, in introducing quality service and measuring the outcomes. As noted above, progress was variable and few agencies achieved the Excellence level.

For stage three to mid 1996, Implementing Total Quality, agency CEOs are asked to implement quality practices and develop a culture of continuous improvement in all facets of their organisation. "Agencies will be required to demonstrate they are putting in place strategies aimed at measurably improving their performance. They are encouraged to use a range of techniques, including Total Quality Management, Quality Assurance and business process reengineering." The NSW Government has a partnership with AQC to assist in this stage.

The intention is that the guidelines, time lines and outcome requirements for benchmarking as part of stage four, Achieving Best Practice, be released by mid 1996.

Contacts

Main project contacts

Tim Wyatt, Director
Service Performance and Operation Division
Premier's Department NSW
Governor Macquarie Tower, Sydney 2000
02-2284989 ph, 2283277 fax
(On quality client service, total quality)

Robin Sen
Executive Business Analyst
Council on the Cost of Government
02-2283504
(On corporate services efficiency)

Other contact officer: Don Munro, Service Performance and Operations Division, Premier's Dept, 02- 2285047

Reports

In 1994, the Premier made a NSW Quality Customer Service Statement. There is also the report, Quality Customer Service in the NSW Public Sector: First Progress Report (Premier's Department, November 1995). The following Corporate Services Efficiency Project benchmarks NSW public sector corporate services. Contact officers can give updates.

Corporate Services Efficiency Project - NSW Government

Project aim

To combat budget pressures, through rationalisation of NSW Government corporate services.

Practical applications

This is an effort to build benchmarking into a "whole-of-government" approach to corporate management in agencies. It is a useful comparison, if you are a manager who would like to introduce "results" benchmarking for resource management and rationalisation in your agency (or across agencies). It takes the benchmarking through to the logical end of resources allocation.

Note the variation in agencies' corporate resourcing and practices and the approach to improving them according to a common framework. See the previous pages on the NSW Government's Total Quality program.

The results

The program is a three-phase approach to corporate services, linking to the NSW Government's Total Quality program. The results from the first phase, 1995 costing of corporate services across the NSW budget-funded agencies, include the following:

• large agencies spend relatively more on corporate services, and large regional agencies spend more than smaller regionalised or non-regionalised agencies;
• the corporate services share of the total agency averages 8.4% by cost or 7.7% by personnel numbers, with substantial variations about the means; and
• management/admin (31%), finance (17%), and human resources (16%), take the big shares of the corporate services dollar, followed by information management and IT.

The variation in the results is taken to indicate scope for savings, especially via common corporate service arrangements across agencies. The reporters also conclude that the agency approach to decentralisation has to become more strategic. Many agencies focus on corporate process rather than decision support, having poor information systems for management.

Savings to budget are expected in 1996-97 as phases two (savings targets for agencies) and three (performance improvement, best practice in agencies) are implemented.

The why, when, what and how

Why and when benchmark?

The background for the program is Government needs for fiscal responsibility and low cost administration.

What was benchmarked and how was it done?

Across all budget-funded agencies, corporate services costs are measured, subdivided, and compared. The Council on the Cost of Government oversees the Corporate Services Project, carrying out a 69-agency survey in 1995. NSW Premier's and Treasury Departments are responsible for the target setting and savings phases of the program.

Attachment A8: Benchmarking of Local Government Services - National Officer of Local Government (DEST)

Project aim

The aim of benchmarking in Local Government is to improve the effectiveness, efficiency and quality of services provided.

Practical applications

Benchmarking is just one element of the strategy being pursued within Local Government with the endorsement of the Local Government Ministers' Conference. The strategy adopted would be a useful model for APS program managers who would like to encourage the use of benchmarking among a range of regional service outlets. The City of Monash example, that follows, is also a very useful example of how to apply the different stages in the benchmarking process in a practical situation.

The Local Government Ministers Conference pilot benchmarking project showed that there were at least six key elements if Local Government benchmarking were to produce tangible results:

• Chief Executive support
• effective training
• re-allocation of resources so the work could proceed
• clear definitions of services to be benchmarked
• a balance in the benchmarking measures used (e.g. customer satisfaction, quality, timeliness and cost)
• effective communication.

Participating councils in this phase helped in the preparation of a Local Government benchmarking manual, gaining much in insights for their own benchmarking. All councils in Australia have received a copy of the manual.

The results

Funding to encourage benchmarking activities has been provided under the Local Government Development program (LGDP) and benchmarking was one of the priorities for funding in 1995-96. Several groups of councils have had benchmarking projects approved in 1995-96. The contacts can give updates on approved projects and progress generally.

The why, when, what and how

Why benchmark?

A resolution of the Local Government Ministers' Conference endorses a strategy that involves: the development of national performance indicators; encouragement of continuous improvement processes including through benchmarking; and funding of projects to develop new technologies, new practices and systemic reforms.

What is to be benchmarked?

The 1994 pilot project benchmarked a range of typical Local Government services such as building approval, fleet, libraries and payroll, across a sample of councils. Benchmarking projects funded under LGDP include children's services, building application and development approval processes and waste management.

How is benchmarking to be done?

In 1995-96, submissions for funding under the LGDP including benchmarking proposals were subject to competitive selection.

Grants for benchmarking under LGDP may go to State government agencies, councils and other associations. It is expected that councils applying for LGDP funds to undertake benchmarking will form into groups and will make available the results of their projects to other councils.

Contacts

Main project contacts

Dr Mark Johnston, FAS, National Office of Local Government, DEST
Box 9834, Canberra 2601
06-289 2557 ph, 289 2838 fax

John McLucas
Assistant Secretary, National Office of Local Government, DEST
Box 9834, Canberra 2601
06-289 2510 ph, 289 2004 fax

Reports

The key starter document (Department of Housing and Regional Development 1995) is:

Benchmarking for Local Government: A Practical Guide.

See the City of Monash example of Local Government benchmarking at Attachment A9.

Attachment A9: Benchmarking of Local Government Services - City of Monash (Victoria)

Project aim

This project aims to speed City of Monash reform, and specifically to generate a City response to Victorian compulsory tendering requirements.

Practical applications

Following on from the national Local Government Development Program (LGDP), the City of Monash example shows how to apply the different stages in the benchmarking process to a practical service situation. It also suggests that, when agencies and staff are very new to the process, it may be better to start with internal benchmarking, analysing the elements of your own work flows and processes, rather than risk discouragement by immediate external benchmarking against national or international "best practice".

The results

In each of the five areas benchmarked, there are early results:

• library service has improved acquisition and processing of stock;
• parks and gardens have benchmarked aerial and ground level pruning, and are looking at turf wicket maintenance and grass cutting;
• drainage has begun to rationalise inspections and assessments;
• valuation has benchmarked external queries and is studying internal inquiries; and
• child health centres have studied an early-childhood hearing test.

Apart from these specific changes, the City is also getting spin-offs by making general improvements to the benchmarking process itself, to customer satisfaction surveys, and to quality management and accreditation. City's work teams are better prepared to make in-house bids in the competitive tendering process (below).

The why, when, what and how

Why benchmarking?

Benchmarking in the City responds to the City's Mission Statement and helps meet pressures arising from shifts in population, industry and infrastructure. It is also an essential and practical tool for in-house teams to prepare their bids in the Victorian Government's compulsory competitive tendering process, the second stage of LGA reform following LGA rationalisations.

What is to be benchmarked?

All LGA services are subject to competitive tendering. Based on the City Corporate Plan and community satisfaction surveying, the services benchmarked initially were libraries, parks and gardens, drainage, valuation and child health.

How is benchmarking to be done?

In the City of Monash, the Manager Benchmarking uses the Practical Guide (see Attachment A8 and the List of References) developed as part of the National Local Government Benchmarking Project.

The process follows a cyclical approach (similar to that in the Practical Guide and in Box 1 of this Report):

• form benchmarking teams - generally, small teams are formed and trained from the service area in question. The Manager Benchmarking assists
• analyse current processes - performance measures and performance levels are identified, to enable comparisons to known best practice levels. In this stage, the teams map out the stages in the work processes being benchmarked
• initiate improvement action - generally teams quickly recognise obvious ways to improve their process. Changes are recommended, trained for, adopted and documented
• assess improvements - performance measures are monitored to see if gains are actually being made and can be held.

Once the City has developed the skills with internal benchmarking, external benchmarking of services with other councils will be considered. The City is also to be part of a Victorian LGDP project (see preceding Attachment A8).

Contacts

Main project contact

Sue Williams, Manager Benchmarking, City of Monash
293 Springvale Rd, Glen Waverley 3150
03-95660289 ph, 95660293 fax

Reports

The contact can provide updates.

Attachment A10: Local Authority Performance Indicators - Audit Commission (UK)

Project aim

This UK Audit Commission project aims to tell UK customers how well their local councils are doing the job and whether rates are being well spent.

Practical applications

This is an approach to quality in local government for all of England and Wales. It is a useful and topical example of governments in other countries using performance indicators to promote better performance in community services.

The notable variations among English and Welsh councils in quality of service are of interest. The main point is that a national government is making an effort to assess local services according to a single national framework that is readily accessible to the actual consumers of the service.

The results

In the most recently published material, around 200 performance and contextual indicators were collected using 1993-94 data. The report of Local Authority Performance Indicators (three volumes) provides council performance for a selection of these indicators.

Examples of the indicators are expenditure per pupil, percentage of older people helped to live at home, average time taken to relet public housing, percentage of house waste recycled, police spending per head, percentage of fire calls attended satisfactorily. For each major service group, total council expenditure figures per head are also published. The Audit Commission comments on key trends and lets others assess how well individual councils are performing.

Why, when, what and how

Why benchmark?

The present Government approach is directed to better information on local council services and better value for money. It started in 1992 with the publication of the UK "Citizen's Charter", directing councils to publish performance indicators.

What is to be benchmarked?

A whole range of key local services is measured. Government surveys were carried out to guide the choice of the indicators used.

How is benchmarking to be done?

In accordance with the legal charter of the Audit Commission, all councils are obliged to provide information on their standards of performance against the agreed performance indicators. The Commission draws the information together and publishes the analyses. Councils are also required to publish their performance indicators in local paid-for newspapers.

Reports

The main reports (UK Audit Commission, 1995) are Local Authority Performance Indicators, Volumes 1-3. Technical appendixes are also published.

Attachment A11: Internal Benchmarking of Student Assistance Services - Department of Employment, Education, Training and Youth Affairs

Project aim

The aim is to improve standards and maintain client satisfaction in student assistance services delivered through the Student Assistance Centres (SACs).

Practical applications

The project is of interest to APS agencies that are interested in using "results" benchmarking to assess service and productivity in decentralised client services. Benchmarking of SACs has helped to maintain standards over time in a large benefits program.

It is worth noting that the service indicators (based initially on DEETYA research) continue to highlight accuracy and promptness of processing claims as more important to clients than "time taken to respond to queries".

The results

Internal benchmarking of SACs has been operating throughout the 1990s.

This has helped maintain high standards of client service over time and across the SACs nationally, maintaining staff productivity levels as the Student Assistance Program has grown in volume. Most SACs meet the target standards (e.g. advise 75% of applicants of eligibility in 21 days) and target standards have been maintained over the years.

Why, when, what and how

Why and when to benchmark?

Comparisons of SACs were deemed to be an essential element of service and productivity improvement in a decentralised, high-volume, financial assistance program where accurate and timely processing is of paramount importance to clients. Benchmarking began shortly after the program was introduced by government and the SACs commenced operation.

What to benchmark?

SACs (there are 29 nationally) are responsible for the processing of over half a million applications annually for financial assistance to tertiary and secondary students through AUSTUDY, ABSTUDY and AIC. These programs, with a budget over $1.5bn in 1995-96, promote access and equity through equal educational opportunity for young people.

SACs are benchmarked according to their performance against National Client Service Standards (NCSS) targets set annually for key service indicators such as application processing times, correctness of application processing, response times to queries and changes in circumstances, and overpayment levels.

How is benchmarking done?

Computerised applications data, automated call answering technology, sample checks and other records, are used to assess each SAC's performance against standards and targets in the NCSS.

SACs aim to provide a high quality service with a target of at least 80% of clients to express satisfaction with the services they receive. NCSS targets for 1995 were:

NCSS 1 is to advise eligibility for student assistance within 21 days of first lodgment of application
Target:
At least 60% in 14 days and 75% in 21 days
SAC Performance Measure:
To determine entitlement for at least 85% of completed applications with seven working days of receipt

NCSS 2 is for initial determination of entitlement and ongoing fortnightly entitlement to be correct in all cases
Target:
At least 96% of cases have no errors leading to incorrect or delayed payment

NCSS 3 is to process changes in circumstances promptly, in time for next available payday
Target:
At least 85% of reassessments to take effect by next available payday

NCSS 4 is to answer telephone calls in one minute or less
Target: At least 75% of calls to be answered in one minute or less and 98% in two minutes or less

NCSS 5 is for overpayment not to exceed 3% of annual program outlays
Target: Accumulated collectable overpayment not to exceed 3% of annual program outlays

Actual average SAC performance in 1995 generally met NCSS targets. 1996 targets are very similar.

Detailed SAC-by-SAC Performance Reports, against targets, are made available fortnightly to SAC Managers and staff. Annual performance reviews form an important part of program review and feed into future SAC planning and resource allocations.

Contacts

Main project contact

David Batchelor, Assistant Secretary, Network Management, DEETYA
Box 9880, Canberra 2601
06-240 8874ph, 240 9555fax

Reports

Reports of the project are not published but information is available from the contact.

Attachment A12: Internal business planning - Benchmarking of service delivery to Veterans - Department of Veterans' Affairs

Project aim

DVA's mission and vision is to "serve Australia's veterans, their widow(er)s and dependants through programs of care, compensation and commemoration" by "being the best service delivery department in the public sector".

To support this, DVA must articulate its mission and vision through business planning and will gauge its success by measuring performance at all levels against best practice, both internal and external.

Practical applications

This project is of interest to APS agencies that are interested in using a combination of benchmarking techniques to improve and report on performance within a wider business planning framework.

The results

While DVA continues to report on its performance against most activities, since 1995 this has been tied to the Business Planning process incorporating performance reporting against agreed standards.

This has resulted in competition between business units toward meeting or exceeding the set benchmarks and standards and toward improving overall performance. With the introduction of "exception reporting", the focus is now on the elements of the business that require attention: whether for improvement or for identifying innovative best practice.

Why, when, what and how

Why and when to benchmark?

Benchmarking allows for comparisons, both horizontally and vertically, across all of the DVA business units and enables clearer goal setting against objectives and expected outcomes. Such comparisons lead to the identification and dissemination of innovative best practice, and allow the business to concentrate more concisely on the activities that need improvement. Benchmarking is carried out against all activities that are critical to the success of DVA.

What to benchmark?

The six State Offices are primarily responsible for the operational activities of DVA, while National Office carries primary responsibility for policy matters and services to the Repatriation Commission and the Minister.

For 1995-96, State Offices are benchmarked according to their performance against National Performance Standards in Client Service, Processing and Corporate Wellbeing. Some of these standards apply equally to the National Office business units.

How is benchmarking done?

Computer systems based reporting, Quality Assurance and sampling, staff/client/provider surveys and other records are used to identify actual performance against the national standards and targets.

Samples of the types of targets and standards used by DVA in 1995-96 include:

Processing Measures

• PRO3(a) is for all new Service Pension claims (age and invalidity) to be processed to completion within 100 days of receipt.
  Target: 80% of new SP claims to be completed within 35 days of receipt, 100% of new SP claims to be completed within 70 days of receipt.
• PRO3(b) is for all Pensioner Initiated Reviews (PIR) of SP to be processed to finalisation within 100 days.
  Target: 75% of PIRs completed within 25 days. 100% of PIRs completed within 70 days.
• PRO4(a) is for new Disability Pension (DP) claims to be processed to completion within 120 calendar days.
  Target: 80% of DP claims processed to completion within 80 calendar days, 100% of DP claims processed to completion within 120 days.

Client Service Measures

• CSO1(a) is for the quality of staff client contact as perceived by the client.
  Standard: 1995 Veteran Satisfaction Survey results used to set baseline for DVA's success in meeting the Veterans' Charter and Signing On (standards expected of staff in client contact) agreement. Survey conducted annually.
• CSO1(d) Community Health Accreditation and Standards Program (CHASP) standards developed for the Veterans' Affairs Network (VAN). These are described in Attachment A18.
• CSO2 is for the quality of support given by DVA to its service providers in the form of direct contact, procedures and forms, education packages and other issues as perceived by the provider.
  Standard: 1996 Provider Satisfaction Survey Results used to set the baseline for DVA's success in meeting the needs of providers. Survey conducted annually.

Specific reporting formats are targeted for specific audiences, from the most senior executive down to the supervisor level, including graphical and tabular formats. National Performance is reviewable by all of the business units on a quarterly basis, with lower levels of reporting on a more frequent basis. The Executive Management Group reviews national performance quarterly against corporate goals and emerging targets.

In 1996-97 DVA will be establishing external benchmarks with other public and private sector agencies to be incorporated into the national performance indicators.

Contacts

Main project contact

Mr Patrick Callioni
Branch Head, Planning, Policy Coordination and Client Services Branch
Department of Veterans' Affairs
PO Box 21, Woden ACT 2606
(06) 289 6738ph 289 6741 fax

Reports

Reports are not published but information is available from the contact.

Attachment A13: Achieving Cost Effective Personnel Services - MAB/MIAC Project

Project aim

To review the costs and effectiveness of personnel services in the APS and, to the extent that change is required, to propose strategies for change.

Practical applications

Most APS agencies have had the opportunity to participate and learn from a direct involvement in the first, second, or both, stages of the exercise. This has given agencies experience with a range of benchmarking techniques, including the analysis of work flows and work processes. They gained direct comparisons to private sector practices and yardsticks, as part of business process reengineering.

The first-stage project report succeeded and gained support for further action because it used the quantitative information as pointers to potential inefficiency and ineffectiveness in human resource management, rather than as an end in themselves. It analysed inhibitors to performance and set directions for change.

The results

The project shows that APS HR planning processes are not always linked to other corporate planning processes. Such linkages are a central feature of best practice. There needs to be a shift in emphasis from interpreting conditions and processing entitlements to supporting managers in achieving corporate objectives. The project also shows there is limited use of process measurement and review as a means of promoting efficiency and effectiveness.

From the first-stage results, the direct cost of delivering HR services in the APS agencies surveyed is, on average, two and a half times that of best practice in Australian business. Agencies are compared to best practice in terms of (for example) the organisation's unit costs of key personnel services per employee and the numbers of personnel staff compared to total staff. The wide performance variations among APS agencies demonstrated the potential for improvements.

A significant proportion of HR resources (almost 60%) is invested in administrative and processing tasks rather than in more strategic HR activities. This is contrary to best practice, and contrary to the priorities set for the APS in Building a Better Public Service (MAB/MIAC, 1993). The key cost drivers are:

• devolution hasn't delivered improved efficiency and effectiveness in the APS because, generally, activity and not authority has been devolved to line managers;
• authority has been largely retained by HR staff regardless of whether they are local or in central areas;
• the model of HR service delivery based on the philosophy of locating processing and advisory functions with the organisational units they serve has led to duplication of effort and resources and has spread expertise too thinly, and;
• the complexity of personnel rules, the way they are applied, and the volume of processing work generated, are key causes of high costs in APS personnel services.

The main outcome from this first-stage benchmarking was to enable the Management Advisory Board (MAB) to endorse the need for fundamental change in APS personnel management.

The why, when, what and how

Why and when to benchmark?

The pressures for improvement are continuing through the review of the Public Service Act, enterprise bargaining, and the continuing rationalisation of the APS award structures. High APS HR costs and low effectiveness levels are strong incentives for benchmarking.

What to benchmark?

Service standards in personnel practices and services across the APS; the costs of personnel practices and services; whether agencies cost their personnel practices and services, and, if so, how; and the effectiveness of current practices in supporting corporate objectives.

How is benchmarking done?

MAB/MIAC commissioned this major project in 1994 to study costs and effectiveness of APS personnel services. The first stage of the project covering 25 agencies was launched in November 1995 as the two-part MAB

Report Achieving Cost Effective Personnel Services

Some 23 APS agencies (covering about 70% of APS staff), two non-APS Government Authorities and a number of private sector organisations were surveyed at first. The number of APS agencies now having been benchmarked has risen to 37.

The first part of the project reviewed existing HR cost and effectiveness data; consulted agencies; and gathered additional information on specific HR processes which were: recruitment and selection, OH & S, increments, permanent part time work, pay and conditions. Agencies were compared anonymously to Australian best practice.

This stage of the project included large focus group studies that complemented and confirmed the benchmarking outcomes. The benchmarking was largely qualitative and brought in examples of private best practice as well as identifying examples of good practice in the APS. The report of stage one focused as much on the effectiveness of HR services as on the efficiency. Cost is important, but not the only factor looked at.

These findings were a rationale for the second stage of the study, in which 10 invited agencies agreed to undertake the re-engineering of their personnel services in order to document the case for change and to identify cost effective strategies which can be adopted by agencies and the APS as a whole.

Contacts

Main project contact

Dominic Downie, MIAC Project Leader

(Each participating agency would usually have a senior, corporate project contact)

Reports

The first stage of the project covering 25 agencies was launched in November 1995 as the two-part MAB Report Achieving Cost Effective Personnel Services. Some stage 2 outcomes are available from the project team and will be published in mid 1996.

Attachment A14: Commercial Support Program - Department of Defence

Project aim

The Commercial Support Program (CSP) aims to ensure non-core support services and products are provided to core defence activities in the most cost-effective manner, through:

• provision of quality services and products within budget constraints;
• disciplined defence evaluation of competing options to achieve value for money through application of a common and consistent methodology;
• maximum cooperation across defence to optimise benefits to defence and industry; and
• transfer of non-core activities to the civil sector where feasible and cost-effective.

Practical applications

The CSP is a tested and documented method for "purchaser-provider" review - if you would like to assess the business status of organisational activities and benchmark non-core activities for potential outsourcing. The main lessons of the CSP process thus far are that:

• to work, the process must be robust, transparent and fair;
• performance, not process, specifications are essential for innovative solutions;
• consultation with industry, unions and staff to change culture and agree on policy and process is vital;
• high level management commitment is vital;
• activities must be scoped carefully for viability and to maximise bidding; and
• inclusion of in-house options promotes industrial harmony and more competition.

The results

The CSP evaluation process emphasises resource identification, attribution and allocation. In seeking best value for the defence dollar and sponsoring continuous improvement in the way support activities are conducted, the CSP approach is closely linked to the principles of Total Quality Management and Value Management. CSP is acknowledged in industry and in academia as a benchmark for achieving value for money through competition and for the results achieved through this process.

Agencies considering the CSP techniques for outsourcing might note that the inclusion of "in-house" options has contributed to industrial harmony and provided increased competition (in-house bids have been favoured in 30% of CSP decisions).

To May 1996, CSP had tested the work performed by 5,490 positions and produced projected annual savings of $116 million, representing 34% of pre-CSP costs. Forty-five new contracts worth in excess of $500 million had been awarded to industry. Some four and a half thousand further positions have been identified for future testing.

The why, when, what and how

Why and when to benchmark?

Government gave a direction for competition in support activities consistent with the Defence objective of greater efficiency in the use of resources. Benchmarking was a preferred tool to help in assessing competitive bids.

The program commenced in July 1991 following Government endorsement of the recommendations of an Interdepartmental Committee (IDC) convened to examine how the Australian Defence Force could draw maximum support possible from Australian industry and the wider community, consistent with operational requirements.

What to benchmark?

The CSP can be used to compare in-house and commercial bids for the broad spectrum of non-core Defence support activities, such as catering services, base support, aircraft maintenance, and IT services.

There are three steps before an activity would be reviewed under CSP. First, determining whether the function being performed is needed in the future; second, deciding whether it is inherently core or non-core; and third, for those activities determined to be non-core, identifying if there is need to quarantine all or part of the activity from commercial support process in order to maintain suitable positions for essential Defence personnel.

How is benchmarking done?

Consistent with Government's purchasing policy and procedures, activities reviewed under CSP are subjected to the CSP Methodology. This involves subjecting the activity to commercial competition to see if better value for money can be achieved.

The CSP decision process involves six stages (see below for the Manual) for a consistent framework to ensure that CSP aims and objectives are met. The stages six are:

1) Activity Definition (clearly define the activity, how currently performed, baseline cost, specification of requirements);
2) Options Definition (explores options to best meet the requirements, acquisition strategy for developing commercial bids and the in-house option);
3) Detailed Development (seeks full definition, including costing, of in-house and commercial bids);
4) Evaluation (ranking of bids); and
5,6) Decision (decision by designated authority) and Implementation.

Each CSP decision, for in-house or commercial supply, is implemented as it is made. On average, 70% of tested activities are contracted out.

Contacts

Main project contact

Mike McNamara, Principal Adviser, Logistics Projects, Dept of Defence
Campbell Park Offices (CP4-2-82), Campbell 2601
06-2664395 ph, 2663353 fax

EMAIL: m.mcnamara@mail.navmat.navy.gov.au

Reports

The program reports annually to Cabinet. There are a number of other internal and external reports. The Commercial Support Program Manual, available from Defence CSP, enunciates the methodology and guides bidders on costing and evaluation principles.

Further information is available through the CSP Internet Homepage on http://csp.gov.au

Attachment A15: DAS Procurement 2000 Review Project - Department of Administrative Services (National Procurement Board)

Project aim

The aim is to develop a vision to optimise the potential for procurement to improve service and business delivery in DAS.

Practical applications

The first phase of the project is a demonstration of the application of benchmarking principles, to an important area of APS agency business, within a broad model of organisational change.

The general approaches used here for organisational review and benchmarking appear to have considerable relevance to large-scale business and commercial processes in other APS agencies. The particular techniques and results are of relevance if your agency has to review how it might manage large purchasing volumes. They are also of interest if you are considering "purchaser-provider" arrangements where your agency decides what is to be produced and contracts another agency to provide it.

The results

The project's first phase was carried out in four DAS businesses and produced a report and purchasing reform program for consideration of the DAS Executive Committee.

The project found some examples of best practice (see below) already present within the four pilot businesses. It identified substantial potential savings that might be made from broader reforms.

The why, when, what and how

Why and when benchmark?

Purchasing is a very important element of expenditure in DAS businesses. The essential aim of the Review was to develop a vision where the potential for procurement to improve service and business delivery in DAS, and within DAS business units, is optimised.

DAS Executive Committee commissioned the project in August 1995, against the background of government purchasing policies, and on the basis of external and internal reports on the effectiveness of DAS purchasing and progress on purchasing reforms. The project was executed by the Secretariat of the National Procurement Board (NPB), the Government's purchasing advisory and reform committee set up in 1994.

What is being benchmarked?

The first phase of the Review Project involved four representative DAS businesses (AUSLIG, Australian Estate Management, Interiors Australia, and Asset Services).

NPB assembled a four-agency Task Force reporting to a DAS Steering Committee. The project used the "7S" model (Structure, Systems, Style, Staff, Skills, Strategy with Shared values at the centre) of organisational change to analyse existing purchasing data in each business; analyse existing procurement processes; and develop a procurement vision.

The process steps were Definition, Vision, Direction, Key Performance Categories, Process Analysis, Social Analysis, Ideas, and Programs.

The project did find some examples of best practice (e.g. electronic trade gateways, quality assurance process, electronic supplier processing and rating) that were already present within the four pilot businesses, whose annual purchase bills range from $16m to $210m.

Applying the organisational change and process models above, the project arrived at five major reform programs for the consideration of DAS Executive Committee. It assessed these as capable of delivering substantial savings in the four businesses.

How would it be implemented?

The project's five major reform programs are:

• Strategic Procurement (design a standard procurement input to business planning)
• Partnering (apply DAS partnering policy to pilot partnerships or strategic alliances with suppliers)
• Procurement Consulting Group (document a consulting structure for DAS approval and gradual establishment)
• Procurement MIS (identify the best MIS and how it should be implemented)
• Procurement Skills and Capability (design an action learning process for DAS).

NPB and the participating agencies finished and reported on this stage at the end of 1995.

The five major reform programs have been incorporated into the implementation plan of the DAS Procurement Reform Project Group (responsible to the DAS Head of Procurement), as part of the broad implementation of DAS purchasing reforms. The contacts can provide updates and advise on next steps within the businesses and in DAS generally.

Contacts

Project development contact

Ross Newman, Senior Project Manager, NPB Secretariat
111 Alinga Street, Canberra City 2601
06-2753490 ph, 2753628 fax

Implementation contact

Mark Wales, Manager, DAS Procurement Reform Project Group
111 Alinga Street, Canberra City 2601
06-2753935 ph, 2753494 fax

Mark.Wales@das.gov.au (e-mail)

Reports

A report is available as DAS Procurement 2000 Review Project Final Report (DAS, December 1995).

Attachment A16: The Attorney-General's Legal Practice - Benchmarking - Attorney-General's Department

Project aim

The project aims to ensure the viability and competitiveness of the Attorney-General's Legal Practice in a deregulated and competitive environment.

Practical applications

The techniques and results are relevant to APS agencies considering cost recovery or outsourcing issues and problems.

The results

Legal Practice has found the benchmarks to be a valuable corporate tool in assessing performance and organisational structures in a competitive environment. The relevant cost figures are readily collected. Software is used to present useful and readily understood indicators for the decision-makers in the Department.

The application has been most valuable in the fee-charging areas because the budget-funded elements have a different basis of funding. That is, under the Running Cost rules funding is provided for the budget-funded elements to meet known costs and there is no opportunity for profit, whereas the commercial elements must be profitable to survive.

The why, when, what and how

Why and when benchmarking?

The Government decided that Legal Practice would be user-pays from 1 July 1992 and that user choice would be introduced for a number of services from 1 July 1995.

The project's rationale is cost-competitiveness upon the introduction of the competitive environment of user-pays and user-choice. To enable the Practice to be cost-competitive it was decided to benchmark the cost elements of the practice against private sector standards. The exercise also extended to staff ratios, which would facilitate effective provision of legal services to clients.

What is benchmarked and how is it done?

The benchmarking involved Legal Practice breaking its cost structure into the following elements: salaries, staff overheads, finance (debt, interest), communications, IT, equipment, accommodation, practice development, training and development, miscellaneous.

For each element, a percentage figure is applied representing the percentage of revenue which should be consumed by that element.

The performance of each "Treasury Centre", or cost centre, in Legal Practice is measured against the benchmarks and reported monthly to the executive.

Benchmarks have also been established, and are monitored regularly, for the Treasury Centres in the areas of:

• the management of work in progress and accounts
• the distribution of personnel among professional, para-professional, clerical and other categories.

Contacts

Main project contacts

Mr Terry Gallagher, General Manager, Resources
Attorney-General's Department
National Circuit, Barton 2600
06-2506183 ph, 2505948 fax

Mr Geoff Hine
Manager
Financial Management Branch
250 6524 ph, 250 5948 fax

Reports

Given the commercial nature of the exercise, there is no public domain summary of the actual cost figures.

Agencies interested in the process or the technical issues may discuss these with the contacts in Resources Division of Attorney-General's Department.

Attachment A17: Continuous improvement within the AVO - Department of Administrative Services (Australian Valuation Office)

Project aim

To "benchmark" continuous improvement in the whole business of the AVO. The AVO tackles the whole business in this manner rather than taking one part of the business (IT, Financial, Valuations etc) or a specific region (NSW, Victoria, etc).

Practical applications

This is a useful model for small to medium APS agencies that would like to use benchmarking in a measurable, agency-wide continuous improvement process.

Some of the lessons learned through the AVO experience are as follows:

• involving the whole business from the beginning;
• the time taken to engender positive staff attitudes and commitment;
• the importance of the executive setting up processes which involve everyone and deliver visible results ("It must never be allowed to go off the boil"); and
• keeping unions involved and linking Continuous Improvement projects to staff surveys and the Enterprise Agreements.

The results

In September 1994, an external consultant conducted a self-assessment process to evaluate Continuous Improvement Program (CIP) progress against the key criteria below. In April 1995, the same consultant reported a 10% improvement against the criteria. The intention is for AVO to be ready for a form of quality certification by December 1996.

Involving the whole AVO business from the beginning, particularly in the documentation, was an important vehicle for educating staff, and getting ownership and commitment.

The changes in attitude have been considerable. Staff have been enthusiastic and committed, and want results.

The why, when, what and how

Why and when benchmarking?

AVO, an organisation of about 200 people with offices in Canberra and State capitals, is the main government valuation agency. It became a separate DAS commercial business in 1987 and commercialisation of the agency was a strong incentive for this CIP program.

The CIP approach to continuous improvement has the purposes of: promotion of excellence; better customer service; clear staff and management direction; stable quality and planning bases; and a base for enterprise bargaining.

What is benchmarked?

CIP covers the whole business, not just certain parts of the business or specific regions. The key elements or criteria benchmarked in the program are: customer focus, leadership and management, quality and productivity improvement, staff participation, training and recognition, quality assurance, strategic quality planning, and measurement and analysis.

The 8 key elements used above are similar to those used in the "Australian Quality Awards" framework. This is the framework that is used by the Australian Quality Council (to which many APS agencies belong), to compare the merits of public and private sector entrants for its annual national Awards.

How is benchmarking done?

The project is an established corporate continuous improvement program to embed quality assurance and benchmarking approaches into the corporate culture of doing business. The program began with Customer Focus in 1991, became a Continuous Improvement Program in 1993 which was formatted in the CIP Handbook 1994 (AVO) distributed to all staff.

The basic approach to reporting on CIP progress includes:

• customer value model reports
• staff survey reports
• CIP "audit reports" for the 8 key elements
• financial performance reporting and benchmarking against other organisations (Toyota Benchmarking Survey)
• performance reports.

The CIP reporting cycle is half-yearly. The CIP links into the AVO Business and Marketing Plans and the overall DAS Corporate Plan "DAS Directions". Success is measured within the CIP framework and in overall business performance annually. Measurement is also made with Australian Quality Council against AQC benchmarking partners, and against key result areas in the DAS Corporate Plan.

Contacts

Main project contacts

Ian Williams, Acting General Manager, AVO
Sirius Building, Furzer Street, Phillip 2606
06-2695300 ph, 2695407 fax

Rod McFadden, AVO
Same address
2695414 ph, 2695407 fax

Attachment A18: Internal Business Planning - Benchmarking of National Quality Standards in the Veterans' Affairs Network - Department of Veterans' Affairs

Project aim

DVA's mission and vision is to "serve Australia's veterans, their widow(er)s and dependants through programs of care, compensation and commemoration" by "being the best service delivery department in the public sector". The Veterans' Affairs Network (VAN) is one vehicle through which DVA provides and coordinates service to the veteran community, through 22 outlets Australia wide.

VAN National Standards have been developed, modelled on the Community Health Accreditation and Standards Program (CHASP), to provide a method for ensuring that VAN provides a high quality and effective service for clients.

Practical application

This project is of interest to APS agencies that provide direct client service.

The results

VAN standards have been developed in consultation with all stakeholders, the veteran community, DVA and VAN staff, the CPSU, the Department of Health and Family Services, the Australian College of General Practitioners and community organisations. They have been piloted in three VAN offices, further refined and the final package endorsed by a committee comprising the stakeholders.

VAN standards, and the review process they employ, have resulted in the stakeholders being provided with:

• a chance to take a fresh look at an office and individual practice
• an opportunity to get external perspectives on what an office is doing and to provide new directions
• team building and an increase in working together with a common vision
• more of a community focus to an office's activities
• a chance to improve areas that are problematic
• a way of externally validating strength and raising issues with management
• an opportunity to have organisation-wide staff development
• a means to increase the sense of control over day-to-day work
• a means to assess how effective an office is
• a means to be accountable to the community and the Department
• a structured framework for continuous quality improvement.

Why, when, what and how

Why and when to benchmark?

Benchmarking using VAN standards enables a qualitative comparison of the service provided to clients between VAN offices. These results can be collated with, and compared to, other quantitative indicators utilised by DVA to provide an overall picture of the performance comparisons of offices. These comparisons lead to the identification and dissemination of best practice.

VAN standards also enable benchmarking with other organisations and allow best practice from other VANs/agencies/businesses to be readily imported into the VAN structure through the use of accredited external members on the review panels and the supply of accredited review panel members for other organisations. VAN standards are designed as an ongoing measurement process with flexibility inbuilt to accommodate changing client needs and characteristics.

What to benchmark?

Primarily, the 22 VAN offices are benchmarked according to their performance against the VAN Standards. However, components of the process and many of the standards can be and are being imported into other service delivery areas within DVA. As mentioned above, there is the capacity to benchmark against other service delivery agencies.

How is benchmarking done?

A review team consisting of internal staff, a consumer (member of the veteran community), and an external member, assesses the office's performance against a number of set standards and criteria using various tools such as observation, client and staff feedback, surveys and consultative groups. The results are then compared to other office review outcomes.

Standards are organised within sections as listed below:

• Identification of Needs and Provision of Accurate Information
• Promotion of Health and Wellbeing
• Community Development, Liaison and Participation
• Rights of Veterans
• Client Records and Activity Records
• Education, Training and Development
• Planning, Continuous Improvement and Evaluation
• Management
• Work and Its Environment.

There are four levels of attainment:

• Exceeded
• Met
• Met in Part
• Not Met.

Contacts

Main project contact

Mr Patrick Callioni
Branch Head, Planning, Policy Coordination and Client Services Branch
Department of Veterans' Affairs
PO Box 21, Woden ACT 2606
(06) 289 6738ph 289 6741 fax

Reports

Reports are not published but information is available from the contact.

Attachment A19: Financial Management Quality Assurance - Department of Employment, Education, Training and Youth Affairs

Project aim

To raise DEETYA standards of financial management through the provision of a mechanism to maintain financial standards and accountability at local levels, and to give feedback to managers on the quality of financial management in areas in which they are responsible.

Practical applications

This is a useful and practical model for benchmarking "best practice standards", especially if you are a manager in a decentralised APS agency who would like to measure and improve organisational health in some area of corporate performance (e.g. finances, staffing, change management, IT, and so on). The model could also be applied to benchmarking of core businesses delivered by regional outlets.

The results

Evidence to date indicates that the Quality Assurance package introduced has raised standards of financial management and has provided a basis for reshaping internal audit strategies, particularly compliance audits in an environment of reduced audit resources.

The ongoing quality assurance helps reduce the pressure on senior line managers in DEETYA Divisions and Areas, by increasing the levels of financial awareness and compliance on the part of front-line managers of CES and other service outlets.

The main lessons to emerge from the project include:

• organisational and management benefits flow when managers accept that financial management is integral to their wider management responsibilities;
• managers need to be committed to the actual use of the package if its implementation and use is to be successful;
• review findings need to be monitored and followed up to ensure that there is sustained financial improvement;
• QA coordinators need to have a level of financial management expertise in order to successfully implement the package; and
• involvement by internal audit is often necessary and desirable in providing advice to management on the seriousness or otherwise of adverse QA findings.

The why, when, what and how

Why and when to benchmark?

The use of benchmarking in financial management has been encouraged (for example) by the need to maintain hard-won corporate financial standards, by the requirement to maintain comparability in standards with the 1994 shifts from State-based to Area-based financial management and accounting, and by the need for objective indicators that will assist in targeting scarcer DEETYA internal audit resources.

The Financial Management Quality Assurance Package was developed to provide Area Managers with a mechanism for benchmarking financial management performance in their Areas. It now also operates in DEETYA National Office Divisions. The package is part of a strategy to promote financial management improvement with emphasis on the responsibility of the manager in meeting core financial management requirements of legislation and departmental policy and procedures.

What to benchmark?

The quality of financial management practices and procedures operating at local levels throughout the Department is benchmarked. The QA Package includes 34 categories for scrutiny under the headings of Human Resources, Financial Administration, IT Systems, Corporate Functions and Program Delivery Operations.

How is benchmarking done?

Financial management practices operating at local levels are tested under devolved arrangements against the key financial management controls which are set out in a document called the Financial Management QA Package. Any deficiencies or weaknesses identified at time of review are used to establish a benchmark rating for that site. Sites which are rated below the required benchmark standard subsequently become the focus for corrective action.

The package has been released to all managers for implementation at local level. Managers are required to appoint QA Coordinators who are responsible for arranging the conduct and coordination of the reviews. The results of the reviews are then made available to management together with advice or action taken or proposed in correcting any deficiencies or weaknesses.

Contacts

Main project contacts

Garry Rayner, Dir. Financial Management
National Office, DEETYA
12 Mort St
Canberra City ACT 2601
Ph: (06) 240 8015
Fax: (06) 240 8034

Barry Longland, Internal Audit
Outposted National Office,
DEETYA 477 Pitt St Sydney NSW 2000 Ph: (02) 379 8160 Fax:(02) 379 8169

Reports

Information about the approaches in the QA Package can be obtained from the contacts.

Attachment B: List of benchmarking references

An International Comparison of Performance Indicators for the Australian Coal Industry, Department of Primary Industries and Energy, AGPS, Canberra (1994)

APS Agency Agreements and Continuous Improvement: A Resource Guide, Department of Industrial Relations, Canberra (1996)

Benchmarking Australia: Linking Enterprises to World Best Practice, J MacNeil, J Testi, J Cupples, M Rimmer, Pitman, Melbourne (1994)

Benchmarking: Improving Performance in the APS, Management Advisory Board, Management Improvement Advisory Committee, Canberra (1994)

Benchmarking for Local Government - A Practical Guide, Department of Housing and Regional Development, Canberra, and Office of Local Government, Victoria, avl. through AGPS (1995)

Benchmarking Self Help Manual - Your organisation's guide to achieving best practice (Second Edition), Department of Industry, Science and Technology and Department of Industrial Relations, Canberra, available through AusIndustry (1995)

Business Process Benchmarking, R. Camp, ASQC Quality Press, Milwaukee, Wisconsin (1995)

Commercial Support Program Manual (4th Edition), Department of Defence, Canberra (1994)

Commonwealth Grants Commission: Report on General Grant Relativities: 1996 Update, AGPS, Canberra (1996)

Continuous Improvement Program Handbook, Australian Valuation Office, Canberra (1994)

DAS Procurement 2000 Review Project, Final Report, Department of Administrative Services, Canberra (1995)

First National Report on Health Sector Performance Indicators, National Health Ministers Benchmarking Working Group, Australian Institute of Health and Welfare, Canberra, available through AGPS (1996)

Government Trading Enterprises Performance Indicators 1989-90 to 1993-94, Volumes 1 and 2, Steering Committee on National Performance Monitoring of Government Trading Enterprises, c/o Industry Commission, Melbourne (1995)

International Benchmarking: Overview 1995, Bureau of Industry Economics Report 95/20, AGPS, Canberra (1995)

Local Authority Performance Indicators, Vols 1-3, Audit Commission, HMSO, London (1995)

Measuring Up: A Primer for Benchmarking in the Australian Public Service, Resource Management Improvement Branch, Department of Finance, Canberra (1996)

Report on Government Service Provision, Steering Committee for the Review of Commonwealth-State Service Provision, c/o Industry Commission, Melbourne (1995)

The Benchmarking Book, MJ Spendolini, AMACOM, American Management Association,NY (1992)

Attachment C: List of benchmarking contacts and activities

Agency	Benchmarking - Contacts	Addresses	Activities
Attorney-General's Department	Mr Terry Gallagher General Manager, Resources	National Circuit, Barton 2600 (06-2506183, 5948fax)	*Benchmarking of the Legal Practice is well established, with its own MIS - see case study.
Aust Competition & Consumer Commission	Mr Bill Dee, Director Liaison	Benjamin Offices, Belconnen 2617 (2642853ph, 2808fax)	*ACCC has issued a paper (1995) on "Consumer Charter" benchmarks.
APS Innovations - On Line	Ms Maureen House, Mr Stein Helgeby, c/o MIAC Secretariat	c/o Department of Finance Newlands St, Parkes 2600 (2632338ph or 263 3616)	*APS Innovations - On Line is an internet tool, launched 1996, that is designed to improve networking of information on innovative and promising APS practices. (http://www.innovations.gov.au)
Australia Post	Mr Ray Lowe Group Manager Best Practice	321 Exhibition St Melbourne 3000 (03 92045306ph)	*Australia Post has subscribed to an international benchmarking model for letter delivery.
Australian Customs Service	Ms Sue Pitman-Hobbs National Manager (Budgets)	5 Constitution Ave Canberra City 2601 (2756846ph, 5770fax)	*ACS was a leader in Stage II of the MIAC Personnel Project (T Dam). *ACS has given the Software Metrics Association a Benchmark of an application

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