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Demonstrating Performance: A Primer for Expenditure Reviews (June 2008)

Executive Summary

This paper lays out a framework for analysing the performance of major service and regulatory interventions. The framework is used in expenditure and baseline reviews, and to help agencies and the Government to assess and understand performance.

Leaders need performance reporting systems to support decision-making processes. Effective managers ensure that their major interventions work as they are meant to.

An agency’s major interventions must work to make its overall approach work. Major interventions are characterised by high leverage, cost, risk and/or value to the public. Major interventions therefore warrant careful design, delivery, analysis, and monitoring.

Ministers, boards and managers wanting timely reports on performance invest up front in design, data and reporting systems, and ensure reports feed into decision-making. Ex ante, major interventions worthy of significant effort or expenditure are expected to:

  • address needs and aspirations that are relevant to our peoples and institutions
  • have ends (outcomes and goals) and means (outputs and coverage) mapped to those needs and performance aspirations, and
  • have systems in place to validate performance against the ex ante specification.

To justify ongoing funding, every major intervention should be supported by credible information showing (allowing for fundamental measurement constraints) that outputs:

  • are produced efficiently and cost-effectively (eg, Public Finance Act 1989, s40)
  • meet quantity and quality standards (s41)
  • reach (s41) and positively influence the groups they are designed to affect, and
  • demonstrably reduce needs and improve the outcomes used to justify funding (s40).

Reports on major interventions should summarise key results, and be timed to support leadership decisions on strategy, priority, output, capability and budget. This ‘primer’ shows ways in which New Zealand agencies have demonstrated performance of major interventions, using the criteria listed above. The primer shows different ways in which the performance of major interventions can be reported in accountability documents.

If performance reporting systems are weak, now is the time to improve them.

Fortune favours the prepared. Performance reporting systems should be set up ahead of delivery. They identify and gather data needed to demonstrate performance. Reports help leaders identify and resolve problems at an early stage, and to focus on results.

Where reporting on the performance of major interventions is considered inadequate, reports on Expenditure Reviews should recommend to Ministers that robust reporting systems get set up, and that specific, SMART measures are reported by set times.

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