INTERNATIONAL IDEA EXCHANGE

Best Value and Balanced Scorecards in an unbalanced world

Warren Roberts
National President
Institute of Public Works Engineering Australia

The APWA International Affairs Committee presents this series of articles to assist in the exchange of ideas between our international partners. This article is presented as part of the partnering agreement in place between APWA and its Australian counterpart, the Institute of Public Works Engineering Australia (IPWEA).

The City of Stonnington is an inner city municipality of Melbourne, Victoria, Australia with a population of 87,412 and a total operating budget of $A90 million.

During the period 1993-1995, Local Government in the State of Victoria went through a period of significant imposed reform. This resulted in amalgamations from 210 down to 78 Councils, and also the introduction of Compulsory Competitive Tendering (CCT) whereby 50% of Council services had to be market tested by 1997.

These two reform agendas resulted in a marked cultural change, predicted improved efficiencies, economies of scale and competition in service delivery. The success or otherwise is the subject of ongoing debate and disagreement. One important aspect overlooked during the reform period was the significant impact on the quality and deliverability of services and on the capacity of the organisation to meet community and stakeholder needs. The focus was on reducing costs and normalising service standards.

Following a State Election, the concept of CCT was abolished and replaced with the Best Value (Principles) Act 1999. The new approach enables Councils to decide the most effective ways of providing services to their communities rather than the prescriptive and overly cost-driven approach of CCT. The six Best Value Principles that Councils must observe require:

  • Community consultation on all services and activities
  • Responsiveness to community needs
  • Accessibility of services to those who need them
  • Best quality and value for money
  • Continuous improvement
  • Regular community reporting on Council achievements

The broad framework for Best Value allows Councils to develop systems and a methodology to reflect the community and individual operating environment. The focus was not just on cost but also on quality and service standards that meet community needs and aspirations.

At the City of Stonnington we adopted a Best Value Model for Service Reviews and a Balanced Scorecard to provide a framework to monitor and report on Service Performance. The Balanced Scorecard at Stonnington has been developed to reflect the particular service and is based on an extensive range of performance measures.

The Stonnington Balanced Scorecard integrates all elements of Council's services across all departments reflecting the following key principles:

  • The delivery of any service involves a number of departments operating horizontally across Council, and any Service Review cannot be constrained by vertically-defined organisational structures.

  • The need to take full account of "triple bottom line" rather than simply lowest cost, with a result that the model incorporates Stonnington-wide service dimensions of: Service Quality and Performance; Service Responsiveness; Service Effectiveness to meet Outcomes; Service Cost to deliver "Best Value"; and brings all measures into a single overall Best Value Score.

  • The need for Continuous Improvement in a way that moved away from a single event.

The Stonnington Model and Best Value Reviews provided the framework and methodology that enabled Council to not only comply with the legislation but also deliver services and outcomes that:

  • Meet community expectations,
  • Provide appropriate levels of consultation and engagement,
  • Promote Continuous Improvement that facilitates a focus on quality and appropriateness of services rather than just cost.

It requires a formal review of services every five years. This was a significant change and, as it was not overly prescriptive, each Local Government organisation had the ability to develop its own response to comply with the legislation.

The model is widely recognised within Victoria as being a leading-edge approach on how to undertake Best Value Service Reviews.

The Balanced Scorecard Model has been built on the basis of integrating and scoring key elements of each service. Importantly it recognises the interdependency of service elements and is not simply a silo-management approach. It enables the complex service delivery elements of finance, customer service operational performance, responsiveness, information technology and other components to be reflected as integral aspects of service quality. It is not just about service delivery.

The Balanced Scorecards are constructed from consultation with the community, staff, management and Councillors and comprise measures that provide a representation of the key outcomes of the service.

The responsible Manager, General Manager and the Executive Management Team review the outcomes from the scorecards monthly. They provide a snapshot of performance and responsiveness and establish a useful framework to review the diagnostic elements of the service.

Importantly the Balanced Scorecards as applied to the organisation can be aggregated to divisional and then organisational levels for reporting to Council and the community. They are also being used as an indicator of performance and continuous improvement that is an integral part of Council's Enterprise Bargaining Agreement.

In all there are 35 Balanced Scorecards for the organisation reflecting services such as Waste, Information Technology, Library Services, and Aged and Disability Services. Each Scorecard incorporates measures and indicators that are relevant to the service and provide excellent metrics for the management of the service and the intra-organisational links.

The development of the Balanced Scorecards has been an interesting journey; however, like the family holiday and the questions from the back seat—"Are we there yet?"—the answer is "No." The scorecards need to be continually refined and validated, to ensure that we are not kidding ourselves and arriving at the answer that we think we want to hear.

From experience it is clear that all Service Review Teams follow a similar learning path, that starts with "We cannot measure our service, it is too complex" to the development of so many indicators that it would make the scorecard unworkable and complex. The ongoing maturity of the scorecard provides an opportunity to monitor the sensitivity of the indicators and to ensure that they do in fact provide value, are useful metrics for measurement of performance, and enable diagnostic analysis. The next generation will include a sustainability/environmental measure of performance.

Another lesson learnt on the way was that it is desirable to have an independent member on any review; this provides some objectivity and industry knowledge. This practice has yielded great results with reviews having a broader insight into the market and competitive environment.

Best Value is about ensuring that we are getting value for money; it is not about justification for the way we currently deliver services. The framework is about satisfaction and performance and the balance between the two measures.

It is also about delivering quality services that meet community needs. This means that we must validate the "value" of the service to ensure that it is delivered to the appropriate standard and quality—"Best Value." There may be some things that we do extremely well, that are not valued or wanted by the community—"Irrelevant Value." On the other hand, there may be services that are valued by the community but are delivered to a lower standard—"Poor Value."

Both of these outcomes are frustrating both for staff and the community. We must strive to deliver relevant services and be mindful of the recurring theme "but that's not how it's done around here."

The introduction of Best Value legislation has provided Local Government with a great opportunity to move away from a simple cost structure to one where the totality of the service and what we do are considered in an integrated way.

It has provided a catalyst for change in a positive way and has empowered Local Government to address community needs and expectations in a variety of ways. For Stonnington this has resulted in the development of our Best Value Framework and Balanced Scorecard Model.

The City of Stonnington has found that the use of Balanced Scorecards for all services provides a positive and meaningful framework for the community and staff of the organisation to review service standards and quality on a regular basis. It has provided an innovative solution that has provided a simple way to review complex and diverse services to comply with the legislation and achieve community expectations.

Additionally, the Stonnington Model has achieved a level of staff ownership of the scorecard and reinforced that measurement is about continuous improvement, not blame.

The Stonnington journey is ongoing and like all road trips we will have more adventures and side trips as we continue on our pathway towards the Holy Grail of "Best Value." However, I am pleased to report that as an organisation we are learning and enjoying the journey and looking forward to sharing our experiences with others.

Warren Roberts is General Manager of Infrastructure and Environment at the City of Stonnington in Victoria, Australia. He is also National President of the Institute of Public Works Engineering Australia (IPWEA). He can be reached at wroberts@stonnington.vic.gov.au.


International Infrastructure and Public Services Congress and Exhibition
July 13-16, 2005
Aguascalientes, Mexico

APWA's International Affairs Committee invites you to become part of APWA's delegation to the International Infrastructure and Public Services Congress and Exhibition this summer in Aguascalientes, Mexico. This major international conference will be held July 13 to 16 in the historic colonial city of Aguascalientes, Mexico, capital of the namesake state of Aguascalientes.

The historic center of Aguascalientes is ideal for walking and shopping.

Sponsored by the Mexican Municipalities Association (AMMAC), one of APWA's international partnership organizations, the International Infrastructure Congress will draw attendees from throughout Mexico and Latin America. APWA has actively participated in this conference for a number of years, with members both attending sessions as well as making presentations. APWA President Tom Trice is scheduled to represent the APWA Board of Directors at this year's conference.

Any APWA member wishing to participate in this Congress as an attendee, exhibitor or presenter should contact Julio Fuentes, chair of the APWA/AMMAC Task Force, at (619) 533-3092 or by e-mail at JFuentes@sandiego.gov.

Aguascalientes has a population of around 650,000, is situated in the geographic center of Mexico at an elevation of 6,100 feet, and enjoys a year-round spring-like climate. A major transportation hub, Aguascalientes enjoys easy access to many of Mexico's major tourist destinations, including San Miguel de Allende, Guanajuato, Zacatecas, Guadalajara, and Mexico City. Participation in this year's summer Congress could easily be combined with an extended vacation to some of these, or other, tourist destinations.


2005 Jennings Randolph Fellowship Recipients Named

The American Public Works Association is pleased to announce the recipients of the 2005 Jennings Randolph Fellowship. The following APWA members were selected through a formal application process to present public works/infrastructure-related papers at APWA's international partnership countries' public works-related conferences coupled with a one-week study tour of public facilities and issues in that country. All three recipients will prepare articles for the APWA Reporter reflecting their experiences and will make a presentation at the 2006 APWA International Public Works Congress and Exposition on their findings.

The 2005 Jennings Randolph Fellowship Recipients are:

  • Brian Pettet, Director of Public Works, Pitkin County, Colorado. Pettet will attend the International Public Works Engineering Australia (IPWEA) International Public Works Conference to be held in Adelaide, Australia on August 21-25, 2005 and will study involvement practices of public works in the land development application and approval process, as well as methods and tools that are utilized by public works agencies to mitigate the cost of development on public infrastructure.

  • Lawrence E. Lux, President, Lux Advisors, Ltd, Plainfield, Illinois. Lux will attend the International Public Works Engineering Australia (IPWEA) International Public Works Conference to be held in Adelaide, Australia on August 21-25, 2005 and will study response techniques and learn the disaster preparedness, response and recovery methods currently used in Australia for natural and man-made disasters, with a focus on the role of public works in terrorism.

  • Julio C. Fuentes, Senior Traffic Engineer, City of San Diego Transportation Department. Fuentes will visit Mexico and attend the AMMAC Latin American Public Works and Services Congress to be held in Aguascalientes, Mexico on July 13-16, 2005 and will evaluate a study he began five years ago with the City of Tijuana in implementing short-term traffic engineering measures along a congested corridor.

The APWA International Affairs Committee looks forward to receiving applications for the 2006 international conferences in Slovakia/Czech Republic and Mexico. To learn more about this program, please visit the APWA website at www.APWA.net under "About APWA - International Activities" or contact Kaye Sullivan, APWA Deputy Executive Director, at ksullivan@apwa.net or (800) 848-APWA, ext. 5233.


International Infrastructure Management Summit, New Zealand, October 2005

The year's most innovative and complete international asset management conference will be held in Rotorua, New Zealand from 17 to 19 October 2005.

The International Infrastructure Management Summit will bring together infrastructure leaders and decision makers from around the world in a spectacular geothermal setting in one of the country's top tourist destinations.

The Summit offers a unique opportunity to network and learn more about managing, maintaining and future-proofing infrastructural assets, from energy and water to buildings and transport systems. Along with international keynote speakers, the Summit will feature interactive, facilitated workshops and special interest groups.

To round out the week, the Summit will be followed by two days of optional site visits to local councils, to see asset management practices in action.

As well as being a leader in asset management, New Zealand is a stunning tourist destination with outstanding natural beauty. Rotorua boasts activities for the most adventurous or the happily sedate and is a centre of Maori culture, so make sure to allow plenty of time to explore this lovely part of the world. It's also a place where visitors will be pleasantly surprised to discover how far their dollar will go (including the Canadian).

Plan now to attend the International Infrastructure Management Summit. It promises to be an education as well as a great adventure. The Summit website (www.infrastructuresummit.com) will be updated as new information becomes available.

For more information please contact ross@ingenium.org.nz.


Cultural Proverbs

"The full man does not understand the wants of the hungry." - Irish Proverb

"A leaky house may fool the sun, but it can't fool the rain." - Haitian Proverb

"When spiders unite, they can tie down a lion." - Ethiopian Proverb

"Avoid the evil, and it will avoid thee." - Gaelic Proverb

"The beginning is the half of every action." - Greek Proverb

"Confessed faults are half mended." - Scottish Proverb

"Do not employ handsome servants." - Chinese Proverb