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					Performance Measurement                                                        Working Paper



Framework for a Provincial Performance Measurement and Index System


Draft for discussion
kk/mb - VIE/01/024 - 04.04.2007




1    Introduction
In the course of Vietnam's public administration reform, decentralization and self-
management policy, modern management concepts like results based management and
performance measurement are gaining in importance. The core of these concepts is to make
the performance of public institutions and services more transparent and accountable to the
public and to provide leaders and decision makers with relevant management information on
effectiveness and efficiency of public services delivery for them to take action, as necessary.
Both, international and Vietnamese experiences clearly suggest that alone the generation
and publicity of performance data and rankings can significantly influence the performance
of state agencies. Concerned agencies in general are incited to improving their performance,
striving to ascend in the rating.
A proposal to design and pilot a "Provincial Performance Measurement and Indicator System"
has therefore been suggested. This system will allow:
   Central government to monitor the efficiency and effectiveness of local level service
    delivery and support local government performance improvement.
   Local leaders to compare their own province performance over time and/or against other
    provinces. The performance can be calculated as a weighted index on a 100 point scale.
   Vietnam to modernise the management of its public service delivery in line with the most
    modern international practices and encourage ever more cost effectiveness in the
    provision of public services.


2    Focus on key public service areas
Initially, the proposed Performance Measurement System is purposely kept as simple as
possible. It distinguishes between (i) public service delivery, (ii) administrative performance,
and (iii) impact.
Public service performance includes the areas where most of the public money is spent.
These are health, education, economic and environmental services, social relief, and
administrative services. For these services, the core themes to measure are accessibility and
quality of services, citizen's satisfaction, efficiency (unit cost), and value for money.
Administrative performance is divided into two parts. Firstly, internal services, which are in
support of the effective overall operation of local government, like HRM, financial
management, and auditing. Secondly, an overall corporate assessment, which looks at
performance of local government as a whole. International experience shows that latter
section is of particular relevance and might be weighted higher than the other service areas.
Impact relates to the overall plans and visions which the province would like to achieve. For
instance the Vietnam Development Goals or provincial GDP etc.. However, such high level
objectives are in general dependent on external factors. Though important for an overall
assessment, local government can in many cases not really be held accountable for certain
impacts. Therefore, these indicators are put into a separate section. (Alternatively, instead of


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putting them separate, impact indicators might be included under corporate assessment (as
done e.g. in the UK) or under the respective service areas).

Service areas for an initial system            Core themes to measure in public
                                               services
1) Public service performance
 Education                                       Fair and affordable access
 Health care                                     Quality
 Creating business friendly environment          Citizen's satisfaction
 Agricultural services                           Efficiency (unit cost)
 Environmental services                          Value for money
 Social relief and social security
 Administrative services
                                               Calculation of overall performance
2) Administrative performance                   Overall performance of a province can
 Internal government services                    be calculated from individual weighted
 Corporate Assessment                            performance indicators / sub-indices,
Impact                                            and displayed on a 100 point scale.


The service areas can, in a later draft, be further extended and differentiated, as required.
Transport and construction might be added; environmental services might be broken down
into water supply, waste water treatment, and road cleaning etc. However, priority should be
given to keeping the index simple and not too overloaded.




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3    Lessons from international experiences
There are some essential international lessons which can inform the drafting of a system for
Vietnam. Performance Measurement in the public sector has now been developing around
the world for at least 25 years and in the extensive empirical and theoretical literature that
has built up over this time both the strengths and weaknesses of particular methodologies
have been extensively researched. The major movements in performance assessment over
the years can be characterised as follows:
   Self-assessment instead of top-down control
Experiences show that performance measurement in form of a top-down control do not lead
to satisfying results as controlled agencies generally tend to resist such systems, and results
often tend to be distorted or biased. More successful are systems of self-assessment or, at
least, systems which build on consultative, joint local-central assessment.
  The Introduction of Overall Corporate Assessment
In the UK's "Comprehensive Performance Assessment", the component on "corporate
assessment" has gained significantly in importance. While detailed efficiency and
effectiveness assessments of public services are generally sector specific and take a narrow
view of individual performance, Corporate Assessment looks at the performance of local
government as a whole, at leadership, commitment, and overall achievement. In the UK, this
Corporate Assessment is undertaken by local government as a self-assessment exercise.
  A shift from output to outcome indicators
Many measurement systems have started with a focus on output indicators. But output
focused systems have been shown to be susceptible to biases and distortions in measuring
results. Outcome indicators, generally, can better reflect performance as to what actually is
intended to be achieved.
  A reduced number of indicators
Another frequent experience is the tendency to start by collecting too much information. As
a consequence, quality assurance of information and data processing is more difficult, and in
the interpretation of survey results, there is a risk of getting lost in the details. This has also
happened in the piloting of Citizens' Report Cards in Vietnam. Several countries drew the
lesson and started to reduce the number of indicators and, thus, clearly communicate what
the priorities are.
  Challenge agencies to make change
Publicise and reward those who make positive efforts to improve their performance;
disseminate good practices to others and encourage their use. At the same time, take care
that low performers do not feel blamed. But rather pro-actively consult with them to jointly
look for ways of improving their performance. The ultimate sense of the measurement
system is not to distinguish the good from the bad, but to encourage and challenge agencies
to make change and improve.

Conclusions for the formulation of indicators in Vietnam
The indicators should be subject to broad consultation between all relevant stake holders.
And they will be subject to steady revision over time as experience grows in their use. When
negotiating the indicators, some principles, which are informed from international
experinece, should be kept in mind:
   There should be strong local ownership; local government should have a strong stake in
    defining the indicators while still ensuring a core set of indicators which apply for all
    provinces in order to ensure comparability; and there should be a strong focus on self-
    assessment of the local level.


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   Start with a clear formulation of service objectives and the priority issues (core themes).
    The service objectives should be challenging but still possible for the province to reach.
    Core themes are the essential questions which inform whether the government's
    priorities aim towards the service objectives. Objectives and core themes should be
    mutually agreed upon before discussing the indicators.
   The indicators should solely inform the core themes; they should be kept as low in
    number as possible while still sufficiently covering the core themes, thus, clearly
    communicating what the priorities are - with a strong weight on value for money.
   Indicators should look at trends, i.e. the pace of change - not just at absolute figures.
    For instance, poor provinces should be rewarded for a fast pace of poverty reduction,
    and not sanctioned for the still high level of poverty.
   By nature, the assessment of individual services will always remain fragmented and
    incomplete. This can be balanced by including a mix of different objective and subjective
    measures like citizens' satisfaction; local self-assessment; general rating by central level;
    and last but not least, the Overall Corporate Assessment.
Further considerations when composing the performance index
   When formulating indicators for service performance, distinguish what local government
    can (and want to) be held accountable for. Some outcomes, provincial government might
    be hold accountable for, like for instance drop out rate in primary education. Other
    outcomes might be difficult to held local government accountable for, like employment
    take up of graduates from secondary school. Such indicators might then be put under
    impact in the last section.
   Setting priorities: The initial performance index will consist of 130 to 150 indicators.
    Obviously, not all of them are equally important. For calculating sub-indices and the
    overall index, indicators will therefore be weighted, i.e. important indicators' weight
    might be double or more of a less important indicator. This is essential in order to set
    priorities - not only in statistical terms, but in political and managerial terms.
   The Performance Index can not serve as a comprehensive management information tool
    for local government, but as a comparative orientation. Provinces should be encouraged
    to additionally elaborate their own local performance measurement systems - as it is
    forthcoming in HCMC, Ben Tre, and Lao Cai and in other provinces which develop local
    M&E systems. Indicators of local systems should ideally include core sets of indicators
    which are used as well in the Performance Index.


Summary steps for establishing the indicators and the Performance Index
        1. Agree about a first set of service areas to include in an initial version
        2. For each area, agree about the service objective and the core themes
        3. Carefully consider which is the smallest set of indicators which can best represent
           the essence of these core themes
        4. Check data availability and, if deemed necessary, collect missing data
        5. Experiment with setting targets and thresholds, and with weighting and
           composing sub-indices and overall Performance Index




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4    The Performance Index in relation to other institutions
Within the wider legal and administrative context, the Performance Index relates to some
important institutions and emerging systems. Some of them are listed here with comments
on how the performance index relates to them.
   Output oriented budgeting: In the framework of the PAR MP 2006-2010, the Ministry of
    Finance is aiming to develop output oriented budgeting (OOB) mechanisms. OOB is not
    feasible without performance measurement. The Performance Index could play a central
    part in this context.
   Decree No. 130/2005/ND-CP and Decree 43/2006/ND-CP (the latter one replacing decree
    10/2002) regulate the regime on autonomy and self-responsibility for the use of
    administrative management payrolls and funds by state agencies. In this instance,
    agencies are expected to develop performance measures, indicators and targets. The
    Performance Index could provide an overall framework for central government to look at
    overall performance of local service provision.
   The new Law on State Audit (37/2005/ QH11) foresees the development of performance
    audit (§38 and §39). While the audit is basically an independent control instrument, the
    performance measurement system is a management tool for government aimed at quality
    improvement. The Performance Index should be developed in close consultation with the
    State Audit of Vietnam in order to align the core focus and indicators of both the
    Performance Index and the performance audit. A similar setting exists e.g. in the UK with
    the government's "Best Value Performance Indicators" and the Audit Commission's
    "Comprehensive Performance Audit Indicators".
   The SEDP is a centralized planning mechanism with planning indicators which are partly
    included in the Performance Index. The data for which are mainly compiled and managed
    by the General Statistics Office.
   The Public Opinion Poll, forthcoming under the VIE/01/024, will provide valuable data on
    citizens' satisfaction with public services. Such information is indispensable for the proper
    quality of the Performance Index. It should be discussed how far public opinion polls can
    be undertaken on a regular basis and in all provinces.
   Citizens' Report Cards: Similar to the public opinion poll, the Citizens' Report Card is a
    survey on people's opinion of public services. The difference is that it is far more detailed,
    and that it is a local survey. The advantage is that it is a more comprehensive
    management instrument for local government. The shortcoming is that it does not
    necessarily make performance comparable between provinces. It might be discussed how
    to combine the report card with the national opinion poll and/or with the Performance
    Index. For instance, all provinces doing report cards might be asked to include a small set
    of compulsory, centrally agreed indicators which are thus comparable across all provinces
    and thus could feed into the Performance Index.
   The Provincial Competitiveness Index (PCI) conducted by the Vietnam Chamber of
    Commerce is very similar in its structure to the one the Performance Index will adopt.
    However, it concentrates on just one aspect, which is local government performance in
    the development of a competitive business environment. The PCI is an extremely
    successful tool and has found quick and wide acceptance. It is suggested that the PCI be
    included in the Performance Index as one separate service area.




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Note: Following tables are, in a first place, meant as a basis for discussion. They
provide a draft framework for the index composition. The formulation of service
objectives, core themes, and especially the indicators are a draft proposal only
and subject to intensive consultations and refinement.




Educatiion
Educat on
Service objective           Provide universal education for boys and girls at a quality that provides graduates a
                             fair chance to find appropriate employment, and to become well educated citizens
Main service                Primary schools
providers                   Secondary schools
                            Vocational schools
Core questions              Is education provided universally with equal opportunities for all?
                            How good is the quality of teaching?
                            Are citizens satisfied with education services?
                            What is the unit cost of schooling per population / student? (efficiency)?
                            Does education provide value for money (results in relation to investment)?
                                                                                                              Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                         availability
Access and equal            Net enrolment rate (primary and secondary) (VDG)                                 GSO
opportunities               Gender gap in primary and secondary education (VDG)                              GSO
                            Ethnicity gap (relative to proportion of population)                                 ?
                            Fees and charges to be paid by poor and disadvantaged children                       ?
Quality                     Drop out rate                                                                    GSO
                            Number of teachers per 1000 students                                             GSO
                            Teacher qualification (e.g. ratio of teachers employed on the basis of          DOET?
                             clear quality criteria)
                            Education quality (e.g. increases in two-session schooling attendance            GSO?
                             rate (full day working) of children at primary school level (VDG))
                            Average marks of final examinations in secondary and vocational schools        DoET??
                             / or, if data is available: employment take up of graduates from
                             secondary and vocational school
Citizens' satisfaction      Citizens' satisfaction with quality, fairness, and outcome                      survey
Unit cost                   Public expenditure per 1000 students                                             MOF
Value for money             Calculated on the basis of results (as from above indicators) in relation to
                             sector expenditure
                            Self-assessment of province
                            Rating by central level
Educatiion
Educat on                Calculated from above indicators (weighted)
sub--iindex
sub ndex




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Heallth care
Hea th care
Service objective           Provide universal health care
Main service                Provincial / municipal hospital
providers                   District health facility
                            Commune health station / health worker
Core questions             Is health care provided universally with equal/fair/affordable access for all?
                           How good is the quality of health care?
                          Are citizens satisfied with health care services?
                          What are the costs of different health services per population / patient? (efficiency)
                          Do health services provide value for money (results in relation to investment)?
                                                                                                             Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                        availability
Equal/fair/affordable     Proportion of households using a health facility in the last 12 months            CRC
access                      (Number of patient episodes per 1000 population)
                            Proportion of poor households whose health insurance card for health              MoH
                             service fees is paid for (decision 139)                                           /CRC
Quality                     Health budget planning based on defined and prioritized outputs and/or
                             on a medium term expenditure framework
                            Number of re-admittances to hospital per 1000 hospital in-patients
                            Number of complaints per 1000 patients / hospital in-patients                         ??
Citizens' satisfaction      Citizens' satisfaction with time, quality, fairness, and outcome of service      Survey
Efficiency                  Recurrent expenditure per provincial / municipal hospital bed
                            Recurrent expenditure on district health facilities per population
                            Recurrent expenditure on commune health stations and health workers
                             per population
                            Number of patient episodes per doctor??
                            Average length of stay in a hospital bed
Value for money             Calculated on the basis of results (as from above indicators) in relation to
                             sector expenditure
                            Self-assessment of province
                            Rating by central level
Heallth sub--
 Hea th sub              Calculated from above indicators (weighted)
iindex
  ndex




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Creatiing a Busiiness Friiendlly Enviironment
Creat ng a Bus ness Fr end y Env ronment
Service objective           Create a business friendly environment that induces economic growth and
                             employment
Main service             
providers
Core questions             How competitive and business friendly is the economic environment in the province?
                           How much investment is being generated?
                          Does the economic development promote employment?
                                                                                                         Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                   availability
Competitiveness1          Provincial competitiveness                                                   VCC
Investment                  Total internal (province) investment generated                                GSO
                            Total external (national and foreign) investment generated                    GSO
Employment                  Number of jobs created per 1000 population                                    GSO
                            Reduction of unemployment ratio                                               GSO
Busiiness sub--
 Bus ness sub            Calculated from above indicators (weighted)
iindex
  ndex




1
    Directly taken form the Provincial Competitiveness Index, Vietnam Chamber of Commerce.

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Performance Measurement                                                                          Working Paper




Agriicullturall serviices
Agr cu tura serv ces
Service objective           Provide modern agricultural services which meet the demands of farmers and
                             contribute to rural economic development
Main service                DARD with sub-branches like extension, veterinary, plant protection, forestry etc.;
providers                    (not including private service companies)
Core questions             Are services and information accessible and affordable for farmers?
                           How good is the quality of agricultural services?
                          Are farmers satisfied with public agricultural services?
                          How efficient is spending in agricultural services?
                          Do agricultural services provide value for money (results in relation to investment)?
                                                                                                            Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                       availability
Service provision         Number of field days of district and commune staff (extension,
                            veterinary, plant protection ...) per year and 1000 farm households
                            Proportion of private agricultural service companies in the province
                             (development of private service sector)
                            Proportion of communes with tele-centres (forthcoming MARD initiative)
Quality                     Degree of decentralization of services from province to district
                            Ratio of extension budget for "soft inputs" (capacity building, field days,
                             etc.) over "hard inputs" (seeds, fertilizer...)
                            Ratio of commune extension workers with university degree
                            Annual increase of gross income from agriculture per farm family
Farmers' satisfaction       Farmers' satisfaction with public agricultural services                          survey
Efficiency                  Ratio of sector expenditures for "software" (operation, management, and
                             maintenance) over "hard inputs" (new infrastructure); ratio of recurrent
                             over capital expenditure
Value for money             Calculated on the basis of results (as from above indicators) in relation to
                             sector expenditure
                            Self-assessment of province
                            Rating by central level
Agriicullturall
Agr cu tura              Calculated from above indicators (weighted)
sub--iindex
sub ndex




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Performance Measurement                                                                         Working Paper




Enviironmentall serviices
Env ronmenta serv ces
Service objective           Ensure clean, save and sound environment for citizens in private, work, and public
Main service             
providers
Core questions              Are environmental services provided sufficiently for the communities?
                            Are environmental services up to required quality standards?
                            Are citizens satisfied with environmental services?
                            What are the unit costs of different environmental services?
                            Do environmental services provide value for money (results in relation to
                             investment)?
                                                                                                              Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                         availability
Service provision           Access to save drinking water (rural/urban) (VDG)
                            Solid waste collected (VDG)
                            Hazardous waste and hospital waste is treated (VDG)
                            Environmental problems in all rivers are basically addressed (VDG)
                            completion of improved and upgraded water sewerage systems in all
                             cities, industrial parks, and export processing zones; (VDG)
Quality                     Ratio of new factories using environmental friendly technologies or are
                             equipped with less polluted devices (VDG)
                            factories are granted environmental protection certificates. (VDG)
                            Industrial parks and export processing zones having central waste water
                             treatment systems that correspond to environmental protection
                             standards; (VDG)
                            Waste is treated by standardised processes; (VDG)
Citizens' satisfaction      Indicators / data from public surveys                                             VIE
Unit cost                   Cost of drinking water provision per cubic metre
                            Cost of garbage collection per collected ton cost of solid waste
                            cost of treatment per ton of hazardous waste and hospital waste
                         
Value for money             Calculated on the basis of results (as from above indicators) in relation to
                             sector expenditure
                            Self-assessment of province
                            Rating by central level
Enviironmentall Calculated from above indicators (weighted)
Env ronmenta
sub--iindex
sub ndex




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Sociiall relliief // sociiall securiity
Soc a re ef soc a secur ty
Service objective        
Main service                DOLISA
providers
Core questions             Is social relief / social security provided for all poor / people in need?
                          How good is the quality of social relief and social security?
                          Are the poor / people in need satisfied with services?
                          What is the unit cost per poor / person in need?
                          Does social relief / social security provide value for money (results in relation to
                            investment)?
                                                                                                              Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                         availability
Access and equal         
opportunities            
                         
Quality                  
                         
                         
Citizens' satisfaction      Poor citizens' satisfaction with social services                                  survey
Unit cost                
                         
                         
Value for money             Calculated on the basis of results (as from above indicators) in relation to
                             sector expenditure
                            Self-assessment of province
                            Rating by central level
Sociiall sub--
 Soc a sub               Calculated from above indicators (weighted)
iindex
  ndex




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Admiiniistratiive serviices (OSS)
Adm n strat ve serv ces (OSS)
Service objective           Provide administrative services to the public that are efficient, effective, fair and
                             equitable at the lowest possible price
Main service                Province departmental OSS
providers                   District OSS
                            Commune / Ward OSS
Core questions              Is there easy and equal access to administrative services?
                            How fair and how good is the quality of administrative services?
                            Are citizens satisfied with administrative services?
                            What are the unit costs of different administrative services?
                            Do administrative services provide value for money (results in relation to
                             investment)?
                                                                                                                Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                           availability
Access and equal         
opportunities            
                         
                         
Quality                  
                         
                         
Citizens' satisfaction      Satisfaction with time, competence, courtesy, fairness and outcome                Survey
Unit cost                
                         
                         
Value for money             Calculated on the basis of results (as from above indicators) in relation to
                             sector expenditure
                            Self-assessment of province
                            Rating by central level
Admiiniistratiive Calculated from above indicators (weighted)
 Adm n strat ve
serviice sub--
 serv ce sub
iindex
  ndex




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Internall government serviices
Interna government serv ces
Service objective           Provide services to the provincial government which increases management capacity
                             and quality, transparency and accountability
Main service                DoHA
providers                   DoF
                            State Audit
Core questions             Are human resources managed properly; including equal recruitment opportunities?
                           Are financial resources managed properly and in a transparent way?
                          Are independent control mechanisms properly in place and ensure accountability?
                          Is the administration working efficiently?
                          How is the administration's performance in terms of value for money?
                                                                                                       Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                 availability
HRM                       Number of agencies which apply merit based recruitment regulations
                            Number of agencies which apply block staffing mechanisms / number of                 ??
                             staff from non-core government employment shifted to private sector
                            Number of follow up training days provided per 100 staff per year
                            Public servants' satisfaction with HRM / working conditions                     survey
Financial                   Number of agencies which operate on the basis of medium term
management                   expenditure frameworks and/or results based plans (OOB)
                            Ratio of recurrent expenditure over capital expenditure
                            Budget coverage complying with internationally accepted norms
                            Transparency of financial reporting (of plans and final accounts)
                            Degree of financial decentralization from province to district and
                             commune
Independent control         Ratio of agencies and SOE and/or volume of public expenditures which is
/ public feedback /          audited per year (financial / performance audit)
accountability              Availability of audit reports to the public
                            Redress and grievance mechanisms in place and used by the public
                            Number of cases of grievance related to public procurement
                            Public surveys conducted per year to assess satisfaction with public
                             spending (public opinion poll, citizens' report cards, ...)
Efficiency                  Share of administrative expenditures over total provincial budget
                            Number of cadres and civil servants per 1000 population
Value for money             Calculated on the basis of results (as from above indicators) in relation to
                             administrative expenditures and/or in relation to number of
                             administrative staff
                            Self-assessment of province
                            Rating by central level
Internall
 Interna                 Calculated from above indicators (weighted)
serviices sub--
 serv ces sub
iindex
  ndex




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Corporate assessment
Corporate assessment
Overall objective           Create favourable and democratic conditions for prosperous economic and spiritual
                             lives for the people, creating a socially just society, and a safe and secure
                             environment, which meets the people's needs.
Main responsible            PPC
Core Questions and          What is local government trying to achieve?
themes2                       o Commitment and ambition for the people
                              o Prioritization
                            What is the capacity to deliver on these plans?
                              o Capacity
                              o Performance management
                            What has been achieved?
                              o Citizens' overall satisfaction with government performance
                              o Achievements (Impact)
                                                                                                          Data
Core themes
Core themes              Indiicators
                         Ind cators                                                                     availability
Commitment and              Are there clear and challenging ambitions for the province and its
ambition for the             communities?
people                      Are ambitions based on a democratic understanding of local needs?
                            Does the local government provide leadership across the community
                             and ensure effective partnership working / grassroots democracy?
Prioritization              Are there clear and robust priorities within the ambitions for the area?
                            Is there a robust strategy to deliver the priorities?
                            Is robust action taken to deliver the strategy?
Capacity                    Is there clear accountability and decision-making to support service
                             delivery and continuous improvement?
                            Is capacity used effectively and developed to deliver ambitions and
                             priorities?
                            Does local government have the capacity it needs to achieve change
                             and deliver its priorities?
Performance                 Is there a consistent, rigorous and open approach to performance
management                   management?
                            Do the council and partner organisations know how well they and
                             each other are performing against planned outcomes?
                            Is knowledge about performance used to drive continuous
                             improvement in outcomes?
Citizens' satisfaction      Overall satisfaction of citizens with local government performance          survey
                            Overall satisfaction of citizens with grassroots democracy                  survey
Achievements /              What overall progress has the local government made in delivering its
impact                       priorities and improving quality of life for local people? Basically
                             impact indicators, e.g. GDP or related to the VDG
                            Indicators might be determined by each province individually
                            Select few indicators only - not more than five
Corporate
Corporate                Calculated from above indicators (weighted)
sub--iindex
sub ndex



2
    adapted from the "Comprehensive Performance Assessment", Audit Commission, UK, 2005

Draft kk/mb 03.07.2006                                                                                    14

				
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