Benchmarking local government – insight for decisions | KPMG | AU

Benchmarking local government – insight for decisions

Benchmarking local government – insight for decisions

The challenges of meeting customer demands, being cost efficient, and engaging new data and analytics technologies are hitting local governments across Australia. Benchmarking can shed light on best practice and show how local governments can play a major role in founding Australia’s Smart Cities of the future.

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Municipalities across Australia are experiencing extensive challenges as a result of changing citizen demands on service, constrained budgets, the need to be digitally savvy, and their growing role in making Australia an attractive and sustainable place to live, work, do business and visit.

Traditionally, there has been a strong focus from analysts on the macro indicators of Australia’s liveability, economic viability and productivity. Benchmarking Australian states and cities in areas such as housing affordability, road congestion levels, public transport efficiency, employment rates, access to aged care, and healthcare services has shown what works now, and what needs to be improved for the future.

“The same benchmarking is happening across global cities,” says Paul Low, Lead Partner, Planning and Infrastructure Policy, KPMG. “Such as Sydney looking at Singapore and Hong Kong as the rival areas for financial services in the Asia Pacific region. Or Brisbane looking at San Diego, Barcelona and Vancouver to see what’s happening at a digital connectivity level.”

However, Toni Jones, Lead Partner, Local Government Sector, KPMG, explains that these macro perspectives don’t usually dive into local governments and examine the performance at a service delivery level.

“As population pressure, customer expectations and financial constraints hit, the ability for local governments to feed into the macro objectives means they need to look closer at how they are operating,” she says. “Are they operating sustainably, what kind of services are they delivering, and how are they delivering them?

KPMG’s report, Benchmarking city services: Finding the courage to improve, represents the first attempt internationally to help local governments achieve this.

Thirty-five international cities were able to provide information, including five from Australia, covering areas such road congestion, transit costs, small-to-medium enterprise development, building permits and enforcement, park access, recreational facilities, quality of drinking water, wastewater removal and stormwater drainage, fire rescue, garbage collection and waste diversion.

Low says: “This report goes beyond macro level assessments and looks at service delivery in detail to find out what innovations are working. It is the start of the journey, and as we gain access to better information we will get even more interesting insights.”

The benefits of benchmarking

Creating benchmarks for local government is complex, as it attempts to account for differences in accountability and function, geographical size, population, climate and many other factors. For example, the Australian cities do not measure transit, drinking water, wastewater removal and fire rescue.

Further, Jones says that municipalities often assess themselves and their divisions using their own measurements. Others are not as effectively comparing their performance year-on-year and service-by-service.

“They need to look at how they define and measure services and build it into their budgetary forecasting and reporting,” she says.

KPMG engaged its Municipal Reference Model (formed in Canada) as the basis for its investigation, as it provides key frameworks to help leaders improve measurement and assessment. It offers an ‘outputs and outcomes-based’ view of performance and efficiency. In the case of this report it has considered the effectiveness and efficiency of 12 service areas undertaken by city administrations across various continents.

Low says: “We’ve used different reference points to understand the kind of future we want for our cities, and looked at ways to assess the impact of different interventions, service delivery models or infrastructure policies on the future aspirations for communities.”

The result is a foundation for local government leaders to compare organisational structures, services and delivery models that exist across Australia, and in different parts of the world.

“It’s important for governments to look outwards for best practice, as well as seeking to understand their customer base,” Low says.

Meeting changing customer demands

As customers of local councils increasingly demand the service, digital communications and speed of delivery that they are receiving from other organisations, it is more important than ever to assess if councils are equipped to deliver, Jones says.

“Understanding the customer is the first thing to do to start understanding the services they need. Which services are critical for the community, and which ones can you deliver in different ways?”

All five Australian cities that participated in KPMG’s research are serving their customers well in different areas, Jones says. “But there is also a lot of potential for improvement.”

It also helps to understand the perspective of strategic partners when it comes to delivering to customer demand, such as adjacent councils.

Low says: “Benchmarking opens up your mind to different market structures and delivery relationships when it comes to managing assets, attracting new enterprises or business incentivisation. People innovate on the basis of relationships and collaboration with each other.”

The big picture of Smart Cities

Paul Francis, Director and Smart Cities Lead, KPMG, says understanding customers and gathering data on services will also help councils drive their own, but also support the Federal Government’s Smart Cities Agenda.

“The drive towards the Smart Cities and using emerging technologies such as the Internet of Things is allowing greater access to more timely data,” Francis says. “For example, although one council does produce quarterly reports on air quality, they are only currently required do that every 4 years. Utilising Smart City data, they could have that information daily, or even in real-time, and that’s a much better indicator on which to base decisions on. The same would hold for traffic and people movement, for example.”

Low adds that councils will need to view data as tool for decision making – not just for performance or compliance reporting.

“To work towards these outcomes, we need to know what we are measuring, and what we are trying to drive towards to meet our aspirations,” he says.

Technology is key

Data driven councils require modern data and analytics capabilities – however Jones says many are sitting on complex, unsophisticated legacy technology.

“They may have a lot of different systems not talking to each other, and until that IT puzzle is solved and they have the overall framework right, it’s difficult to effectively use data for insights and for developing Smart Cities,” she says.

Creating councils fit for the future also requires a collaborative approach to gathering and sharing data, Low explains.

Ultimately, Jones says, Benchmarking city services: Finding the courage to improve, is a foundation to help leaders identify best practice, and to support strategic decisions.

“If you don’t know how much it costs to deliver something, how effective it is, and the best method, how do you make informed investment decisions? If you look at your portfolio and you know where you’re spending, and what revenues you’re getting back, that helps you make informed decisions on determining what services to provide, what the best model is for delivering them and in what areas to focus investment in Smart City technology.”

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