Internal Service Benchmarking - Financial Management Institute of

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Benchmarking
Financial Management Institute of Canada
Ottawa, Ontario
September 25, 2014
Mike Lionais
Acting Executive Director, Costing Centre of Expertise
Office of the Comptroller General
Kiran Hanspal
Executive Director, Results-based Management
Expenditure Management Sector
Table of Contents
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Benchmarking
Challenges in the Public Sector
Benchmarking Internal Services
Continued Efforts to Benchmarking
Annex A – Definition of Internal Services
Annex B – Internal Services Performance
Measurement Framework
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Benchmarking
• The action of identifying, comparing, understanding and
adapting outstanding practices found either inside or
outside an organization. Benchmarking is based mainly on
common measures and the comparison of obtained results
both internally and externally. Comparing results against
those of a best practice organization will help the
organization to know where it is in terms of performance
and to take action to improve its performance.*
Done right, benchmarking can drive performance!
*Source: Treasury Board of Canada’s Supporting Effective Evaluations: A Guide to Developing
Performance Measurement Strategies
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Challenges in the Public Sector
• In the private sector, benchmarking can be done more
readily:
• common goal of profitability; and
• comparable services amongst competitors.
• In the public sector, benchmarking faces unique
challenges:
• concept of value for money is focused on public good,
effectiveness and efficiency rather than profits;
• agencies and departments are often the sole provider
of goods and services (e.g., issuing passport); and
• varying mandate of organizations has led to
inconsistency in measures and interpretations.
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Benchmarking Internal Services
• The Canadian government has been paving the way to
make benchmarking feasible for internal services.
• Often referred as corporate and administrative services
(CAS), these functions incur costs in support of
departmental programs and activities. The costs are
normally incurred outside of program branches for the
benefit of the department as a whole (Annex A).
• Establishment of proposed internal services
performance measurement framework (Annex B).
• Our government has been reporting on internal
services as a common program activity since 2009:
• Recent spending reviews have provided additional
insights on the use of internal services in program
operations.
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Continued Efforts to Benchmarking
• To allow historical and comparable information on
internal services, the Canadian government has
recently:
• developed draft standard internal service
performance measures for 7 of the 10 IS
categories;
• streamlined the presentation of internal services;
• developed a Guide on Internal Services
Expenditures: Recording, Reporting and
Attributing; and
• issued a Guide to Costing to ensure fundamental
costing principles and concepts are consistently
applied in decision making, performance
comparison and resource management.
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Contacts
• Expenditure Management Sector (EMS)
[email protected]
• Office of the Comptroller General (OCG)
[email protected]
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Annex A
Definition of Internal Services
Revised structure effective April 1, 2015
 Sub-programs
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Management and Oversight
Communications
Legal
Human Resources Management
Financial Management
Information Management
Information Technology
Real Property
Materiel
Acquisition
*Source: Treasury Board of Canada’s Guide on Internal Services Expenditures: Recording,
Reporting and Attributing
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Program - Internal Services Link
Program Outputs
Program
Direct
Cost
 Program outputs’ costs = direct costs + all
supporting costs (both in the program or in internal
services)
 Cost should be linked to results
 Measurement regime
 Program effectiveness.
Program
Direct
Support
Cost
 Program efficiency.
 Internal Services effectiveness.
 Internal Services efficiency.
Internal
Services
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Annex B
Proposed Internal Services
Performance Measurement Framework
Outcome Measures
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Measures of any departmental-wide impact of the service
•
This should be aligned with any TB Policy Objectives, beyond compliance of the policies
•
Would be best to have an outcome statement (s) e.g. the department rates the condition of all major assets and
uses this to allocate resources.
•
Measures would be % of department assets rated; % of departmental assets in poor condition; evidence of
allocation of resources based on asset condition
Services Measures
• Typical measures of any service
• Establishment of service standards and monitoring achievement
• Measurement of client satisfaction
Cost/Efficiency Measures
• Relative cost of the service e.g. cost of service as a percentage of departmental spending
• The efficiency of the service, usually a cost per output. E.g. cost per HR action. Proxies can be used to measure
efficiency e.g. cost per departmental FTE, where the FTE is a proxy count of the number of outputs.
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Example of Proposed Measures:
Financial Management
FINANCIAL MANAGEMENT
Outcome
Measure
The department has financial systems and controls in % collection of internal services costs at the lowest level in the PAA structure
place to ensure the integrity of resource management
and to produce the information needed for decision
making by the department and central agencies
% collection of program costs at the lowest level in the PAA structure
% collection of internal services costs allocated to programs at the lowest level
in the PAA structure
Service
Measure
Cost/Efficiency
Measure
% supplier payments paid on the due date
% of interest due to suppliers for late payments that is paid according to the
Directive on Payment Requisitioning and Cheque Control
% of departmental budget allocated to Responsibility Centre managers with
financial authorities by the end of the 1st quarter of the fiscal year
Departmental cost to process invoice
% of lapse at year end related to Supplementary Estimates C funding approved
in-year
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