THE ROLE OF INDICATORS IN URBAN MANAGEMENT:
Concept paper compiled for the SA Cities Network
1.
BACKGROUND
Indicators can potentially play a valuable role in urban management as tools to inform and to
link various strategic initiatives, such as the IDP, budget and performance management.
However, in practice, where indicators have been used by local authorities they tend to be
used in a general, descriptive manner rather than being tied to the various phases of strategic
management.
This paper outlines the ways in which indicators can be used by local authorities as tools in
the various phases of urban strategic planning.
The focus is on the use of indicators at the
strategic, corporate level rather than the use of indicators at the sectoral or departmental level.
2.1
INTRODUCTION - why urban indicators
The use of indicators in urban management has become more important in relation to two
major sets of issues impacting on cities. The first is the urban policy challenges that have
intensified as a result of globalisation and urbanisation and the second is the push for more
efficient public sector management including the shift to performance management.
2..1.1
URBAN POLICY CHALLENGES
Globalization, which is a consequence of improved technologies in transport, communication
and information, has had significant implications for economic growth and the development of
cities’ economies. The geographer Michael Smith has characterised the modern global
economy as "a worldwide net of corporations and a global network of cities...The top 5001000 multinational corporations ... create a truly transnational economy, one whose primary
geographical nodes are the world's cities."
Cities are now competing at both a national and international level to attract investment. This
has had major implications for urban policy as the social needs of local urban communities
have to be balanced with the potentially conflicting need to attract local and foreign
investment to our city.
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Where globalisation has had a positive effect in stimulating economic growth, these benefits
have not been evenly distributed. Cities therefore continue to experience problems of poverty
and inequality. In developing cities these problems are compounded by urbanisation which
has led to problems of unemployment, the proliferation of informal settlements and
environmental degradation.
Continuing levels of poverty and inequality in the midst of global economic growth reinforces
the view that economic measures on their own are not sufficient to measure levels and
distribution of development. In dealing with these policy challenges confronted by cities, a
broad range of intersectoral indicators are needed to measure and inform urban policy.
2.1.2
PERFORMANCE MANAGEMENT
Particularly since the 1980s there have been increasing efforts to incorporate performance
management and measurement in government. In the US, the Government Performance and
Results Act of 1993 (GPRA) was enacted by Congress in order to promote comprehensive
Performance Management throughout federal departments and agencies. In the UK the Local
Government Act of 1992 required local authorities to provide direct information about their
performance.
In South Africa local authorities are required to implement a performance
management system in terms of the Municipal Systems Act.
Indicators are key to measure performance and the use of indicators are prescribed in national
policy and legislation relating to performance management and Integrated Development
Planning. This legislation is summarised in Appendix A.
3. THE POLICY DEVELOPMENT CYCLE
The role of indicators in urban policy can be related to the policy development cycle.
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Figure 1: The Police Development Cycle; adapted from Monitoring Human Settlements with Urban Indicators,
UNCHS, 1997
Following from the policy development cycle, there are 4 areas where indicators can assist
local authorities in addressing the challenges faced by cities. These are:
 Developing appropriate policies with clear goals and strategies
 Measuring the performance of local authorities
 Reviewing policies and strategies
 Reporting on progresss to increasing accountability and transparency
These areas are interrelated as reflected in the policy development cycle.
3.1
STRATEGY FORMULATION
3.1.1
ROLE OF INDICATORS IN STRATEGY FORMULATION
In terms of the policy development cycle, the policy framework gives rise to strategies, which
should contain clear measurable objectives to be implemented in relation to organizational
capacity.
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As part of strategy formulation, indicators provide baseline and target measures against which
to gauge the success of the initiatives implemented to achieve the objectives.
The baseline indicators measure the starting point against which progress can be assessed
while target indicators, by setting targets to be achieved, operationalise the goals.
3.1.2
NATURE OF INDICATORS USED IN STRATEGY FORMULATION
Indicators used at this level are closely tied to the goals set and should also reflect the
responsibilities of local government.
Since the goals of urban policy cut across different sectors, the indicators will be of a multisectoral nature.
Target indicators can be of four types:
Input Indicators. Inputs are the resources expended in relation to a specific goal, such as the
amount of money spent or the total number of employee-hours needed to deliver a service.
Output Indicators. These reflect the quantity of products or units of service provided to the
population.
Outcome Indicators:These measures report the results of programmes and services or relate to
the "quality' of the service e.g measures of customer satisfaction
Efficiency Indicators: These measure the cost per unit of an output or outcome
3.2
PERFORMANCE MONITORING
3.2.1
ROLE OF INDICATORS IN PERFORMANCE MONITORING
In assessing the effectiveness of urban policy the indicators identified as part of the strategy
should be measured at regular interval.
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3.2.2
NATURE OF INDICATORS USED IN PERFORMANCE MONITORING
Key Performance Indicators (KPIs) are derived from the target indicators identified as part of
the strategy. The indicators should conform to the SMART criteria - specific, measurable,
achievable, relevant and time-related.
Performance Indicators can be grouped into a number of dimensions that relate to elements of
one's strategy. An example of a tool for doing this is the Balanced Scorecard which is a tool
for relating performance indicators to strategic planning.
3.3
POLICY/STRATEGY REVIEW
3.3.1
THE ROLE OF INDICATORS IN POLICY REVIEW
The policy development cycle includes a review of current conditions and policies. The
indicators used in this phase should be broad-ranging so as to reveal policy gaps and identify
new or emerging development challenges. In this phase indicators provide an overview of
levels of development, and highlight issues that need to be addressed and prioritized. New
policy goals are then revised or reformulated to address the policy gaps or changing
development trends identified.
3.3.2
NATURE OF INDICATORS USED FOR REVIEWING POLICY
The indicators used for reviewing development policy are broader than the indicators
developed for measuring strategy. Review indicators are also not necessarily tied to what is
under the control of a local authority and should instead be oriented to broader, multisectoral
urban policy issues. There are many tools that have been developed that can be used for
reviewing urban policy including:
 City Development Index.
The City Development index as developed by UNCHS (Habitat) is a composite index
of a range of indicators that measures city development, analagous to the Human
Development Index which measures national development.. The five sub-indices
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reflect the multisectoral nature of city development i.e. city product, infrastructure,
waste, health and education.
 Human Poverty Index
The UNDP has developed a Human Poverty Index that focuses on deprivation in 4
Dimensions. The indicators are: longevity as measured by the probability of birth of
not surving to age 60, knowledge as measured by the adult illiteracy rate, % of people
without access to water, the % of children under 5 who are under weight and social
exclusion – as represented by long term unemployment rate (12 months or more).
 Gini-coefficient
Inequality and relative absolute poverty can be measured by the GINI coefficient.
The higher the GINI coefficient the more skewed the income distribution.
3.4
REPORTING
3.4.1. ROLE OF INDICATORS IN REPORTING
Indicators can be used to report on the progress in policy implementation. A range of
stakeholders can benefit from the reporting of indicators, including local, Provincial and
Government elected and appointed official’s, residents, commercial and business
organizations.
Indicators are a means of communication between local governmnent and the public. The
communication of indicators through for example the media can lead to citizens being more
well informed and promote participative and transparent local government.
3.4.2
NATURE OF INDICATORS USED FOR REPORTING
The development of indicators should be devised around different classes of stakeholders and
the type of information they will find valuable in addressing the various issues that concern
them. For example, the information needs of Citizens are for simple and easily understood
indicators. For reporting to councillors, use can be made of a scorecard comprising a set of
indicators.
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Indicators are used by national government to measure and compare the performance of local
authorities. In South Africa, national government has identified 6 indicators to be used for
reporting:
a. The percentage of households with access to basic level of water, sanitation,
electricity an solid waste removal
b. The percentage of households earning less than R1100 per month with access to free
basic services
c. The percentage of a municipality’s capital budget actually spent on capital projects
identified for a particular financial year in term of the municipality’s IDP
d. The number of jobs created through municipality’s local economic development
initiatives including capital projects
e. The number of people from employment equity target groups employed in the three
highest levels of management in compliance with a municipality’s approved
employment equity plan
f.
The percentage of a municipality’s budget actually spent on implementing its
workplace skills plan.
Ideally, the indicators used for reporting should be developed through a consultative process
with stakeholders. An example of this is the Seattle Sustainable Indicators Project where
members of the public and civic groups were involved in drawing up a set of indicators used
for reporting. Failure to identify and consult with stakeholders is likely to result in indicators
that are less relevant to user’s needs and therefore less credible to external parties.
4. SUMMARY
Indicators potentially have a valuable role to play in city management particularly with respect to
guiding urban policies and strategies and in managing the performance of local authorities.
To maximise the value of indicators however they should be tied to the broader urban policy
development/strategic planning cycle in local authorities. The role and nature of indicators vary at
different stages of the policy cycle. By using indicators at various stages of strategic planning,
indicators can provide a link between the various strategic planning initiatives of local authorities
including the IDP, the budget and performance management.
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