Expanding the scope of performance management: while performance management is often assumed to take place on a departmental or

Many opportunities exist for taking advantage of a strategic approach that uses evidenced-based decision making. While performance management is often assumed to take place on a departmental or organizational level, it can also occur on a much smaller scale. The Government Finance Officers Association's recently published book, Capital Project Planning and Evaluation: Expanding the Role of the Finance Officer, suggests that finance officers should become more involved with the planning aspects of government to help set goals, determine priorities, and develop accountability and tracking mechanisms to make sure that capital projects deliver on promised results--but this concept applies to many things other than capital projects, including new services, initiatives, or programs.

Performance management on this level also goes beyond just the finance office--managers and employees throughout the organization can benefit from establishing clear goals and setting up performance measures to track and focus on results. Following the performance-based process described below will allow for a more effective use of resources, a greater focus on results, and more accountability and transparency for key stakeholders.

1) Define the purpose of the project

2) Define key indicators of success

3) Use the goals as a roadmap during the project

4) Communicate results

5) Review data to learn and improve

DEFINE THE PURPOSE

Not all projects define specific goals and key indicators that target improvements in service levels, business process efficiencies, or cost reductions. When planning projects, however, the outcomes are just as important as the cost and time involved--inputs such as cost and time only provide a portion of the story. Really understanding a project, and the justification for the project, at the level required by elected officials and other decision makers requires project goals that explain both inputs and expected results. Understanding the purpose of the project and defining its goals maintains a focus on the real reason why time and money are being invested, as well as setting expectations that allow for an objective measure of success.

DEFINE KEY INDICATORS OF SUCCESS

When an organization makes investments in infrastructure, facilities, equipment, technology, etc., a return is expected in the form of improved service levels, new services being made available, improved efficiencies, or other cost savings. Identify these expectations upfront and develop measurements that will be tracked throughout the project to judge success. For example, resources are invested in a new construction project to improve congestion, decrease travel times, improve access for one or more groups of citizens, or provide alternative transportation options. All of these objectives can be measured. Similarly, drivers for technology projects often include business process improvements, efficiency gains, and more effective use of resources. The only way to determine if any of these goals have been accomplished is through performance measurement, and an effective way to manage these projects to achieve the desired outcomes is through regular review of performance data. Governments have a responsibility to demonstrate whether or not investments have returned the desired results, but tracking this information also allows managers to make informed decisions that improve the chances that projects will stay focused, stay on schedule, and achieve their stated and expected goals. True success for a project is not whether it is completed on time and on budget; success only occurs when key outcome goals are met.

USE THE GOALS AS A ROADMAP

Most projects have detailed project plans that explicitly identify key phases, tasks, and milestones--output-type targets that identify what work was done rather than the impact of the work. If the project's goals are not continually emphasized, managers and staff may get so involved with the details that they lose sight of what they are trying to achieve. Each decision made over the course of the project should be evaluated in light of how it will affect the project's ability to meet its stated goals. All too often, once a project is begun, project managers shift their focus from the outcomes or goals of the project to the project's output-based milestones. Losing sight of the project objectives and not making a proper evaluation on how key decisions will affect outcomes creates a risk that at the end of the project, outcomes will not be achieved. For example, technology projects such as enterprise resources planning implementations often have large goals of process improvements, efficiency gains, and roll-out of additional e-services to citizens. Once the system implementation begins, however, these goals are often displaced as the top priority by the goals of being on-time and on-budget. (See Exhibit 1 for more on keeping track of the big picture.)

COMMUNICATE RESULTS

Communication has to be constant throughout the project to set expectations, provide information on intermediate results, and demonstrate the overall result of the project. Communication also needs to occur at different levels. Different stakeholders (managers, executives, elected officials, staff, citizens) may require different information, and governments should consider ways to deliver the level of accountability and transparency demanded by each. In the end, the ultimate determination of success will be made by project stakeholders, so make sure they all have the information they need to make informed decisions.

Results of some projects may be clear. Adding additional capacity to roads may ease congestion in a way that is apparent to all drivers. Outcomes of other projects, however, may not be as clear, such as the implementation of new technology When communicating results, focus on the informational needs of the end user or audience of the information, especially for projects where the end results may be extremely technical. Every project should relate outcomes back to improved results in service levels that should be clearly communicated and understood.

REVIEW DATA TO LEARN AND IMPROVE

Performance management involves not only reporting on results of the current project, but also reviewing performance data to improve the implementation of future projects. With this knowledge, strategies can be developed to target outcomes that were not achieved, or improvements can be made to help future projects better achieve results. Analysis of outcomes for goals that were and were not met can also be applied to future projects.

CONCLUSION

Defining a purpose, setting goals, and tracking progress toward outcomes is not a new idea in fact, most project managers are already doing it. However, by taking a formal approach to setting goals and tracking outcomes, performance management can help communicate those outcomes while adding a level of transparency and accountability that had been missing. Projects are investments in resources that, if successful, have a positive effect on one or more outcomes. Tracking and reporting on inputs such as dollars and hours only tells half the story. To truly understand why a project is being undertaken and whether it was successful, there must be a system of setting, tracking, and reporting on the results.

MICHAEL J. MUCHA is a senior consultant and analyst in GFOA's Research and Consulting Center in Chicago, Illinois.

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