PwC

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Fragile? or Agile?
City Performance Management Jan Gey van Pittius
PwC
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CPM Responsiveness To Change
It is not the strongest species that survive,
nor the most intelligent but the
ones most responsive to change Charles
Darwin SOUTH AFRICAN CITIES CHANGE RAPIDLY, SO
HOW DO YOU AS A MUNICIPAL MANAGER OR CFO DESIGN A
MUNICIPAL FUNCTION THAT IS RESPONSIVE?
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Issues Facing Municipal Leaders
How can we improve our operational actions
through the use of real time dashboards and
scorecards?
How can we automate our planning, reporting and
analytical reporting processes through standard
data models and systems?
How do we align our key performance indicators
and reduce the volume and complexity of our
management reports?
How can we effectively align and reduce our cost
structure?
How can we better link our rewards programs to
better align with our strategy?
How can we reduce our overall budget cycle time
and deploy rolling forecasts to increase the
value of our planning process?
How can we inform our communities about our city
performance?
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Performance Issues In Municipalities

• Local government faces a large gap between
  service delivery and performance management
  tracking....
• Section 57 employees are accountable, but
  municipalities do not have the processes,
  automation and reporting tools to monitor
  performance..
• Section 57 metrics are not easy to justify
• Audit reports highlight poor reporting of
  non-financial measures
• The public continuously enquires as to the
  effectiveness of service delivery.
• All of these issues stem from
• Not cascading the idp strategy into a formally
  linked sdbip, which is directly linked to section
  57 employee scorecards

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IDP Execution, SDBIP Reporting

• The challenge is..
• How do I link my SDBIP reporting to the idp and
  how do I link my SDBIP to the section 57
  scorecards?
• By using corporate performance management tools
  and methodologies.
• A basis is activity based costing
• Cost driver volumes normally serve as good sdbip
  indicators of service delivery
• Kilolitres of water
• Kwh OF ELECTRICITY
• Vacant funded posts maintained
• It infrastructure maintenance
• Of burials

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Automation Minimise Risk

• Put technology behind the linking of the IDP
  execution, SDBIP reporting and performance
  reporting
• Rather monitor fewer metrics that are directly
  measurable
• Performance can be calculated based on these
  metrics
• Monthly reports can be pushed to directors and
  executive directors

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Non-financial Reporting

• NT requirement for supplementary performance
  reporting to financial statements
• Standardised extracts from SDBIP, scorecards and
  cost driver volumes to populate templates for
  financials
• Strong audit trail for AG to follow
• Reporting to communities/publishing performance
  data should be considered

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Cities Require an Approach and Methodology

• City Performance Management is a merging of seven
  methodologies
• This integrated approach consists of
  methodologies supported by technologies
• This allows scenario-based agility when
  municipalities face changes

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How Can ABC Enhance Today's Municipal / Public
Sector Planning and Control Systems ?
Today's focus is on mainly financial measures and
ignores the real causes of cost performance

The focus is directed towards Balance Sheet,
financial performance and Ratio and Variance
Analysis and of course, budget cost performance.
NONE OF THESE MEASURES IN THEMSELVES DRIVE COST
Leading institutions have recognised that the
basis for effective financial planning and
control begins with non-financial measurement
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Municipal Planning Performance Is A Lifecycle

• Each facet of the municipality transforms over
  time
• PwC City Performance Management methodologies
  measures the future impact on the City

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Facets Of CPM

• PROCESS The lifecycle of IDP execution and
  continuous adaption. How do I know what and where
  I must adapt?
• PEOPLE Who is involved in service delivery and
  who is in support? What if they change how they
  do things?
• SYSTEMS TECHNOLOGY Does my technology mirror
  the municipality and give me flexibility to
  forecast the impact of change?
• ORGANISATION CULTURE How I merge the above
  into the daily culture of municipal employees?

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Re-Focus our Municipal Efforts

• Put your organisation on an information diet
  Feed it nutritious stuff, but leave out anything
  that doesnt build muscle, spark the brain cells,
  and raise its energy level. Tony Manning (Value
  Based Management)

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The Modern Finance Function From Scorekeeper To
Trusted Advisor To The Mayor and Mm
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Methodology

• Normally start with either a costing or budgeting
  methodology
• Then craft uniform tariffs
• Performance management is normally based upon
  cost drivers
• SDBIP reporting is also based upon cost driver
  volumes
• Section 57 employees have scorecards based on
  cost driver volumes!
• Scenario-based IDP modelling environment is
  created and offered at annual Councillor and
  officials workshops

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Designing a Flexible City with CPM

• IF YOU DO NOT UNDERSTAND THE CAPABILITIES AND
  CONSTRAINTS OF YOUR CITY YOU CANNOT DESIGN ITS
  FUTURE IN AN IDP!
• CPM Allows one to mirror the current operations,
  strategy, people, processes and Technology that
  support service delivery
• Creating a mirror of the City and showcasing the
  capabilities and constraints to Councillors
  creates an environment for informed decision
  making

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Act! Perform, Not Conform

• Designing finance, operational and IDP
  flexibility transforms a citys support and
  delivery functions from playing catchup to
  delivering with agility

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Any questions?
Contact Details Jan Gey van Pittius Director
PricewaterhouseCoopers Tel [phone]
5331 Fax [phone] Mobile [phone]
0049 E-mail jan.gey.van.pittius_at_za.pwc.com