Economy, Efficiency, and Effectiveness

The primary goal of public accountability and performance measurement is to promote economical, efficient, and effective programs.

• Economy, or productivity, a least-cost concept, is concerned with the acquisition of resources of appropriate quality and adequate quantity at the lowest reasonable cost.
  
  
• Efficiency, a resource usage concept, is concerned with the maximization of service at a minimum level of effort and costs.
  
  
• Effectiveness, an ends-oriented concept, is concerned with the achievement of preconceived goals and predetermined objectives for a particular program.

Performance Measurement

Performance measures link inputs to outputs and are essential for assessing performance outcomes and maintaining public confidence and accountability. To be fully accountable, utility administrators and managers must somehow relate service charges to service needs and then assess whether these needs are worthy of continued support. Because performance measures relate input resources to output accomplishments or outcomes, performance measures are commonly used for assessing accountability and for making informed decisions. 

In the wastewater industry, most service performance is measured in terms of wastewater flow, wastewater strength, treatment efficiencies, and costs. Performance or unit measures are produced from this operational and financial data by dividing outputs and inputs by each other.

Use of performance measures allows a utility to measure its progress towards a specific standard as well as compare its performance to other similar utilities. Generally, there are five types of performance measures used in the wastewater industry.

Input Measures: These measures record the costs, labor, and other resources used to provide a service.

• Salaries
• Parts and equipment
• Number of employees
• Miles of sewer lines
• Number of sewer connections
• Treatment capacity at the wastewater treatment plant

Output (workload) Measures: These measures record the amount of work performed during a given period of time (e.g., outputs/time).

• Amount of wastewater treated per day
• Wet/dry tons of sludge produced per day
• Number of service calls received per month
• Miles of sewer lines inspected/cleaned per year
• Number of sewer connections added per year
• Number of sewer taps sold per year

Efficiency Measures: These measures relate accomplishments to level of efforts (e.g., either as outputs divided by inputs or inversely, as inputs divided by outputs).

• Wastewater treatment costs per 1,000 gallons
• Sludge disposal costs per dry ton
• Number of employees/number of pumping stations
• Number of employees/number of customers

Effectiveness Measures: These measures relate actual accomplishments to targeted objectives.

• Number of sewer backups per mile of sewer
• Number of service complaints/number of customers
• Average service call time

Outcome Measures: These measures provide information on service quality.

• Number of days effluent quality exceeded discharge standards (Treatment)
• Percentage of sewer lines in excellent, good, fair, and poor condition (Asset Management)
• Revenue-to-expense and coverage ratios as indicators of self-supporting ability (Financial Management)

Performance measures are relevant, timely, and meaningful. To encourage unit measure development, data must be relatively easy and inexpensive to collect. But to invoke credibility, performance data must be accurate and independently verifiable. 

Unit measures have no meaning by themselves; they must be compared to other unit measures made up of similar inputs and outputs. Normally, for trending and base lining purposes, unit measures are compared to a time series of like measures. More often, performance measures are compared or benchmarked to a standard or to the performance of other utilities for determining efficiency and effectiveness.

From a cost accountability viewpoint, unit measures can be established to track varying expenses. As work loads go down, so should unit costs, and vice versa. Consequently, program managers can be held strictly accountable for varying cost-to-output relationships.